Budget 2022: Blind to today’s challenges, Modi government promises Amrit Kaal in distant future

Poverty has significantly increased in India post Covid-19 (MIG Photos/ Aman Kanojia)

Despite the din of gushing praises showered by the numerous pro-government media as well as practically every single industrialist and business lobby that jumped as if on a cue as soon as Union finance minister Nirmala Sitharaman presented the union budget for 2022-23, a few sounds of concern over the disastrous budget that promised some ‘Acche Din’ rebranded as Amrit Kaal 25 years hence, but completely ignored the numerous existential challenges that India faces today, were clearly audible.

One of the loudest noises of protests came from the battered tourism and travel industry which has been brought to its knees by the pandemic and is yet to receive any assistance from the Indian government, while their counterparts in other countries have been fairly handsomely compensated for the near-total disruption of business.

The tourism industry roundly criticised the government for continuing to ignore their pleas for even small assistance like tax breaks. Travel Agents Association of India (TAAI), India’s premier and largest travel and tourism association, expressed deep dissatisfaction with the budget. ‘‘Our trade has suffered tremendously due to the pandemic and it was expected that the government would at least work towards positive upliftment of the travel and tourism in India, which they always portray as a priority ? In our representations to the Finance Minister over last two months, we had requested for GST input credits be made available across states for hotels and travel-tour operators,’’ says Jyoti Mayal, president of TAAI.

TAAI was soon joined by other bodies which also criticised the government for its inaction in helping them resolve their problems of the day, instead of promising them some heavenly state of affairs a quarter of century later. This despite numerous acknowledgements by Narendra Modi himself about the importance of tourism as a job-creating sector with high potential in areas without many other employment opportunities.

The government’s turning a blind eye to the travel industry is just the tip of the iceberg in the way the budget has cast aside the priorities of the country today, while making hollow promises that it says would be fulfilled but only on a 25-year timescale.

In her enthusiasm to promote the imaginary Amrit Kaal (era of nectar), Sitharaman preferred to cast aside the real problems afflicting not just millions but over half a billion people that have been hit very hard by the government’s fumbling over handling of Covid-19 and its aftermath.

Massive rise in unemployment & malnutrition

The ill-planned and poorly executed lockdown imposed by Modi in March 2020 rendered hundreds of millions of workers in the unorganised sector and the informal economy homeless and jobless and teetering on the edge of starvation as the government failed to provide necessary safety net for those with limited resources. Though the government’s data has not yet been publicised, various experts estimate that up to 6 million businesses, mainly of micro and small industries were forced to shut down. This does not include the numerous restaurants, travel firms, hospitality industry units that have also cut down by over half their workforce, numbering well over 10 million before the pandemic outbreak.

Besides MSME and the travel and hospitality industries, hundreds of millions working on daily wages such as construction workers or other informal sector jobs. So much so that most data analysts say that unemployment in India is now at the highest level in over four decades and it has stubbornly stayed significantly higher than the pre-pandemic levels, despite seasonal movement over the past two years.

All of these explain the United Nations estimates that India saw an unprecedented rise in number of people living in extreme poverty due to outbreak of poverty. The UN said that nearly half of the 97 million more people that had fallen into extreme poverty were in India, which saw at least 46 million added to its already large total of extremely poor people. At the peak of the pandemic, in 2020, the number had risen even more, as India’s headcount of extremely poor people rose from about 55 million before the pandemic to 150 million in the immediate aftermath, mainly due to the job and income losses arising from the outrageous lockdowns.

While some of the economic impact of the lockdown and job losses could be overcome over a period of time once the economy revives fully, there are many other scars that are likely to stay for very long time and the data is still coming in about these, such as sharp rise in malnutrition and stunting, where again India holds the dubious top spot in the world.

Despite the seriousness of the condition, it is a pity, if not gross negligence and malafide that Sitharaman totally ignored the ground realities and the need of urgent and immediate assistance that hundreds of millions of Indians need and mainly due to the incompetent and insensitive handling of the pandemic by the government. Indeed, all subsidies, across various sectors.

Take food subsidy, for instance. It was cut by over 60 pc last year from INR 5.4 trillion to INR 2.9 trillion and despite the data about rise in malnutrition, the allocation in this budget has been curtailed by an additional 27.6 pc this year to INR 2.1 trillion. Similarly, provision for rural employment guarantee scheme, MGNREGS, has been curtailed by 25.5 pc in this budget. Instead of extending the helping hand when it is needed, the government has chosen to spend INR 7.5 trillion of public money on infrastructure development, arguing that it would create jobs and allow economic expansion.

This thinking reeks of insensitivity as it is precisely this approach that Indian government has taken right from the moment of the pandemic outbreak, even though the governments the world over, including the most free-market of them all, the United States, opened up their purses for generous social welfare schemes, providing thousands of dollars per year in assistance to all families, while in India hundreds of millions were abandoned to their own fate by the government, whose slogan ironically was ‘Sabka Saath, Sabka Vikas’ (Progress for All, with Support of All).

Not surprisingly, the decisions taken by the government have taken their toll on the country, its people and the economy. It has also created a situation where inequality, already one of the highest in the world, has grown dramatically in India.

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According to a report by Oxfam, a charity, 84 pc of households in India saw a decline in their income in a year marked by tremendous loss of life and livelihoods, but the number of Indian billionaires grew from 102 to a record 142. Oxfam says that from March 2020 to November 30, 2021, the wealth of billionaires in India increased by over 130 pc from INR 23.14 trillion to INR 53.16 trillion. At the same time, over 46 million Indians fell into extreme poverty, taking the total of extremely poor people to over 100 million or close to 7.5 pc of the total population. “The stark wealth inequality in India is a result of an economic system rigged in favour of the super-rich over the poor and marginalised,” says Oxfam.

The charity has called for a 1 pc wealth tax on the 98 richest billionaires in India to finance the entire public health insurance scheme, Ayushman Bharat, for over seven years.

Not a healthy sign

Not only has the government failed to impose any tax on the wealthiest Indians, but it also curtailed its already measly spending on health and education, two areas where India has consistently lagged behind almost the entire world, figuring in the bottom quintile of most global data sets.

For public health, the spending this year has been slashed by a vicious 45 pc to INR 410 billion, less than INR 293 per person for the whole. This, despite the fact that India is also home to the largest number of people to fall into extreme poverty due to unexpected medical bills. Sitharaman seems to have forgotten that the pandemic is still going around the world and that even to catch up with many other low-income countries, India needs to significantly enhance its public spending on health, closer to 7-8 pc of the total GDP, instead of less than 3 pc where it stands today.

Another front where much needs to be done by the government, but which has seen little help in the budget is education, whose budget is another poor 1.3 pc of the total monies being spent by government. Once again, even before the pandemic, India struggled to catch up with even its south Asian neighbours in terms of quality of education and access to education and employment.

Various studies have since shown that the pandemic has hit the education sector like few others as the myth of online classes was finally broken and reality set in, with a cataclysmic drop in learning abilities across the country as tens of millions of students struggled to catch up with classes for two years.

It will be a few years before the true impact of continued neglect of these crucial sectors on the country and its well-being. But there is something Modi and his team ought to already know.  A “New India” that Modi does not cease to talk of needs all the healthy and well-educated youth it can muster, not hundreds of millions of malnourished and stunted children, with poor education.