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Prof Venkatesh Athreya, an economist and adjunct professor at Asian College of Journalism, has termed the union government’s Budget 2023 presented on February 1 as a non-budget. In an interview given to inmathi.com, he called the budget an exercise in which only big corporations, the affluent and the influential had a big say, not ordinary people such as farmers and the working class.
Asked generally about the budget’s basic features and its impact on the country’s economy, Prof Athreya said that the budget was only one of the government’s economic policy instruments among many others but that the annual affair is blown out of proportion by the media. As for its content, it is not substantive, he adds. Its core is a statement of estimates of revenues and expenditures in the pipeline. Moreover, the budget speech is different from the budget presentation; it’s more of a political and media event.
While presenting the budget, the government cannot ignore economic ground realities prevailing across the country. In fact, the country’s wealth is concentrated in the hands of only a few super-rich people, both Indians and non-resident Indians. It is they who dictate the terms for the budget and dominate the proceedings of what is called the pre-budget consultation that is more drama than a serious exercise in which ordinary people have no role at all, says Prof Athreya.
Our country’s economy is intertwined with global economic trends since liberalisation was introduced in the early 1990s, and has intensified in the past two decades of this millennium. “Our economy is now so globalised that if America sneezes, we will contract fever,” Athreya jokes.
Generally, the budget is only one of the government’s economic policy instruments among many others but that the annual affair is blown out of proportion by the media. As for its content, it is not substantive
While the official budget is presented on the heels of an economic survey every year, an unofficial budget goes on in parallel without consulting Parliament or any think tanks. That is, petrol prices and excise duty are hiked; GST was introduced and demonetisation fell on us like an axe. These are part of an unofficial budget, he says.
Explaining the nuances of the budget, Athreya says there is a difference between budget estimates, revised estimates and actuals. For instance, for the financial year 2023-24 the Union Finance Minister presented budget estimates of revenue receipts and expenditure, that is, she has presented just proposals for the 2023-24 FY along with revised estimates for FY 2022-23 and also the actuals. So, it is a two-year-long exercise. The actuals we have now are for the FY 2021-22. The union government says there has been a rise in the expenditure as the actuals show. But considering the 7 per cent inflation, the expenditure has remained the same.
The difference between budget estimates and revised estimates and the difference between the revised estimates and the actuals has been widening for the past few years. “It shows the financial instability of our country. But we should make an allowance for the declining global trend also. The international economic crisis, our country’s price rise and the mounting interest rates on the loans India has taken from global agencies have all contributed to the economic downswing in the country,” he says.
Yet India has managed to rebound and achieve 7 per cent growth rate. The ruling politicians have projected this as a great achievement of the government, branding India as a bright star among countries in the world. But there is no logic in their claims. For, after the GDP and growth rate slid in 2019 and 2020 when the pandemic played havoc with the economy, the country started recovering in 2022. The growth rate of 7 per cent is shown as if the country has leapfrogged to this growth rate from ground zero. “We, economists, call this ‘recovery growth rate’,” Athreya says, lamenting that there is a general uncritical attitude towards our poor economic condition.
As for individual income tax exemption level raised to Rs 7 lakh in Budget 2023, he says that salaried individuals’ income is based on work whereas the corporates and super-rich capitalists’ revenue is based on possessions. Raising the individual income tax exemption level to Rs 7 lakh will entail a loss of Rs 35,000 crore, the Finance Minister has claimed. But under the new tax regime, you cannot claim tax rebate for your housing loan, insurance investment etc he pointed out. So, this new tax exemption in the present budget proposals does not make any difference to most individual income tax payers, he says.
Compare this to the great concessions given to corporates in 2019 when recession hit the country. Corporate tax was reduced from 30 per cent to 22 per cent, entailing a loss of Rs 1.45 lakh crore to the government. Subsequently, corporates in various trades including real estate were given tax concessions. The total value of all these tax concessions given to the super-rich few over the years since 2019 amounts to a whopping Rs 3 lakh crore.
The country’s wealth is concentrated in the hands of only a few super-rich people, Indians and non-resident Indians. It is they who dictate the terms for the budget and dominate the proceedings of what is called the pre-budget consultation
But the government justified it, saying that big private corporates must be given concessions so their growth will generate employment opportunities for people and thereby the country’s economic condition will improve. But it owes an explanation to the people on the question what better economic results have been achieved thanks to the sops given to the corporates.
On the one hand, there are tax concessions given to the super-rich and on the other the government is faced with a huge deficit. So, it has no other choice but to tax common people. So the majority, including the middle-class are bombarded with hikes in petrol and fuel prices and GST.
Meanwhile public sector units (PSUs) are faced with losses running up to Rs 3 lakh crore as well.
If you join all these dots, you can find the links inherent in them and come to a conclusion that the majority of people are suffering for the wellbeing of the super-rich minority.
The government has been trying to sell off PSUs, which are actually the people’s assets, in order to tide over the economic crisis. Hence, we see public sector units such as SBI, LIC pushed into the gambling game in stock markets and losing public money to alleged fraud committed by corporates such as Adani group.
There have been times when the government was quite scrupulous in its duties and responsibilities of providing good education to the people and creating more healthcare facilities. But gone are those days. Nowadays, as a corollary of the super-liberalisation of the economy, doors are opened wide to the private sector. “If you are financially comfortable, you can go to private hospitals for clinical treatment of your diseases, and for education go to private institutions.” This has become an unwritten law in present times, Prof Athreya says. Privatisation is the buzzword in the age of liberalisation, he remarks.
Talking about tax revenue, he says the government earns much more from indirect taxes such as GST rather than direct taxes (just six per cent) such as income tax of which corporates and common taxpayers each account for Rs 9 lakh crore. So, the government prides itself on record GST collections. Only one-third of indirect taxes come from corporates while two-thirds comes from common people, he pointed out. The total revenue from taxes for both union and state governments is not more than 16 per cent of GDP, he adds.
Raising the individual income tax exemption level to Rs 7 lakh will entail a loss of Rs 35,000 crore, the Finance Minister has claimed. But under the new tax regime, you cannot claim tax rebate for your housing loan, insurance investment etc
Athreya says the country has been running on a trade deficit. Since its imports have exceeded its exports, the trend has caused a current account deficit in the balance of payments (BoP). Of course, the exports in service and IT sectors have improved. Yet this export growth is not enough to tide over the deficit in the BoP position – as the deficit has crossed the permissible level of 3 per cent of GDP.
Asked if the MSMEs have anything to cheer about in the Budget 2023 estimates’, Athreya says there is nothing at all.
The economic survey, prepared as it was by economists, has pointed out all these problems. But the budget presented by the Finance Minister seems to obfuscate them. Criticising the minister for glossing over issues and instead trying to make the speech sound fancy peppered with Sanskrit phrases, Athreya says the Finance Minister would do well to translate it all to all Indian languages. In conclusion, he terms Budget 2023 as shallow and superficial non-budget.
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