Budget 2024’s botched borrowing of ideas leaves India without the impetus it needs
The Union Budget reflects poorly on the Modi government, favoring politicking over nation-building. It neglects crucial areas like rural development, health, and education. Unemployment is finally back on the agenda, but key initiatives are poorly executed. The budget seems more like a political move than a plan to address the nation's needs.
The Union Budget is not merely a statement of accounts — it is a declaration of the nation’s economic priorities. By this yardstick, this budget reflects poorly on the Narendra Modi-led government and bodes ill for India’s political and economic future.
The budget highlighted the government’s preference for politicking over nation-building. States where the National Democratic Alliance did well in the Lok Sabha Elections — Andhra Pradesh and Bihar — were massively preferred over states where the Opposition did well, e.g., Maharashtra and Haryana. Natural calamity relief flows to Bihar, Assam, Sikkim and Uttarakhand, all NDA-ruled; only Congress-ruled Himachal Pradesh is the exception. The government’s duty is to provide support to all of India based on objective criteria rather than to single out states where it is in power.
The budget speech made no mention of the Railways. At a time when there have been several tragic incidents and railway services are in shambles, this should have been top priority.
Rural India did not get its due. MGNREGA’s budget has remained stagnant at ₹86,000 crore despite huge demand for work, indicating significant unemployment and economic distress. Allocations for crop insurance and urea subsidy have been reduced. Agriculture’s share in the overall budget has declined from 4.97% in 2019-20 to 2.74% in 2024-25. Lofty commitments such as extending natural farming to 10 million farmers and using digital public infrastructure for agriculture are hardly likely to yield substantial, tangible results. The Prime Minister (PM)’s promise of doubling farmers’ incomes remains a distant dream.
A key budget priority is ‘Inclusive Human Resources Development.’ Yet welfare is glaringly neglected. The word “children” was not mentioned once. Health expenditure as a proportion of the GDP remains stagnant; the government is far from the goal of spending 2.5% of the GDP on health. Food subsidy has also been reduced.
Skilling initiatives were highlighted. However, so far, various skilling initiatives have failed to deliver. There was no mention of primary or higher education in the budget speech. Sad, given that 3.5 million children dropped out in the academic year 2021-22. Without investing in social welfare and human development, how is the government to transform future generations, another of the budget’s priorities?
The budget’s most important achievement is that it signifies the return of unemployment as a focus of the government’s policy making. Bizarrely, unemployment has been missing from the agenda for the last few years — it has rarely shown up in budget documents, the BJP’s election manifestos, or the PM’s speeches. The debacle of June 4 appears to have stirred the government to pay attention to this challenge.
Two key initiatives have been borrowed from the Congress’s Nyay Patra for the 2024 Lok Sabha elections: the internship programme, and Employment Linked Incentives. Unsurprisingly, both have been adopted rather poorly.
The Nyay Patra envisioned a Pehli Naukri Pakki scheme, which guaranteed a year-long paid apprenticeship to all college graduates and diploma holders. The budget’s internship programme, which promises to deliver internships to 10 million young people at 500 top companies over the next five years, is inspired by this idea. But it botches up the policy. Rather than make the scheme a universal guarantee for educated youth, it promises 10 million internships — simply for the gimmick value of the number. Similarly, rather than taking a comprehensive economy-wide approach, it needlessly limits itself to the top 500 companies. These top 500 companies are not the only ones who can provide quality apprenticeships — nor are they the ones actually in need of interns. Further, allowing firms to redirect Corporate Social Responsibility (CSR) funds towards partial funding of internships will save the government some funds, but it detracts from those corporations’ other responsibilities to society. Employment Linked Incentives were also proposed in the Nyay Patra 2024, as a way for “corporates to win tax credits for additional hiring against regular, quality jobs.” The budget adopts the idea, but rather than delivering ELIs through tax credits, delivers them through reimbursements for EPFO contributions. This delivery mechanism is effectively a subsidy on wages for these employed workers. Employment-linked rebates on taxes — rather than the blanket corporate tax cuts which were announced a few years ago and failed to deliver investment or jobs — would have been a more compelling incentive for firm owners and proprietors to expand hiring.
The middle class did not get much of a respite. The budget only tinkers with and has made no major changes to the income tax slabs. This ignores the increasing inflation burden faced by the average taxpayer over the last decade. Removal of indexation is an unnecessary intervention that will hurt millions of families who invested in real estate assets over the years.
There are a few silver linings. The scrapping of the angel tax will help our start-ups. Unachievable disinvestment targets were left out. Rhetorically, MSMEs have returned to the government’s agenda.
Overall, this budget can be termed a kursi bachao budget and a Congress manifesto “copy-paste”. It shows that the Modi government has again failed to put its finger on the pulse of Indians who are hurting. It is a massive let down from a government that is running out of steam.
Rajeev Gowda is a former member of Parliament, and chair, AICC Research Department The views expressed are personal