Across the aisle by P Chidambaram: Budget abandons the lesser gods-2

I am usually sceptical of bare promises made by a government; I prefer a time-table towards implementing the promises and a performance report at the end. Here are examples of the promises made by Mr Narendra Modi or his government since 2014, none of which has been achieved.

• Economy will double to $ 5 trillion by 2022, says Modi – The Hindu, September 20, 2014
• In 2022 every house in India should have 24 x 7 electricity: PM Modi – Business Standard quoting PTI, September 4, 2015 
• Every Indian will have house by 2022: PM Narendra Modi – The Indian Express
• PM promises farmers income doubling by 2022 – The Hindu, June 20, 2018 
• Bullet Trains To Be Reality In India By 2022, Says Narendra Modi To Indian Diaspora In Oman – info.com, photograph, ‘last year, Modi and his Japanese counterpart Shinzo Abe’

I wonder if 2022 is behind us or ahead of us?

Money is absolute numbers

Budget 2025-26 also contained many promises including 7 Schemes, 8 Missions and 4 Funds. There was no allocation of money for many of these schemes and missions. Naturally, during the debate on the budget, the Hon’ble Finance Minister (FM) was questioned by many MPs on the budget numbers.

Budget is about money, and money is allocated and spent in absolute numbers. The FM took cover under ‘proportions’, not absolute numbers. For example, she admitted that her income tax relief of Rs 1,00,000 crore to income-tax payers 

included the relief given to the rich (annual income over Rs 1 crore), the very rich (> Rs 100 crore) and the super rich (> Rs 500 crore), but explained that she had given proportionately small relief to the rich! The question that she did not answer was ‘why do persons who have an annual income of Rs 1 crore to Rs 500 crore deserve any relief at all? Every economic decision involves the principle of equity and morality. The Modi government had, long ago, abandoned that principle and the FM dutifully followed her leader while giving ‘tax relief’.

The FM adopted the same technique while explaining the cuts in capital expenditure. The ‘cuts’ are real:

                                  (in Rs crore)

Undeniably, in 2024-25, the central government’s capital expenditure was cut by Rs 92,682 crore and the grants to states for capital expenditure were cut by Rs 90,887 crore.

FM denied there were any cuts as a proportion to GDP and asserted that the budget estimates (BE) for 2025-26 were higher. Assuming that the estimates for 2025-26 were correct, what is the guarantee that there will not be cuts in 2025-26 too? Will the promised grants to the states to create capital assets in 2025-26 not be cut as it was done in 2024-25?

Equity, morality discarded

Where did the cuts fall? Taking into account both capital and revenue expenditure, the major cuts in 2024-25 were in critical sectors:

(in  Rs crore)

Health: Rs 1,255

Education: Rs 11,584

Social Welfare: Rs 10,019

Agriculture: Rs 10,992

Rural Dev: Rs 75,133

Urban Dev: Rs 18, 907

Employment generation: Rs 8,283

Who is hurt most by cuts in expenditure on the above heads? The poor. Who benefits by the FM’s generous income tax relief? Not the poor.

If the FM had desired to uphold equity and morality, she could have given tax relief through a cut in the GST rates or cut in the taxes on petrol and diesel. Or she could have to put more money in the hands of the people by increasing the MGNREGS daily wage or raising the statutory minimum wage in every kind of employment across the board.

Ridicule was the reply

The FM started her reply in the Rajya Sabha at 4 pm. The MPs are aware of her debating style and she did not disappoint them. At 5.20 pm she took a swipe at Manmohan Singh ridiculing his wisdom and his vision of 1991, and concluded that his ten years as prime minister marked a “lull” in reforms. At 5.30 pm she ridiculed the poor when she said, “No poor Jaya (Bachchan)! All of you are poor; I am also poor”. A few minutes later, she ridiculed Mr Raghav Chaddha, MP (AAP): “Am I really right in thinking that you are a Chartered Accountant?” A minute after 6 pm, the FM completed her reply.

Not a word on the rising unemployment rate or the shrinking manufacturing sector. Not a word on inflation, stagnant wages or mounting household debt. Not a word on the budgeted but unspent money in the education and healthcare sectors. Not a word on the status of the scheduled castes or scheduled tribes. Not a word on the bottom 50 percent of the population of India. Not a word on the poorest of the poor —14.96 per cent of the population (or 21 crore) according to UNDP. To PM Narendra Modi and FM Nirmala Sitharaman, the poor do not exist.

May the lesser gods forgive them.