A week after the budget

(Dr Pentapati Pullarao)

Great thinkers have always said that it is better to sleep over an idea and then come to a conclusion on anything. When an event like the budget happens, we immediately come to conclusions, based on what TV and media feeds us. There is intense activity about the budget. Since elections results on June 4, 2024, there has been much speculation about the budget.

The great French writer Jean Karr said a 150 years ago;” The more things change, the more they remain the same “. The statement is relevant even today.  What look like earth-shaking events are actually forgotten in time. The US President Joe Biden announced his decision not to contest the 2024 US election.  Great shock was expected. But nothing happened and everything continues the same. We think that some events will bring earth-shaking changes. But the next day, we find nothing much has changed. This also applies to the budget.

Queen Elizabeth of England died in September 2022 after ruling for the longest period of 70 years of any monarch in the last 1000 years.  Before her death, people predicted disaster and whether the English throne will collapse. Now, after nearly 2 years, we find “Nothing has changed in England “.

The Indian budget also creates immense tension, with people expecting great changes. But in the end, it seems, “the more things change, the more they remain the same”. The first Indian budget was in 1952 of only Rs 375 crores, which in today’s money is 55,000 crores. Nearly 75 budgets since 1952 have been announced thus far. But the only notable budget is the 1991 budget of Manmohan Singh. Others have been forgotten totally.

Important announcements in 2024 budget  

There is no doubt that in this budget the allotments to Andhra Pradesh and Bihar are prominent.

Andhra PRADESH: As per the 2014 Re-Organization Ac t, Andhra Pradesh got Rs. 15,000 crores for Capital Amaravathi, assurances of funds for Polavaram and other projects. This is viewed as big decision. It has created anger in other states.

Bihar: People were surprised at huge allotments to Bihar. But people forget that Bihar also suffered due to division and formation of a separate state of Jharkhand in 2000. When Jharkhand was formed, Bihar objected that it was losing all its revenue. Jharkhand had the 3 biggest steel plants in India and today produces 25% of all coal in India. Like Andhra, Bihar was demanding special status. That is why Rs.59,000 crores were allotted in this budget for Bihar to settle the issue totally.

The forgotten people in this budget:

Many states claim they were forgotten. But the fact is that all national schemes, projects benefit them too.  ALL other states, including Andhra and Bihar, will benefit from all infra-structure projects, new employment schemes, agricultural investment, etc . But the real issue is not what the Budget did, but what the budget kept silent about:

Budget did zero here ;

1. The middle classes who form 32% of India have been forgotten.  Even the petty tax exemptions were removed. There is no subsidy scheme for them. Since they are middle classes, they are not classified as poor, and they cannot avail schemes for the poor.
2. Indians had a tradition of the great ‘savings habit “. Government neither encouraged savings nor rewarded people who saved. The interest rates of Fixed deposits have been kept deliberately low to aid industrialists borrowing money from banks.
3. The country is undergoing a severe dose of inflation. Inflation takes away the incomes of middle classes. Those with properties don’t mind inflation, since their assets increase in value. But most middle classes rent their accommodation and so they suffer higher rents. Government has not   tackled inflation in the budget.
4. Agriculture: Budget recognizes that agriculture sector needs help. Farmers’ incomes have not risen. The government feels that increasing funds for research will benefit agriculture. That may happen in the long run. But for the short run, the government has not tackled the problems of agriculture. The basic problem of farmers is that their family income is too small, since they now have smaller holdings than they did 50 years ago. Families of farmers divide their land, and each next generation gets less land.  Government has not shown interest in fidi9ng solutions. This will come back to haunt eh government in future.

Government has taken notice of the un-employment situation:  Government feels that internships and skilled development will help reduce employment. Time will tell whether this will help.  All economists will tell you that if investment is made in agriculture, there will be quick employment possibilities. But obviously, the government listens to a different kind of economists, who are un-familiar with agriculture.

In the first parliament of 1952, nearly 75% of MPs said they come from a farm background. Now the figure has come down to less than 6%, though agriculture -dependent people are 48% of the population.

There is no doubt that Narendra Modi is lucky. Ever since, Modi became Prime Minister in 2014, oil prices have come down. This has never happened earlier. The low oil prices have helped the government do whatever it wants. But this “oil bonus of lower prices “has not been passed down to farmers or middle classes.

A few days after the budget has been passed, it looks like just another day. Whatever steps were announced in the budget will take time to be effective.  Right now, for a farmer or the middle classes, it looks like a budget is non-existent. There will be no change in their lives. “The More things change, the more they remain the same “rings true after 175 years.

(Author is a Delhi based Political and Economic Analyst)