The beginning of February has offered us a tale of two budgets: the Union Government’s budget, which received mixed reviews and some tough criticism from the Opposition, and the Kerala budget, which has been almost universally panned across the state.
The Union budget received praise for a dramatic increase in capital expenditure and criticism for slashing social welfare spending, whereas the Kerala budget, despite predictable genuflections toward the welfare of marginalized communities and social sector development, is disfigured by its additional regressive taxes and lack of attention to the state's economic and infrastructure development.
The Union Budget for the 2023-24 fiscal year has been introduced at a time of uncertainty for the revival of the Indian economy, which had been laid low ever since demonetisation and then shattered by the Covid pandemic and lockdown.
The big-ticket announcement was a hike in capital expenditure by 33% from last year to 10 lakh crores, a move which the Finance Minister argued would “enhance growth potential and job creation, crowd in private investments, and provide a cushion against global headwinds.” While positive, it was the third year in a row that capex had been raised to kickstart the economy, but the government’s track record on implementation has not been stellar.
Last year, the government had announced a similar hike, only to be unable to meet the target by the end of the fiscal year (between April and December, 2022, the government only managed to utilise 65% of the allocation). State governments claim the rise in capex allocations has come at the cost of erstwhile grants, which have been replaced with interest-free loans repayable in 50 years. And these are likely to have little impact on the real crises of unemployment or inflation assailing most Indians today.
More worrying are the government’s priorities: infrastructure hikes at the expense of existing job-provision schemes like MGNREGA, whose funding has been slashed by 33% to Rs 60,000 cr (the lowest-ever as a percentage of the GDP) in a move that defies any logic.
Just last year, the government had initially provisioned Rs 79,000 cr for the scheme, only to run out of funds amid increasing demand for jobs and large amounts owed in pending wages, forcing them to return to Parliament seeking supplementary grants for the scheme.
The government’s defence is that demand has reduced. But data suggests otherwise: current MNREGA demand is 21% greater than pre-pandemic levels. Further, estimates suggest that on average most individuals get around 40 days of work under the scheme, not the promised 100, nullifying the words ‘employment’ and ‘guarantee’ in the scheme’s name!
New highways and airports are all very well, but we live in a time of record unemployment, particularly for those aged 18-29, which has doubled under the current government, and desperately need a social safety net, which the government has slashed. Funding for key welfare schemes like ICDS (for children), Poshan Abhiyan and the National Tribal Welfare Programme has been reduced, as have programmes for minorities and scheduled castes.
The allocation for the Ministry of Women and Child Development has registered a meagre increase whereas the budgets for the Ministries of Minority Affairs and of Labour have been substantially cut. Funding for education has largely remained the same, whereas healthcare spending (which has registered a marginal improvement) is still nowhere close to the stated goal of 2.5% of GDP by 2025.
Worst of all, overall government expenditure on welfare schemes (as a percentage of GDP) has dipped below 20% for the first time since 2009. This is a serious setback to the people of the country, particularly those from vulnerable communities who were just emerging from the economic and financial devastation of the pandemic, only to see key support schemes taken away from them.
In Kerala, the additional taxes and cess imposed by the 2023 Kerala Budget have provoked understandable outrage.
They will have a disproportionate impact on the poor and the middle-class. The imposition of additional taxes (in the name of cess) on petrol and diesel will hurt at the pump and have a cascading effect on the prices of other essential goods and services, adding to inflation. This will severely hit the ordinary citizen, who is already struggling with high prices.
The imposition of additional taxes on various services, such as telecommunications and banking, is also regressive, imposing an unnecessary financial burden on citizens. These services are already taxed heavily, and the additional taxes will increase their cost, making them less affordable for the general public and reducing disposable income, leading to a reduction in consumer spending, in turn affecting the overall economy.
The imposition of a cess on liquor is another regressive measure that will disproportionately impact the poor. Liquor is often seen as a luxury item, consumed mainly by the upper classes, but it also is a refuge of the poor. The additional tax risks driving the poor towards other forms of intoxication – spurious untaxed liquor or worse, illegal drugs – with unknown social consequences. For the relatively more affluent, the increased cost could lead to a reduction in the consumption of liquor purchased in Kerala, affecting the revenues of the state.
While the government needs resources to provide quality education and healthcare, these should not be obtained by squeezing the taxpayer dry and pushing people away from the state.
Despite being one of the most advanced states in the country, Kerala has struggled to attract private investment and create job opportunities. The budget does not address these concerns, with limited allocations towards the development of industries and infrastructure.
Our state has long been grappling with issues such as inadequate road networks, water scarcity, and poor sanitation facilities. The budget fails to address these issues adequately, with little money for the development of basic infrastructure.
The budget also fails to pay attention to the environment and the need for sustainable development, in the wake of two devastating floods and recurrent landslides. With increasing concerns over global warming and environmental degradation, it is imperative that the state takes proactive measures to address these issues. However, the budget fails to allocate adequate resources towards the development of renewable energy and environmental protection.
Instead of additional taxes the government should consider alternative measures, such as opening the state up to business by streamlining regulations, passing an Investor Protection Act to attract investors by assuring them their money will be safe, improving tax compliance and reducing waste (including the lifelong pensions for party cadres performing two years of service to ministers – a boondoggle rightly exposed by the Governor). These measures would go farther to increase revenues while minimizing the impact on Kerala’s long-suffering citizens.
UAPA menace
The release of Siddique Kappan after 28 months in jail reminds us that the Unlawful Activities Prevention Act (UAPA), as amended by this government in 2019, allows the Government to detain people indefinitely without charge.
It took the Supreme Court to finally reaffirm the established principle of "bail not jail". The amended UAPA is proving itself a menace to democracy, just as I had warned when opposing its introduction in the Lok Sabha.
Equally shameful, when Siddique Kappan asked for reading material in jail, he was offered only books in Hindi, a language he does not know, and denied books in English or Malayalam, the only languages he can read. In the land of Mahatma Gandhi, is this the level of our humanity? Or do Yogi Adityanath’s jailers dread their prisoners being exposed to ideas they themselves cannot understand, like freedom and liberty?
