The problem of moving attention away from services

In the absence of gainful employment opportunities and the looming job crisis, the continued neglect of the social sector exacerbates the perpetuation of inequalities

In her speech, the Finance Minister focused on the government’s broad achievements over the last 10 years and also gave some indications for what might be in store in the coming years, in terms of new expenditures (assuming that the NDA comes back to power). The Budget, a vote on account, did not include major announcements on the revenue or expenditure accounts. Unlike the interim Budget presented by this government before the 2019 general elections, where the PM-KISAN scheme was announced with retrospective effect, there were no grandiose announcements this time. Therefore, although the Budget does not say much, it reiterates this government’s view that the economy is on the path to recovery and gives the impression that everything is in an upswing, with much of the progress being a direct result of the policies of the last 10 years.

The Finance Minister said that 25 crore people have been brought out of multidimensional poverty (MPI) in the last 10 years. The limitations of the MPI in estimating changes in poverty have been discussed extensively. For instance, the MPI does not tell us about the trends in income poverty, a useful indicator of economic well-being. While this used to be captured by the consumption expenditure survey of the National Sample Survey, no data on this are available for the period after 2011-12. The further claim that the “average real income of the people has increased by 50%” is also misleading. Average incomes are just that — averages — and do not tell us much about how the lives of the poor changed. To know about the incomes of the majority of the people, what really matters is the distribution of the national income.

According to the last Economic Survey, the real per capita income in 2003-04 was ₹42,995 and increased to ₹68,572 in 2013-14. The advanced estimates for 2023-24 place per capita income in 2011-12 prices at ₹1,04,550. So, in both periods, the per capita increased by a similar factor of 1.5 (1.59 and 1.52). On the other hand, if we look at real wages during this same period, there has been a stagnation. As reported in a recent report by an international periodical, “In 2004-05 the average rural worker earned an adjusted $3 per day. That jumped to $4.80 by the time Mr. Modi took over and has remained flat ever since”. There is other evidence to show that the incomes of the poor are depressed. This is also reflected in the poor growth in private final consumption expenditure. Structural change in employment is seeing a reversal with the share of agriculture in total employment going up, which is an indication that there are not enough jobs available outside of agriculture. Even the increase in women’s labour force participation rates in the last 4-5 years seems to be a sign of distress, as most women are in unpaid family labour and not in gainful employment. The Budget speech, however, was fairly upbeat; it stated, “People are living better and earning better, with even greater aspirations for the future”.

The demand for jobs under MGNREGS is still high despite the low wages being given and the various bottlenecks in accessing the Scheme. This is reflected in the fact that as per the Revised Estimate (RE) for 2023-24, the outlay for MGNREGS is ₹86,000 crore (compared to the Budget Estimate of ₹60,000 crore), which is also the budgeted allocation for FY2025. A number of estimates show that to meet the full demand and increase wages to at least minimum wage levels, much more would be needed.

The Budget allocations for most social sector schemes and departments remain more or less the same as last year. The allocations for school and higher education as well as the health and family welfare departments show some nominal increases compared to last year’s BE, about 6-8%. Although upgradation of Anganwadi centres was mentioned in the speech, the budget for Saksham Anganwadi at ₹21,200 crore is slightly lower than the RE of ₹21,523 crore for 2023-24. The budget for PM-POSHAN (school mid-day meals) is ₹11,600 crore compared to the RE of ₹12,800 crore for 2023-24. It must be remembered that in real terms, most of these schemes have seen reductions of 25-30% over the last 10 years. The allocation for the National Social Assistance Programme, which includes old age, widow and disability pensions, in nominal terms, was ₹10,618 crore in 2014-15 and is now only ₹9,652 crore.

This approach of moving attention away from provision of services has also meant neglect of basic education, health, and nutrition services with all focus being diverted to certain high-profile visible schemes such as the Awas Yojana or sanitation. While these are important assets for the poor, it doesn’t take away from the fact that health, education, and social security budgets remain woefully inadequate even as these services suffer from poor infrastructure, huge vacancies, and inadequate resources. In the absence of gainful employment opportunities, and the looming job crisis, the continued neglect of the social sector exacerbates the perpetuation of inequalities across generations. A truly aspirational India cannot shy away from this.

Dipa Sinha teaches Economics at Dr. B.R. Ambedkar University Delhi