Good economics is quiet and good economists stand behind the results of their policies. The Economic Survey, the President’s Address on the first day of the first session of Parliament in a new year, and the Budget (or the Interim Budget) speech of the Finance Minister are the most important statements of government policy. Together, they make the intentions of the government loud and clear.
The NDA government likes to be very loud. This year, while presenting the interim Budget for 2024-25, the Hon’ble Finance Minister (FM) chose to use a bullhorn. The media obediently amplified the noise. It must have come as a great disappointment to the FM that, by the end of the next day, the budget vanished without a trace.
Tired and Bored
I think the people are getting tired — and bored — of the repeated claims of the government over the last ten years. They remember that 2 crore jobs a year was promised; what we have is handing over a few thousand appointment letters to fill existing vacancies in the government even while Tech companies reported that they had axed 2,60,000 jobs in 2023. They remember the promise that Rs 15 lakhs in the bank account of every person will be deposited after ‘bringing back the unaccounted money stashed in India and abroad’. They know that the alleged scamsters who were allowed to leave the country are hale and hearty in the countries of refuge and none has been extradited to India in the last ten years. They also remember the promise to double farmers’ incomes, house for every family by 2022 and achieving a USD 5 trillion economy by 2023-24. Hence, the people were amused by the FM’s claims.
Some Examples
FM: These and the provision of basic necessities have enhanced real income in the rural areas.
Fact: According to PLFS data and the State of Working India report (Azim Premji University) the real wages of the three kinds of workers (regular, casual/daily and self-employed) between 2017-18 and 2022-23 have stagnated.
FM: … the government has assisted 25 crore people to get freedom from multi-dimensional poverty.
Fact: According to UNDP, the number of people lifted out of poverty were 27.5 crore (UPA) and 14.0 crore (NDA).
FM: Every year, under PM-KISAN SAMMAN Yojana, direct financial assistance is provided to 11.8 crore farmers, including marginal and small farmers.
Fact: The number of beneficiaries dropped to 8.12 crore farmers as on November 15, 2023. Landlords (who own the land) are rewarded while tenant farmers (who cultivate the land) are excluded.
FM: A large number of new institutions of higher learning, namely 7 IITs, 16 IIITs, 15 AIIMS and 390 universities have been set up.
Fact: The ‘vacant positions’ as on March 22, 2023 were: IITs (9,625), IIITs (1,212) and central universities (22,106). As on March 15, 2022, the vacancies in faculty and residents’ posts in AIIMS, Delhi, were 1,256. In the other 19 AIIMS, the vacancies were 3,871.
FM: PM Mudra Yojana has sanctioned 43 crore loans aggregating Rs 22.5 lakh crore for entrepreneurial aspirations of our youth.
Fact: The average loan size is Rs 52,325. If we classify these loans into Sishu (83 per cent), Kishore (15 per cent) and Tarun (2 per cent), it is obvious that the bulk of the loans are Sishu. Simple arithmetic based on published data will reveal that 35.69 crore Sishu borrowers got Rs 9 lakh crore. That means an average loan size of Rs 25,217. What kind of business can be started and run with a loan of Rs 25,000?
FM: Goods and Services Tax has enabled ‘One Nation, One Market, One Tax’.
Fact: If there is one tax on which all businesspersons and traders are united in their opposition, it is GST. The GST laws are deeply flawed and have become an instrument of harassment and exploitation.
FM: Proactive inflation management has helped keep inflation within the policy band.
Fact: Apparently, the government’s understanding of the policy band is not the same as the RBI’s. RBI is doing the heavy lifting to push inflation down to 2 to 4 per cent while the government is testing the upper tolerance limit of 4 to 6 per cent. Average CPI inflation in the five year period of 2019-2024 has been 5.6 per cent. Food inflation is 8.7 per cent; Milk 5.07 per cent; Fruits 11.4 per cent; and Vegetables 27.64 per cent.
FM: It is an important policy priority for our Government to ensure timely and adequate finances, relevant technologies and appropriate training for the Micro, Small and Medium Enterprises (MSME) to grow and also compete globally.
Fact: Thousands of MSMEs shut shop during the pandemic years for want of support from the government. Government twisted and drastically scaled down the guarantee of Rs 3,00,000 crore of losses in bank loans to a mere Rs 3,00,000 crore of bank loans. Based on available data, it is estimated that about Rs 2,00,000 crore were disbursed.
FM: Seafood export since 2013-14 has also doubled.
Fact: The doubling in 9 years (Rs 30,627 crore to Rs 64,902 crore) is in current rupee prices.
In USD, the increase is only 60 per cent from USD 5016 million to USD 8078 million, which yields a modest CAGR of 5.4 per cent.
Non-statutory warning: Use of bullhorns can make people deaf.
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