It is a Directionless, Frustrating Budget: Asim Dasgupta

Kolkata: The people of our country are at present encountering three major problems – unemployment, COVID-19 pandemic and price rise or inflation – but no remedial measures have been taken in the Union Budget, said Asim Dasgupta, well-known economist and former Finance Minister in the Left Front government in West Bengal.

Talking to NewsClick after the presentation of Budget 2021-22 in Parliament on Monday, Prof Dasgupta said it was “directionless” and “frustrating”, as the issues of controlling unemployment or inflation find no mention in the forwarded aims. He also said there was a Left alternative proposal for this Budget that can address these issues. Dasgupta, who headed the empowered group of finance ministers in the early days of formulating the Goods and Services Tax model, analyses some key Budget proposals, especially regarding government expenditure.

Unemployment

As far as expenditure allocated to tackle unemployment is concerned, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) outlay has been reduced to Rs 73,000 crore from Rs 1,11,500 crore in the current fiscal.

Further, Finance Minister Nirmala Sitharaman in her budget speech said that retraining of youths should be taken up to increase employability. However, in a marked self-contradiction, she has decreased the planned outlay in the related Central schemes to just Rs 3,842 crore from an already meagre Rs 5,372 crore in the Budget 2020-21.

Public Health

In the case of public health, while the Central government has conceded that mass vaccination projects require Rs 80,000 crore, only Rs 35,000 crore has been allocated for the same. This will cause hindrance in the mass vaccination drive in the country which may get delayed or curtailed due to inadequate budgetary outlay.

Also read: Budget 2021-22: Govt Fails to Strengthen Public Healthcare

Inflation

The subsidy provided to the Food Corporation of India, the government foodgrain procurement agency which plays an important role in arresting inflation in the country, has been decreased substantially this year, from Rs 3,44,077 crore in the current fiscal to Rs. 2,02,616 in the coming fiscal (2021-2022).

Apart from that, the constant tax imposition on diesel and petrol is leading to transportation costs touching sky high rates on a perennial scale, which is reflected in the consumer price indexes as well. However, the Budget does not seem to portray any will from the Central government to arrest this compound inflation.

Agriculture

Similarly, the contradictory take of the Central government is noteworthy even in the allocation for the agricultural. While on one side, the government has been claiming providing impetus to the sector, in reality, the budgetary allotment has been decreased in agricultural sector from Rs 1,54,775 crore to Rs.1,48,301 crore.

Also read: PM Modi’s ‘Best Deal’ is For Corporates, Not Us, Say Farmers

Meanwhile, the government has claimed that there was significant enhancement in government procurement of food crops.

However, the question arises as to why the government is giving a chance to the big corporates to make a foray into agriculture through the new farm legislations. The Centre has been unrelenting in changing its position on the farm laws despite months’ long protests by farmers across the country, with the national capital becoming the epicentre of these protests in the last two months.

Finance

The Central government is also proposing to take the  foreign direct investment (FDI) route in the country’s nationalised insurance sector, including the Life Insurance Corporation, with the motive of increasing FDI from 49% to 74%.

However, such attempts are not in the interests of country, as is evident from the role played by these foreign insurance companies in allegedly instigating trouble in many countries.

Further, this proposal, too, contradicts the government’s claims of self-reliance (atmanirbharta) –  and will invite protests across the country seeking withdrawal of any such proposal.

The Left Alternative

Notably, even amid the present circumstances, the economic downturn can be arrested if the bottom 20% people of the country are allocated cash support of Rs 7,500 per month for the next two months, as proposed by the Left alternative.

Also, Rs 45,000 crore more should be allocated for the mass vaccination schemes. This would require a total of Rs 9,88,000 crore, equalling 3% of the Budget 2021-22.

The Left alternative will provide an impetus to demand in this country and lead to an equilibrium between demand and supply, and employment will rise. This demand-supply route can also help in arresting further inflation.