Budget failed to provide any significant relief to people at a time of great distress

Following the almost unprecedented contraction in the economy in 2020-21, there has been some recovery as captured in the official data for 2021-22 which, the government expects, will continue in 2022-23.

However, a big question relates to the composition of this recovery and, more specifically, to the extent to which the distress of weaker sections is being reduced or not.

This is also the wider question which is being asked in many countries as there is worldwide concern that the gains of several years in reducing poverty should not be lost. Hence, while economic recovery is keenly sought, there is also the added concern, a very important one, that the distress suffered by ordinary people should be reduced in significant ways as early as possible.

This was the wider context in which the Union budget for the financial year 2022-23 has just been presented in India.

It is clear from recently reported trends that the Union budget 2022-23 has been presented at a time of exceptionally high levels of distress among ordinary people and, even more so, among the weakest sections.

According to United Nations data, nearly 46 million people in India are estimated to have fallen into poverty in 2020, constituting nearly one half of the world’s new poor. While highlighting this, the recently released Oxfam Inequality Report also cited the data collated by the Center for Monitoring Indian Economy for 2021 to state that 84% of households in the country suffered a decline in their income in a year marked by unprecedented loss of life and livelihoods.

The most recent findings of ICE 360 Survey 2021 by People’s Research on India’s Consumer Economy (PRICE) have revealed that as compared to 2015-16, in 2020-21 the income of the bottom 20% of households of India suffered a decline of as much as 53%.

This was preceded during 2005-16 by a significant and much higher increase in the income of the bottom 20% segment of the population, suggesting that the UPA years had been much better for the poorest sections.

Another indication of this is that the biggest relief to the rural poor has been provided during times of increasing distress by the rural employment guarantee act or NREGA which was enacted as a very innovative measure during the UPA days.

Some monitoring groups have been pointing out with carefully conducted research that during the last financial year 2021-22, the arbitrary reduction in the allocation for NREGA (compared to the revised estimate of the previous year) proved to be very costly in terms of the sufferings of the rural people.

With the reduced allocations getting used up at an early stage of the financial year, those who needed employment in the later months found it more difficult to get this employment, and even when employment could be obtained, wages were delayed, and in fact, a lot of these wage payments remained pending right till the time of presenting the Budget for the next financial year. Finally, the Revised Estimate had to be increased, but this was not adequate.

Statistics highlighted by the Center for Monitoring Indian Economy recently indicated that unemployment among graduates in the age-group 20-24 may be as high as 60 per cent while in the age-group 20-29 this may still be very high at 43%.

What is more, both the World Inequality Report and the Oxfam Inequality Report have related the increasing distress of the poor and the vulnerable sections of Indian society to the very fast rise in inequality highlighted by increasing concentration of wealth and income in the hands of billionaires or the super-rich.

Thus, the need to more specifically target the wealth and income of the super-rich, to use fiscal policy effectively to tax the rich adequately to find the resources to provide genuine relief to the poor and the vulnerable has certainly increased.

The Oxfam Report tells us, for instance, that the richest 98 billionaires in India own the same wealth as the poorest 40 per cent of the people of India (555 million people).

Placing more income in the hands of poorer people who have many pending needs will not only contribute greatly to their welfare and, in fact, even to saving precious human lives. In addition, this will have a multiplier effect on stimulating equality-based economic growth at several levels.

Keeping in view this situation, the Union Budget for 2022-23 should have focused most attention on providing significant relief to poorer sections to pave the way for equality led recovery but unfortunately, this focus is not visible in it at all.

Hence a great opportunity to reduce the distress of people appears to have been missed by the government.

The Budget speech came as a surprise to most people who were eagerly waiting to know about social sector allocations as well as allocations for agriculture and rural development for vulnerable groups, but it simply did not give the much sought after information.

Some leaders of farmers have already complained about how little attention their concerns received in the Budget speech.

The budget for NREGA has belied many hopes. In 2020-21, the actual expenditure was 110,527 crore. This was reduced to a Budget Estimate of just Rs. 72034 crore in 2021-22. In view of pressing needs, this had to be raised by the government in the Revised Estimate for this year to Rs. 97034 crore. However, the Budget Estimate for 2022-23 has again been reduced to Rs. 72034 crore.

Of course, there are several government schemes for helping the poor but there is no big increase in them, at best only some incremental increase. Hence this opportunity for making an important contribution to equality led economic recovery has been largely missed by the Union government.

(The writer is Honorary Convener, Campaign to Save Earth Now. His recent books include Man Over Machine and Planet in Peril. Views are personal)