By Nantoo Banerjee
The annual government budget is all about the expenditure and its direction. Income is generated generally through tax and non-tax revenues and borrowing to take care of the expenditure. Normally, the expenditure part comprises seven main aspects – the government’s own maintenance cost, defence, healthcare, social security, education, elderly care, and debt servicing. Even in China’s centralized economy, education, health and elderly care get special focus in its annual budget expenditure. The enlarged BJP-led National Democratic Alliance (NDA) government’s new budget, presented in Parliament on Tuesday by Finance Minister Nirmala Sitharaman during a 85-minute-long speech, failed to throw enough light on how the common man will be benefited from the government’s proposed gross expenditure of Rs. 48.21 lakh crore during the current financial year.
Ever since the NDA government came to power in 2014, its annual budget is focused more on future goals than on its immediate agenda for the budget year. For the last 10 years, which near-consecutively witnessed a fall in the country’s annual net employment growth rate despite reasonably good economic expansion, except during the Covid pandemic year, the government paid little attention to this aspect. It went on increasing imports of goods and services at the cost of local jobs. The current year’s budget has deployed Rs. 200,000 crore on five schemes – once again spread over a five-year period — to boost job opportunities without addressing the real issue that requires drastic import cuts and forcing domestic manufacturing.
The futuristic budget has little for the common man, unemployed youth in the world’s most populous country, part-time job holders, seasonally unemployed, and the elderly. The government’s pre-budget Economic Survey said that the country needs to generate on average 78.5 lakh jobs per year in the non-farm sector till 2030. The massive unemployment and retail consumer price inflation, which is often understated, are driving the country’s poor and lower middle class, comprising around 70 percent of the population, almost crazy.
There is nothing in the current year’s budget which could not have been implemented over the last 10 years. The budget is selling dry dreams. It is unconcerned about the fact the value of Rupee or the purchasing power of our currency is dwindling by day. The key expenditure focus of the budget seems to be to keep the NDA together by making massive allocations and concessions to Chandrababu Naidu’s Andhra Pradesh and Nitish Kumar-led Bihar. Telugu Desam’s Naidu and Janata Dal (United) supremo Nitish Kumar together hold a vice-like grip on the NDA.
India’s annual budgeting traditions, with tinkering tax rates as a major attraction, continue. It may be interesting to note that the annual national budgets of leading democratic countries such as the USA, Germany, France, Japan, the UK and Asian neighbour Indonesia focus more on public good. For instance, the US government had proposed a budget expenditure of $5.02 trillion in fiscal year 2024. And, the majority of its budget spending was on Social Security. The primary expenditure of the US government is on healthcare, retirement and defence programmes. In Germany, the federal government’s three top priorities are: security, cohesion and growth. The 2025 draft budget and growth initiative are designed to ensure that Germany will be a secure and economically strong country.
In France, social spending, including unemployment insurance payments, which amounted to over 31 percent of the French GDP in 2022, continues to be a big focus of its expenditure budget. The other expenditures in the framework of allowances allocated in France include aid for the elderly, and to those with disabilities, and childcare. The tax system in the UK, traditionally known for strong social security measures, is highly pragmatic. It is fair and simple, providing reward for hard work. Consumption growth supported by domestic manufacturing and export together served a key focus of communist China’s national budget system. The budget focus has been highly rewarding for China, making it the world’s second largest economy over a period of only the last 25 years.
It is time that India’s national budget system stops tinkering with taxes and politically-motivated expenditures and concentrates on areas having direct impact on the common man’s life and living. It should focus on education, healthcare, social security, domestic manufacturing, job creation, inflation control, stability of Rupee, surplus trade, and creation of a business environment that attracts massive foreign direct investments from chosen countries. As in China, high domestic manufacturing and consumption should drive the country’s economic growth and help boost the government’s coffers to concentrate on public good. In a true democratic system, no political party remains in power forever. However, the comparison of economic performance and political sincerity often help a party to return to power after a break. (IPA
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