Sahil Mehra (Economics Faculty at Sai University)
The analysis of the interim budget 2024 in particular, and the yearly budgetary exercise in general, needs to focus on the extent to which they align with the larger goal espoused by the government – the development of capitalism in the country. The imagination of development envisages a process of modernization of the econ-omy, such that, over time capitalist mode of production pervades all sectors of the economy – agriculture, industry and services. The idea is that primitive accumulation in agriculture would make the peasant ‘free in the double sense’ and become wage workers in the modern capitalist agriculture, industry and services sectors. However, India’s development trajectory has not followed this anticipated trajectory, where around 43% of the total workforce is still engaged in the agrarian sector majorly constituting small and marginal farmers (owning less than 2 hectares of land) who are unable to eke out a sustainable level of income. Further, the people who exit agriculture are unable to find gainful employment in the modern capitalist sectors, rather, they remain excluded to the margins of the capitalist system and form a part of the info-rmal/unorganized sector – dominated by either self-employment or unpaid family labour, and as such, where capitalist mode of production has not penetrated.
Against this background, an analysis of the current interim budget highlights that the vision of the government very conveniently neglects the fact of continued persistence of these pre-/non-capitalist sectors, and rather presents significant contradictions in its approach towards imp-roving the conditions of these sectors and facilitating their full-fledged transition to capitalism.
The agrarian sector has been embroiled in a deep crisis over the past three decades, that has been exacerbated by neoliberal policies. Despite including phrases like ‘annadata’ in budget speeches, the agrarian sector remains vulnerable. As compared to the last budget, there has been a decline in the government’s allocation for food and fertilizer subsidies along with a fall in the crop insurance scheme. Further, the budget did not deem it important to raise the annual cash transfer benefit to farmers under the PM-Kisan scheme. To highlight a few contradictions, while, on one hand, the budget promotes ‘atmanirbhar oilseeds abhiyan’, the scheme that focuses on developing high-yielding varieties, ado-ption of modern farming techniques, and support for procurement and market linkages – a scheme that will be a part of the Krishonnati Yojana which was allocated marginally higher amount of Rs. 7,447 crores for 2024-25, compared to Rs. 7,066 crores in 2023-24. On the other, the PM-AASHA scheme, which purchases cr-ops like pulses and oilseeds from farmers at minimum support prices was slashed to Rs. 1,738 crore, down 21% in 2024-25 from Rs. 2,200 crore in 2023-24. In another example, the government has ex-pressed the importance of a shift towards the application of Nano–DP fertilizer, to promote green farming, however, the national mission on natural farming, which aims to reduce the use of chemical inputs in farming was allocated a paltry Rs. 366 crore for 2024-25 compared to Rs. 459 crore in 2023-24. In the budget speech, the complete failure to refer to the ‘doubling of the farmer’s income’ and the continued incidence of farmer suicides – around one lakh incidence between 2014 and 2022, highlights the hollowness of the promises and lack of developmental vision.
Moving on to the non-farm economy, the total allocations for the unorganised sector in 2024-25 were slightly up by 8% from the previous year’s budget estimates. Compared to the previous budget, the Ministry of Rural Development’s outlay towards the unorganised sector workers increased by 19% in FY 2024-25 because of the rise in allocations towards MGNREGA by 43%, a scheme which the government has been wanting to phase out. However, the allocation to the micro-small-medium enterprises (MSME) ministry declined by 28% relative to last year’s budget. Government figures show that the all-India unemployment rate for all ages in urban areas was at 6.7% for females and 3.2% for males in July 2011-June 2012, which has increased to 9.2% for females and 5.9% for males in April-June 2023. Further, according to the Centre for Sustainable Employment Report, 2024, around 42% of the educated youth below the age of 25 are unemployed. From 2017 to 2022, the overall labour participation rate (active workforce seeking employment or already employed) fell from 46% to 40%. However, despite such serious concerns, the allocations for the PM – Employment Guarantee Programme declined by 15%. Since the programme was launched to provide financial assistance to self-employment ventures and generate sustainable employment opportunities for unemployed youth and traditional artisans, the decline in its outlay shows the lack of political will to confront the reality of rising unemployment and possible social unrest it might lead to.
Finally, it was noted by the finance minister that average incomes have increased by 50%, however, if one looks closely, the average incomes of the poorest and middle-income classes have experienced a fall by around 40%, which means that an increase in national level incomes is being driven by an upsurge in the incomes of top 20% income class category. A quick look at the government’s revenue structure, where it gets 19% from income tax, 18% from GST and 17% from corporate tax, 28% from domestic and foreign borrowings, further points out the unequal distribution of burden on different classes to contribute to government treasury. Growing agrarian crisis, high levels of unemployment and precarious employment in the informal sector characterise the current capitalist system. Even though the economy experiences growth through capital accumulation, capitalist expansion simultaneously excludes a significant proportion of the population from its fold, thus, bringing forth the inequality embedded in the neoliberal ideology that shapes the annual budgetary exercise.
