Budget 2021-22 was an opportunity to bridge the differences between the Government and the Opposition. It was also an opportunity to make amends to sections that felt wronged by the policies, actions and inactions of the government such as the abjectly poor classes, farmers, migrant workers, the MSME sector, the middle class and the unemployed. The most deserving were left to their fate. Since I had no expectations, I have no disappointment, but millions of others feel cheated.
The Budget has aggravated the divide between the very rich and all others.
Budget is Contextual
There is a rule in Tamil grammar: Place, Subject and Opportunity are wasted like a lamp in the hands of a person without sight. It means that actors and actions must be judged by the place, subject and opportunity (time). It is the context that determines the merit of a decision. The Finance Minister was presenting Budget 2021-22 under extraordinary circumstances characterised by:
* two years of declining growth rate (from 8 per cent to 4 per cent) in 2018-19 and 2019-20;
*one year of recession beginning on April 1, 2021;
*massive disruption in the lives of everyone, especially the poor who constitute, on average, 30 per cent of every village, panchayat, town
*millions pushed below the poverty line and burdened with mounting debt;
*millions who had lost their jobs or livelihoods;
*64.7 million who dropped out of the labour force; of them 22.6 per cent were women;
*28 million actively looking for a job; and
*an estimated 35 per cent of MSMEs that have closed down permanently.
Apart from the above economic factors, there are two other hard facts: (1) China’s illegal occupation of land belonging to India threatens national security and (2) huge investments need to be made to augment health infrastructure.
Failed on all but one
It was in this context that I had listed two “non-negotiables” and a “10-point wish list” (see ‘No expectations, no disappointment’, The Indian Express, January 31, 2021). After examining the Budget documents and reading the FM’s speech, my score card reads as follows:
Wish list: 1/10
The only point on which the Budget gets a ‘Pass’ is ‘increase (in) the government’s capital expenditure’ (subject to deeper scrutiny).
The Budget failed the Armed Forces of the country. The FM did not utter the word ‘Defence’ in her 1-hour-45-minute speech, which was unprecedented. The allocation for Defence in 2021-22 was Rs 347,088 crore as against RE of Rs 343,822 crore in the current year — an increase of just Rs 3,266 crore. Allowing for inflation, the allocation is lower in the next year.
On health, the FM was too clever by half. She proudly announced that the allocation was being increased by 137 per cent from Rs 94,452 crore to Rs 223,846 crore in the next year! The bluff was called within hours: the Budget division had disclosed the true numbers in the ‘Budget at a Glance’ (page 10). They are RE 2020-21: Rs 82,445 crore and BE 2021-22: Rs 74,602 crore. Far from an impressive increase, there was a decrease in the allocation! The conjurer had quietly added the one-time cost of the vaccination programme, the allocation to the Department of Drinking Water & Sanitation and the FC grants to the states for Water & Sanitation and Health to boost the number!
Keeping the two non-negotiables aside, the FM did not have a kind word (not to speak of money) for the 20-30 per cent of families at the bottom of the economy or for the MSMEs and their unemployed workers. She did not announce sector-specific revival packages for ailing sectors like Telecommunication, Power, Construction, Mining, Aviation and Travel, Tourism & Hospitality. She did not reduce the GST rates; on the contrary she slapped cesses on a range of products, including petrol and diesel, that dealt a blow to states’ finances. On every count, other than capital expenditure, she failed the people.
Bury FRBM, pander to rich
Even on capital expenditure, there was nothing bold or imaginative. By March 31, 2021, the FM will borrow an additional sum of Rs 10,52,318 crore, but the additional capital expenditure will be only Rs 27,078 crore! We may add grants in aid for creation of capital assets, which was an additional Rs 23,876 crore. The rest was accounted for by the increase in revenue expenditure of Rs 3,80,997 crore, the shortfall in revenue receipts of Rs 4,65,773 crore and the shortfall in disinvestment proceeds of Rs 178,000 crore. Contrary to the FM’s claim that she “spent, spent and spent” her way to the fiscal deficit (9.5 per cent), the truth is she did not collect the tax and non-tax revenues that she had budgeted for. Nor could she contain revenue expenditure within the budgeted amount. She had no choice but to borrow to fill the gaps.
The poor, the migrant labour, the daily wage earner, the small farmer, the owner of the MSME, the unemployed (and their families) and the middle class felt cheated. They poured out their disappointment in the social media since the newspapers had no space for them or their champions.
I shall not deny there was a calculating head that directed this ‘bury-FRBM, pander-to-the-rich’ Budget but, without a shadow of doubt, there was no heart.