• UGI USER
  • Aug 04, 2024
  • 5 Likes
  • 0 Comments

“BUDGET 2024-25: CLAIMS, CONTRADICTIONS, AND ECONOMIC REALITIES”

Syllabus:

GS-3: Government Budgeting

Focus:

The Budget 2024-25, presented by Finance Minister Ms. Nirmala Sitharaman, has sparked widespread debate due to its claims of increased expenditure, disputed unemployment figures, and handling of inflation. The contrasting data and public response have brought these economic issues to the forefront of national discourse.

source:wordpress

Increased Government Spending:

  • Claims of Increased Expenditure: The FM argued that the government is spending more money under each head of expenditure, indicating good governance and benefiting all sections of people.
  • Comparison with Previous Years: She presented numbers showing increased expenditure compared to 2013-14, 2019-20, and 2023-24.
  • Real vs. Nominal Terms: The FM’s numbers were in gross prices, not constant prices, which can be misleading.
  • Unspent Allocations: Several allocated funds were not spent in 2023-24, with no explanation provided.
  • Proportion of GDP: Enhanced expenditure claims are only relevant if expressed as a proportion of total expenditure or GDP.
Understanding Union Budget:

Definition:

  • Union Budget: Annual budget of the Government of India, also known as the Annual Financial Statement.
  • Presenter: Budget Division of the Department of Economic Affairs (DEA), Ministry of Finance.
  • Components: Annual Financial Statement and Demand for Grants.

Revenue Budget:

  • Revenue Receipts: Expected government revenue from citizens.
  • Revenue Expenditure: Government expenses for daily functioning and public services.

Capital Budget:

  • Capital Receipts: Loans raised by the government for long-term needs.
  • Capital Expenditure: Government expenses for creating long-term assets and welfare facilities.

Key Features:

  • Revenue and Expenditure: Details on government revenue sources and planned expenditures across various sectors.
  • Policy and Plans: Introduction of new policies, schemes, and reforms for economic and social development.
  • Parliamentary Approval: Rigorous examination, discussion, and approval by both houses of Parliament.

Interim Budget 2024 Highlights

  • Growth: Indian economy projected to grow at over 7%.
  • Reforms: Emphasis on ‘reform, perform, and transform’.
  • Revenue Receipts: ₹30.03 lakh crore higher than budget estimate.
  • Tax Collection: Increased number of tax filers and tripled direct tax collection.

Performance of Key Schemes:

  • PM Awas Yojana (Gramin): Target of 3 crore houses achieved; aiming for 2 crore more.
  • Lakhpati Didi Scheme: Enhanced target from 2 crore to 3 crore women.
  • Pradhan Mantri Matsya Sampada Yojana: Doubling of seafood exports; aiming for 55 lakh jobs and ₹1 lakh crore in exports.
  • PM Kisan SAMPADA Yojana: Benefited 38 lakh farmers and 2.4 lakh SHGs.
  • Constitutional Provisions for Union Budget:
  • Article 112: President presents the annual financial statement of estimated receipts and expenditures to Parliament.
  • Article 113: No demand for grants without the President’s prior approval in Lok Sabha.
  • Article 114: Withdrawal from Consolidated Fund only with Parliamentary authorization.
  • Article 266: Revenue credited to Consolidated Fund; provident fund, Postal insurance to Public Account.
  • Article 267: Parliament sets up a Contingency Fund for unforeseen expenditures.

Unemployment Issues:

  • Government’s Stance: The FM claimed that the government’s policy of saksham, swatantra, and samarth had reduced unemployment to 3.2%.
  • Contradictory Data: Government reports showed job creation, but CMIE data estimated current unemployment at 9.2%.
  • Disproportionate Job Applications: The high ratio of applicants to available jobs, such as UP Police Constable Recruitment and SSC, contradicts claims of low unemployment.
  • Highly Qualified Applicants: Engineers, management graduates, and post-graduates applying for constable or clerk positions indicate severe underemployment.
  • Real-Life Assessment: The FM suggested walking the streets to understand the actual unemployment situation.

Inflation Concerns:

  • Historical Comparison: The FM criticised the UPA government’s high double-digit inflation between 2009 and 2013, attributing it to poor economic management.
  • Current Inflation Rates: She did not address current inflation issues, with prices of essential commodities rising significantly.
  • Wages Stagnation: Worker wages have stagnated over the last six years, worsening the inflation impact.
  • Lack of Mitigation Measures: No proposals were made to reduce administered prices, taxes, or increase minimum wages to mitigate inflation.
  • RBI’s Bank Rate: Despite claims of admirable inflation management, the RBI has kept the bank rate at 6.5% for 13 months, indicating persistent inflation concerns.

The Budget’s Reception:

  • Cold Reception: The Budget received a cold reception from the average citizen, reflecting widespread scepticism and caution.
  • Cheerleaders’ Response: Even traditional supporters of the government were cautious and sceptical about the Budget’s impact.
  • Lack of New Ideas: The FM’s reply lacked new ideas to address pressing economic issues like inflation and unemployment.
  • Public Sentiment: The FM’s dismissive approach did not resonate with the public’s current economic realities.
  • Unchanged Perceptions: At the end of the FM’s reply, there was no significant change in the understanding or perception of the Budget’s impact.

Challenges:

  • High Costs: The prohibitive costs of targeted cancer therapies remain a significant barrier for many patients, limiting access to life-saving treatments.
  • Limited Insurance Coverage: Many insurance policies do not fully cover modern cancer treatments, leaving patients to bear substantial out-of-pocket expenses.
  • Accessibility: Geographic and economic disparities mean that advanced cancer treatments are not equally accessible to all patients.
  • Side Effects: Even with newer drugs, managing side effects remains a challenge, necessitating additional therapies and costs.
  • Awareness: There is a lack of awareness about affordable generic alternatives and patient support programs.

Way Forward:

  • Subsidies: Increased government subsidies and funding for cancer treatments can help reduce the financial burden on patients.
  • Insurance Reforms: Expanding insurance coverage to include modern cancer treatments can make them more affordable and accessible.
  • Telemedicine: Utilising telemedicine can improve access to cancer care, especially in remote and underserved areas.
  • Education: Public awareness campaigns about generic drugs and support programs can help more patients access affordable treatments.
  • Research: Investing in research for cost-effective cancer treatments and management of side effects can improve patient outcomes.

Conclusion:

The FM’s Budget presentation and subsequent replies have highlighted significant issues regarding government spending, unemployment, and inflation. While efforts to increase expenditure are evident, the real impact on the economy and citizens remains debatable. Addressing these challenges requires a multifaceted approach involving policy changes, public awareness, and targeted reforms.

Source: The Hindu

Mains Practice Question:

Critically analyse the claims made by the Finance Minister in the Budget 2024-25 regarding increased expenditure, unemployment reduction, and inflation management. Discuss the underlying challenges and suggest measures to address these issues effectively. (250 words)