Budget FY22, Have The Poor Been Ignored?

The budget for India was presented by the Financial Minister of India, Nirmala Sitharaman on the 1’st February 2022. The budget seeks to lay the blueprint for the country for the next 25 years and steer the economy over Amrit Kal. The transition from India@75 to India@100 starts this year. 2022 was a year with expectations. Previously statements such as ‘every Indian will have access to proper housing, clean water and electricity’ were made. Smart cities and bullet trains were to be made a reality and an estimate of 100 lakh crores had to be invested in development of such infrastructure. Not having fulfilled any of these promises, new promises were made.

This year’s budget has four areas of focus. 1) PM-Gatishakti 2) Inclusive Development 3) Energy Transition & Climate Action 4) Financing of Investments. The PM-Gatishakti has 8 divisions. Roads, Railways, Airports, Ports, Mass Transport, Waterways and Logistics. I personally feel new terminologies are being used to create more confidence in the government. But do not get swayed away these promises as the government is rather experienced in setting quite ‘overambitious goals’.

A few beneficial aspects of this year’s budget include the increase of capital expenditure of 35% to 7.5 lakh crores. The investment will be focused on inducing demand for services and manufactured inputs form large, micro, small and medium enterprises (MSME’s) to help farmers with better infrastructure. New cargo terminals under PM GatiShakti enhance competitiveness of the Indian industry by lowering down costs of transportation and bettering the connectivity between production centres and consumption markets, global & domestic. The increased capital expenditure is also said to help in boosting employment. National highways are also to be increased to 25000 KM.

Moving on to the sectors where a significant reduction in the allocation of the budget has been witnessed. Firstly, the budget for MGNREGA is reduced by a whopping 25% from 98000 crores to 73000 crores. A reduction of food subsidies by 27% from 2.99 lakh crores to 2.07 lakh crores is also recorded. Subsequently there also has been a cutback in the fertiliser and petroleum budget by 25%. Even after such substantial changes in the budget allocation, no concrete explanation has been provided for these actions. The most sizeable change has been in the mental and public health budget where a fall of 45% from 5.25 lakh crore to 4.78 lakh crore has taken place. The justification stated for this adjustment is that because the covid vaccination has already been developed, there is no need for such a funding allocation. The defence budget has also shrunk by 10%, from 5.25 lakh crore to 4.78 lakh crore.

But on the brighter side, the budget allocation for sports has been bumped up to 3000 crores. The government is shedding more light on mental health than previous years. The concept of digital university is also being worked upon. One class one channel is being promoted by expansion of TV channels from 12 to 200 so that supplemental education can be provided in every regional language to make up for the losses in education midst lockdown.

The financial well-being of a common man took serious hit during the pandemic. Many studies are conducted to prove that if economic growth must be revived, the middle class must be focused upon. Only if the demand from the masses increase will the supply rise. But no support from the government has been shown on this matter. Another aspect which wasn’t changed at all in the budget were the tax slabs. Government supporters argue that the tax levels weren’t increased but if looked deeper, inflation is rising and each year the value of money is decreasing. The tax slabs are the same, the average inflation rate is 6-7% each year. The cost of commodities keeps on rising but the salary one earns remains the same. The tax levied on one’s salary remains the same but if the tax slabs aren’t modified according to inflation, it would mean each year the government is charging more tax on one’s income. Where more tax is being charged from the middle class / poor, the corporate tax is decreasing every preceding year. The neglect for the weaker sections of the is surprisingly visible in this year’s budget.

This year’s budget has not been shy by any means in lowering the budget in sectors where development seems rather crucial. But the question lies, is the government really using the additional money earned from reduced subsides and taxation, is visible development REALLY happening?