How Indian Citizenry May Look At The Union Budget 2022-23?

In this paper an attempt has been made to objectively reflect on the Budget 2022-23 trying to gauge how an average Indian citizenry may be looking at the Union Budget 2022-23. The idea is to pragmatically make out whether an average citizenry feels hopeful, or feels disappointed, or feels frustrated, or feels indifferent to the main proposals and discussions in the Budget 2022-23.

Nature of the Current Budget

In overall assessment, to an ordinary citizen, this budget seems to be a lackluster budget without any big bang approach or any game changing initiative. The budget to an ordinary mind, seems to be hardly influenced by the imperatives of the assembly election in the five Indian states. Some of the people, including those justifying the budget, are saying that having no new tax proposal in the budget, in itself constitutes an important merit of the budget. If that is the belief, one can only feel sorry at the insensitivity of such assessments.

Politics of the Budget

Why did the central leadership of the current ruling dispensation decide not to make it an election budget? This brings us to the politics of the budget. And this question is quite enigmatic and makes all of us think and think. The situation is perhaps not clear. Maybe the ruling dispensation thinks that economics does not determine the election results. Maybe they think that their victory is assured and they need to preserve this bonanza either for 2023 or 2024 budget, nearer the general election. Or they are just not bothered because of their monumental and Himalayan arrogance bolstered by their huge numbers currently both in the Lok Sabha as well as in the UP Assembly. Or maybe they are thinking that what has to happen, the signal for the same is clear enough and there is no need to waste the fiscal resources on the same and it is better to preserve the same for “distributing the bonanza” nearer the next general election. What else can be better personification of the authorities, even not bothering to make a kind of holding out a promise in the budget which would have made the average public happy without spending any new money, that is, making a promise of filling up the vacant central government posts of about 9 lakhs within a year. This shows that the makers of the budget are somewhat overconfident and do not seem to be bothered about making any overtures despite the terrible and historic unemployment situation and the recent unrest being widely witnessed among the unemployed youth in Bihar and U.P.

Positive Claims of the Budget

The positive claims of the budget is basically premised on about 24.5% increase in 2022-23 BE over 2021-22 RE in capital expenditure (CAPEX) which means 35% increase in 2022-23 BE over 2021-22 BE. This is certainly a welcome move. But this has three important riders. One is that this CAPEX has to be front loaded to a good extent which is mostly not the case. Second, to be effective and efficacious, this amount has to be actually spent, as in many cases, a huge portion of the increased allocation remains unspent as is evident from the CGA’s monthly data on central government receipts and expenditure. Thirdly, the CAPEX has a gestation period of its own, especially in raising employment and smartness in implementation, that is, smart spending happens to be an important factor, especially avoiding cost and time overruns. Some parts of CAPEX has employment and demand boosting effect, but not all of them. So the substantial increase in CAPEX itself, may not be able to bring the desired effect in terms of generating sufficient employment and boosting demand unless the same is backed by smart implementation. And the efficacy of the loan amount of the CAPEX to states and its direct impact on boosting employment and demand in the states, may be questionable.

If we look at the total expenditure, it shows a marginal growth of 4.6% in nominal terms which will in effect show a negative growth with inflation being more than 5%.

Effect of Pandemic on India’s GDP

We have lost about 10% to 12% of GDP due to the pandemic in the two years (2020-21 and 2021-22). The growth of 8 to 8.5% for 2022-23 as projected in the Economic Survey 2021-22, may not be possible because the budget document itself projects 11.1% growth in nominal terms with an inflation level of say 4% (which itself seems to be terrible under estimate). So the GDP growth for 2022-23 in constant prices, as per Budget 2022-23, may in reality be something like 7%. So that is something like the pre-pandemic GDP level seen in 2019-20. So the economy has to first restore the lost growth of about 10% to 12% experienced during the pandemic years of 2020-21 and 2021-22.

Increase in Tax Receipts

We are making much gung ho about the increase in tax receipts during 2021-22, including that of GST. However, we should not feel so elated about the same. This is so because much of the increase in GST is due to huge increase in imports (GST on imports), significant price rise during 2021-22 raising the tax liability for different types of taxes, continuous increases in duties on oil and significant increases in the incomes of the big corporates fashioned by pocketing the gain due to the reduced corporate tax bonanza given by the government without increasing investment and the hugely reduced operational costs of these big corporates at the time of pandemic brought about by retrenchment, cuts in salary and significant reduction in rental and electricity costs. And all this happened when the output dwindled, sales decreased and poverty level significantly increased.

Fiscal Deficit

One good thing is about the projected fiscal deficit of 6.4% in 2022-23 BE compared to 6.9% in 2021-22 RE. This projected reduction of 0.5% in the fiscal deficit, is indeed welcome. How far this is actually achieved, one will know only at the 2022-23 RE or Actual stage. And we know by our hard experience that the performance as per the Actuals is generally much lower than what is targeted at BE stage.

Road and CAPEX Budget

In case of the significant increase in roads and highways budget also, we will have to see how much of that is actually achieved.

Coming to CAPEX and road and highway construction once again, we need to bear in mind that a good part of such projects will get completed only in the medium term and we will have to wait for some time for their results to be seen on the ground in terms of increase in private consumption expenditure and spike in employment. We also need to bear in mind that a good part of CAPEX may not actually help to increase employment. What will help in terms of significantly increasing employment, is largely labor intensive manufacturing. And that has received a rude shock due to significant disruptions and rupture of the MSME sector during the pandemic and this sector continues to suffer very heavily and needs urgent and serious attention for its steady revival.

Areas That Should Worry The Citizenry

Let us now come to some of the areas which should worry the citizenry.

Only about 8% of the disinvestment target has been achieved during 2021-22 which means that we have missed the target by 92%.

There has been reduction in the outlay for Medical & Public Health by 45% in 2022-23 BE compared to 2021-22RE.

Vaccination outlay for 2022-23 BE has gone down to Rs.0.05 lakh crore from Rs.0.37 lakh crore in 2021-22 RE as if the fear of the pandemic is going to disappear. Should we not remain prepared by bolstering our arsenals to effectively and systematically fight the menace of pandemic? This reality makes one feel worried.

The allocation for the Union Ministry of Rural Development is down by 16.9%

Defense expenditure has been increased by only 5% nominally which hardly takes care of the price rise.

We thought that in view of the huge increase in urban unemployment, the government will start an urban component of MGNREGS. But unfortunately that has not happened.

Food subsidy allocation is down by 27.8%, fertilizer subsidy allocation is down by 24.9% and petroleum subsidy allocation is down by10.8%.

MGNREGS allocation is down by 25.5%. Increases in allocations for PM Awas Yojana, PM Fasal Yojana, AMRUT and Smart Cities Mission, PM Krishi Sinchai Yojana, SC & ST are so meager that if we take into account price rise, all of them will find themselves in the negative category.

What Happened To Earlier Promises, Targets and Commitments? Are We Sincere or Accountable Enough?

If we read Late Arun Jaitley’s 2015 and 2016 budget speeches (especially 2015 budget speech), the government made very tall promises (paragraphs 16 and 17 of the 2015 budget speech and paragraphs 13 to 21 of the 2016 budget speech) about the doubling of farmers’ income, drinking water to each house, housing for every family, one job for each family, 24 hours of electric supply to each house and whole lot of other social and infrastructural facilities. These targets were to fructify by 2022 or so, that is, the 75th year of Indian independence when Amrit Mahotsav will start. No details are there in the current budget about the above targets, especially as to where we stand now with respect to these targets to be achieved by 2022 or so, more particularly, the doubling of farmers’ income. Again on integrating postal banking with the overall banking system, this intention was announced in paragraph 37 of the 2015 budget speech and now in 2022, that is seven years after, the current FM repeats the same intention or target in her current budget speech which was announced seven years back in the then Finance Minister’s budget speech. The citizenry obviously stands quite perplexed and confused as to what happens in 2022 to the accountability, in terms of these specific targets and commitments, most of which were to fructify by 2022.

Hardly Any Concern Expressed in the Budget About Worrying Inflationary Situation in the Country

There is hardly any mention of the terrible inflationary situation in the budget when WPI inflation reached double digit during 2021-22. How do we justify this huge miss, is a moot and disturbing question.

Amrit Kal and Difficulty To Access the Budget Data Easily

The current budget speech talks about the “Amrit Kal” for India for the 25 years period of 2022 to 2047, highlighting many of the things to be achieved by the time India will be 100 years as an independent country. So may be the Government expect enough patience from the citizens of the country for the coming 25 years. The nation has successfully done away with the planning process and the planning commission and now they want the nation to plan for 25 years. Many of the Indian citizens will not be there or they will be too old by 2047. To expect the citizens to live and work happily, waiting very patiently for that beautiful day to dawn in 2047, sounds to be too long an order to expect!!

Even after the Economic Survey and the Union Budget had become digital during the last few years, in the Union Finance Ministry and PIB websites all the details used to be easily available. Now alas, it is no more so. We have to find some App or particular website which is not easy to access, to find out the budget information, which used to be so easily available earlier. Maybe they do not want the ordinary people to get the budget details easily. The budget now being paperless, making access difficult, also makes it more difficult for citizens to check revenue and expenditure details readily.

Hope Continues Despite Odds

Optimism of the Indian citizenry, however, still continues despite the situation being not so encouraging. The citizenry, badly ruptured by the onslaught of the pandemic, still hopes and aspires that our beloved country and our hapless poor and weakened middle class, will see better and brighter days in the coming years. And with this hope and expectation the citizenry lives his or her each day, endlessly, eagerly, anxiously, patiently and prayerfully waiting for a better and brighter tomorrow. Hope, pray and wish that better tomorrow dawns on Indian citizenry in not too distant a future in the same way as goes the popular Hindi song of yester years “Woh Subaha Kabhin To Ayegi”!!

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