The Union Budget 2022-23 presented by Union Finance Minister Nirmala Sitharaman exhibits the economic priorities of the Union government led by Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP). The broad majority of India’s farmers and workers are left out of the ambit of welfare, while the rich are allowed to amass more wealth using tax sops.
What are the key takeaways of the Union Budget 2022-23?
- Infrastructure development under PM GatiShakti to boost demand in the market. National highways will be expanded by 20,000 km in the financial year (FY) 2022-23.
- Financing of investments to pump prime private sector. Capital expenditure increased while widening the fiscal deficit to 6.4%.
- Ken-Betwa river linking project will be taken up with a budget of Rs 446.06bn.
- Health, education, employment generation and agriculture continue to lurch in darkness.
- There has been no change in India’s taxation system. Both direct and indirect taxes continue to remain as Albatross around the common people’s necks.
- Non-impressive allocations to social sectors, including healthcare, education and others.
- Continuation of tax sops for corporates under the “start-up” cover.
- No stimulus has been offered to the medium, small and micro enterprises (MSMEs), though there has been only liquidity infusion for the sector.
- Digital rupee to be unveiled by the Reserve Bank of India (RBI).
- Taxation of 30% on virtual asset transfer.
Why the Union Budget 2022-23 is anti-people in essence?
Though Modi praised Sitharaman for the Union Budget 2022-23 saying that “this budget is laced with potentials of more growth, more investment, more infrastructure and more job opportunities”, the facts contradict his assertion.
Unemployment is still missing a mention
Though the Modi regime has stopped publishing unemployment data since 2019, the private survey data from the Centre for Monitoring Indian Economy (CMIE) shows that the average unemployment rate from April to December 2021 was 7.95%.
Like her previous budget speeches, Sitharaman omitted the word unemployment in her Union Budget 2022-23 speech as well. Though she touched on the topic of employment generation through the PM GatiShakti project, she didn’t provide any ballpark figure regarding this project’s employment generation capacity.
As Sitharaman informed the Parliament that the PM GatiShakti project will be fuelled by ‘innovative’ funding, it became clear that there will be a public-private-partnership (PPP) model, which means the government will spend public money to create assets for the private sector to manage. It’s clear from her announcement that the PPP model won’t be providing long-term stable employment to the youth.
Tax sops for the rich and no respite for the middle-class and the poor
Sitharaman announced that the tax sops provided to the corporates will continue in the FY 2022-23 as well. Sitharaman said in her speech:
“Eligible start-ups established before 31.3.2022 had been provided a tax incentive for three consecutive years out of ten years from incorporation. In view of the Covid pandemic, I propose to extend the period of incorporation of the eligible start-up by one more year, that is, up to 31.03.2023 for providing such tax incentive (sic).”
She also informed the house that the corporates will continue to enjoy their tax sops:
“In an effort to establish a globally competitive business environment for certain domestic companies, a concessional tax regime of 15 per cent tax was introduced by our government for newly incorporated domestic manufacturing companies. I propose to extend the last date for commencement of manufacturing or production under section 115BAB by one year i.e. from 31st March, 2023 to 31st March, 2024 (sic).”
There are reports, dismissed by the Modi regime and the BJP, that have shown that India’s middle-class shrunk by 32m in 2020, which is 60% of the global retreat in the number of people in the middle-income tier, ie, those who earn between $10 to $20 daily. At the same time, the report shows how the number of poor people, ie, those who earn up to $2 daily, has shot up by 75m at the same time.
Oxfam’s recent India inequality report has shown the grotesque wealth gap and how the rich are further consolidating and multiplying their wealth, year-on-year, while millions of Indians are losing even the little wealth they had.
However, due to the BJP’s reliance on funds provided by big capitalists, the pro-corporate Modi regime won’t impose a pragmatic wealth tax matrix on India’s super-rich families to narrow the fiscal deficit, which is pegged around 6.4% in the current budget.
There has been no key takeaway for the farmers in the Union Budget 2022-23. Sitharaman’s agriculture announcements covered eight points:
- 120.8m metric tonnes of wheat and paddy to be procured from 16.3m farmers by spending Rs 2.37 trillion as minimum support price (MSP).
- Chemical-free natural farming to be promoted along 5km wide corridors along the river Ganga.
- Promotion of millets by earmarking 2023 as the year of millets.
- Reduce importing of oilseeds by rationalising domestic production through comprehensive planning.
- Delivery of digital hi-tech services to farmers using the PPP model.
- Kisan (farmer) drones to monitor crops, spray insecticides and digitalise the land records.
- States to revise agriculture university syllabus to meet organic farming needs.
- Blended funds to be raised under NABARD to finance agriculture-related start-ups and rural enterprises.
The first point shows that the government isn’t yet ready to accept the demand of the farmers to enact a law guaranteeing procurement of all crops at MSP. This means only 16.3m farmers will benefit from the scheme. Union Agriculture Minister Narendra Singh Tomar informed the Rajya Sabha on February 4th 2022 that the government will form the MSP Committee, as demanded by the farmers, after the assembly polls in four states are over.
This is a tactic adopted by the Modi regime, which is averse to providing the farmers with a fair MSP, to maintain the status quo by fooling the farmers. As Tomar had earlier hinted that the contentious three farm laws, which were repealed in November 2021 following a year-long protest by farmers, can be re-introduced by the Modi regime, therefore, the promise of setting up of the MSP Committee after the elections in the four states appears extremely doubtful.
Though India officially has no clue about the real number of farmers, it’s estimated to be between 100m and 150m. The Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) scheme, under which a direct cash transfer of Rs 6,000 per year is done to farmers’ accounts, has targeted 145m farmer families. In this scenario, providing MSP on only wheat and paddy, and that too to only 16.3m farmers out of 150m, amounts to mocking the farmers’ financial woes.
The Modi regime’s pro-corporate and pro-liberalisation agriculture policies, dictated by the World Trade Organization (WTO), have made fertilisers dearer to the farmers. The high price of diesel has also affected the farmers as vis-à-vis their selling price, the input costs have pierced through the ceiling.
While the revised estimate (RE) of fertiliser subsidy in FY 2021-22 is Rs 1.40 trillion, the budget estimate (BE) for FY 2022-23 has been reduced to Rs 1.05 trillion, which shows a cut of Rs 349bn at a time when the farmers are facing a severe shortage of fertilisers due to blackmarketing and hoarding by unscrupulous capitalists and usurers.
No policies are announced to provide financial relief to the farmers to secure India’s food supply through subsidies on input components and financial stimulus to boost rural demand for industrial goods. Without such support from the government, the farmers can’t free themselves from the vicious cycle of debts and utmost bankruptcy. No wonder, the farmers’ organisations have denounced the Union Budget 2022-23.
On oilseeds, the government is keen to promote the cultivation of palm oil, especially in the northeastern provinces and Andaman and Nicobar Islands. In this article, we have shown how the palm oil cultivation scheme has been prioritised by the government to promote the interests of Gautam Adani, one of the principal donors of the BJP, and Ramdev, a television yoga evangelist-turned-capitalist.
The tall talks of empowering the farmers and helping the rural start-ups grow are smokescreens used by Sitharaman to conceal the fact that the Modi regime is trying to promote corporate control over agriculture throughout the tilling-to-selling process of farming.
Modi and his BJP always go gaga over the PM-Kisan programme and boast of their “farmer welfare” initiative. However, since 2019, the government didn’t increase the benefit amount for the farmers even though inflation has skyrocketed.
A monthly allocation of Rs 500 for an average family size of 4.45—according to the 2011 Census—means Rs 112.36 per person per month, which means the government is paying Rs 3.74 to each member daily and it’s not clear how such a meagre amount can generate rural demand.
Rather than increasing the benefit amount of the PM-Kisan scheme to help the farmers survive amid skyrocketing inflation, the government has marginally increased the budget allocation for the scheme. While the BE for PM-Kisan was Rs 650bn in FY 2021-22, the RE is Rs 675bn. Sitharaman merely increased the BE by Rs 5bn by allocating Rs 680bn as BE for the FY 2022-23.
There has been a fall in the government’s agriculture expenditures in the current FY 2021-22. While the BE for FY 2021-22 was Rs 1.48 trillion, the RE is reduced to Rs 1.47 trillion. Now, going by the practice of using the BE of the last budget to determine the BE of the current one, Sitharaman has increased the BE marginally to Rs 1.51 trillion. This low allocation shows that the government’s intention in agriculture is only to turn the sector into a corporate fiefdom, ignoring the plight of the farmers.
Destroying rural employment opportunities
Sitharaman has significantly reduced the allocation for India’s largest rural employment project – Mahatma Gandhi National Rural Employment Guarantee Act (NREGA).
The NREGA provides a guarantee of 100 days of work to the rural poor through various rural asset-creation projects. It was the NREGA that provided income to those millions of workers who returned to their villages jobless and penniless following Modi’s arbitrarily declared first lockdown in 2020.
After allocating Rs 1.11 trillion as actuals for NREGA in FY 2020-21, Sitharaman had reduced the BE for FY 2021-22 to Rs 730bn only. Even though the RE of FY 2021-22 has been Rs 980bn, Sitharaman had again allotted a BE of Rs 730bn for FY 2022-23. This means a 25% cut in the crucial project that employs millions each year for a limited period of days.
According to the government’s data, there are nearly 152.8m NREGA job card holders in India and the average wage is Rs 245 per day. As per Kolkata-based activist Nirban, approximately 29.79m job card holders can get a total of 100 days of work and 123.01m won’t get any work at all. Also, if the fund is used to provide work to all job card holders, then only 19 man-days can be created.
These are rough estimates and don’t include any costs incurred for raw materials and other input costs. If such costs are taken into consideration, then the number of beneficiaries will be significantly less than the estimated figures.
Debmalya Nandi of the NREGA Sangharsh Morcha told The Hindu that approximately there is an outstanding of Rs 123bn—Rs 14.64bn as wages and Rs 109bn as material cost—that will eat up a major portion of the allocation of Rs 730bn and leave only Rs 607bn for FY 2022-23.
The Union Budget 2022-23 has allocated Rs 866.06bn for healthcare, which is Rs 6.91bn more than the RE of Rs 859.15 of FY 2021-22. Earlier the BE for FY 2021-22, the second year of the COVID-19 pandemic, was Rs 746.02bn while the actuals for FY 2020-21 was Rs 800.26bn.
Though the government had announced the Prime Minister’s Ayushman Bharat Health Infrastructure Mission (PMABHIM) during the Union Budget 2021-22, the project was flagged-off in September 2021. Under the PMABHIM, the Union government has planned to overhaul health infrastructure from rural health centre level to the Union’s health centre, either on its own or in collaboration with the States, over five years.
Sitharaman has increased allocation for the PMABHIM from Rs 5.85bn in FY 2021-22 to 41.77bn in FY 2022-23. However, it’s unlikely that even at the current pace the government can build up a robust public healthcare system in five years.
While healthcare in India, where the vulnerabilities of its dilapidated public healthcare system were exposed during the second wave of the COVID-19 pandemic, needs an allocation that’s at least 5% of the GDP, the government doesn’t want to move beyond 3% and, even in this condition, it diversifies its allocation by funding pseudo-science projects under the garb of promoting ancient Indian wellness systems.
Education is going out of the poor’s reach
Sitharaman allocated Rs 1.04 trillion for education in the Union Budget 2022-23, which is the highest in recent times. Though this allocation can grab the eyeballs of the naïve, there is an issue with the realisation of the funds. The Modi regime has fallen short of realising its BE for FY 2021-22, which was Rs 932.24bn. The RE of the FY 2021-22 is Rs 880.02bn, which is Rs 52.22bn less than the BE.
The migration of education to the online space due to the constant lockdowns and COVID-19 restrictions has made it dearer to the poor and the marginalised. The National Education Policy 2020 revealed how the Modi regime plans to deprive the poor, exploited and marginalised students of their right to education.
Though it has been found that a large number of students are unable to study online due to a host of issues like the lack of smartphones, bad network connectivity, fall in family’s income and the pressure to work and contribute money to their families, Sitharaman ignored their plight. There has been no announcement in providing any support to the students from the marginalised background with support to catch up with their losses.
Moreover, the teachers of non-government primary, secondary and high schools are suffering due to pay cuts since March 2020, and the government has announced nothing for their relief. The government only announced that television channels will be launched for students of different standards, without mentioning the fact that very few students can afford to watch televisions in India.
Sitharaman also declared that the Modi regime will establish a digital university. This is an indication that the government will open the digital university space, ie, a new method of higher education for private companies to participate in. Such digital universities, with lesser money to spend on infrastructure, will be the core fiefdom of private players as the government didn’t disclose any comprehensive plan to make them accessible to all.
Who is benefitting from the Union Budget 2022-23
The Union Budget 2022-23 isn’t a budget for India’s 85%, like the other budgets presented by the Modi regime. This budget exhibited that amid a severe economic crisis, the Modi regime is more interested in providing relief to the rich through the extension of corporate tax sops while the poor are deprived of their rights.
Sitharaman has reduced the food subsidy in the Union Budget 2022-23 from Rs 2.86 trillion as RE of FY 2021-22 to Rs 2.07 trillion in FY 2022-23. Even the BE for FY 2021-22—Rs 2.43 trillion—was higher than the BE of FY 2022-23. There is a reduction of Rs 796.38bn in food subsidy for FY 2022-23 vis-à-vis the present FY. This hints at the probability of the government using the ‘One Nation One Ration Card’ scheme to deprive millions of poor of their right to food.
Even though the rising fuel prices have severely impacted the economy and spiralled inflation, the Modi regime showed utmost indifference in dealing with the issue. In FY 2021-22, Sitharaman had allocated a BE of Rs 140.73bn as fuel subsidy, however, the RE is only Rs 65.17bn, which is 46.30% less than the actual allocation. In the Union Budget 2022-23, the government has allocated Rs 58.13bn as fuel subsidy, which is far less than the RE of the current FY and conforms with the government’s policy of ending fuel subsidies within a few years.
While the government is cutting down social welfare expenses, from NREGA to healthcare, education, food and other subsidies, it’s utilising the money to pay for the subsidies provided to big corporates and to repay foreign and domestic debt.
Around 20% of the government’s income is going towards repayment of interests and debts. As Sitharaman projected that there will be around a 6.4% fiscal deficit in FY 2022-23, it’s comprehensible that the government will borrow more money to meet the gap.
It’s not shocking to see the Modi regime presenting a banal pro-corporate budget. What’s quite noticeable is the sheer indifference shown by the Union Budget 2022-23 towards the poor and the lower middle-class even when four crucial states for the BJP, including Uttar Pradesh, are going to the polls. This exhibits the hubris of the Modi regime, which believes it can manipulate the voters using religious extremism while robbing them financially year after year.
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