Finance Minister Nirmala Sitharaman started the innings of her much-awaited 2022 Budget speech by emphasising her macro-fiscal priorities to be positioned for a long-term budgetary vision of ‘India at 100’. It included areas of: ‘inclusive development’, ‘productivity enhancement’, ‘sunrise opportunities’, ‘energy transition’, ‘climate change’, and ‘PM Gati Shakti’.
The PM Gati Shakti Programme identified seven engines of growth: Roads, Railways, Airports, Ports, Mass Transport, Waterways, and logistics infrastructure. It seems these are the ‘engines of growth’ that the government feels committed to.
To enable a narrower understanding and reading of all key announcements made, without getting too lost in the details, it would be better here to critically focus this Budget’s meaning and analysis on two broader areas – job creation-job security and social-welfare spending priorities (with a focus on women).
What About Employment of Women in Rural Areas?
It seems the Modi Government’s ‘blinded’ or ‘indifferent’ approach with regards to addressing the puzzling crisis of unemployment-underemployment, is likely to continue.
A long-term view of ‘India at 100’ remains centred around enhancing capital expenditure-supported ‘growth’ and ‘productivity’ in big-infra segments, which the Finance Minister has remained rigidly tied to since the last budget.
The hope is that the big boost in capital expenditure and more ‘supply side’ spending measures will subsequently create enough ‘good quality jobs’ for all. It is worth iterating here, though, that from a gendered analysis of past-employment trends across sectors, most jobs created in areas of infrastructure (including construction, ports, logistics) have broadly increased male participation while adversely affecting the ‘female labour force participation rate’ in these segments.
It is largely in areas of services, communication, part-manufacturing and agri-business where women employment viz-a-viz males has been in some proportion. But it has been most ‘equal’ across gender in service sectors of ‘health’ and ‘education’ (as seen below), which have received the least public spending/investment in the past.
Union Finance Minister Nirmal Sitharaman did announce a slew of initiatives targeted at women-centred development in her fourth budget speech.
“Recognising the importance of 'Nari Shakti', three schemes were launched to provide integrated development for women and children," the FM said in Parliament today. Sitharaman said Mission Poshan 2.0, Mission Vatsalya and Mission Shakti were launched recently to provide integrated benefits to children. Saksham Anganwadi is a new generation that has better infrastructure and audiovisual aids covered by clean energy and provides improved environments for early childhood developments. Two lakh anganwadis will be upgraded under the scheme, Sitharaman added.
According to the Ministry of Women and Child Development, women and children constitute 67.7% of India’s population as per the 2011 census.
Last year, Sitharaman allocated ₹20,105 crore for Saksham Anganwadi and POSHAN 2.0 scheme, ₹900 crore for Mission Vatsalya and ₹3,109 crore for Mission Shakti (Mission for Protection and Empowerment for Women). But there are other areas where women-centred employment opportunities, especially in rural areas, weren’t prioritised in this budget.
The FM Didn't Even Mention the Jobs Crisis
Higher allocations to MGNREGA (already affected in 2021 by inadequate budgets), greater support to states for targeted job creation, enhancing PLI schemes towards ‘job creation’, and introducing an urban version of the MGNREGA plan (at least on a smaller scale) were all seen as part of expectations to address the ‘joblessness’ crisis head-on. We didn’t hear on either of these, which is disappointing.
Worse, the Finance Minister did not even mention the ‘crisis’ of joblessness that’s afflicting the state of the Indian economy right now.
On MGNREGA, the Union government lowered its allocated spending for FY2023. It has allocated Rs 73,000 crore for India’s rural jobs guarantee programme in the upcoming fiscal.
India’s broken labour markets and an asymmetric employment landscape has largely been split between the unorganised-organised space. The informal (unorganised) space was hit the most during the pandemic. It has also been the most resilient though, once the state-wide or national lockdowns were lifted. Most women in India’s employment landscape are employed in the vulnerable unorganised, informal space.
One major reason for some of these poor numbers remains centred around the fact that India’s female labour force participation rate (LFPR) – the share of working-age women who report either being employed or being available for work – is as low as 16.4 per cent (in the 15-29 age group) and 33 per cent (in the 35-39 age group), as per the 2017-18 PLFS data (not taking the pandemic effect into consideration). Among women in the prime working ages of 30-50, more than two in three women are not in the workforce, with the majority of them reporting that they are “attending to domestic duties only”.
MSME Sector Has Fallen Through the Cracks
The situation for both women-employment and women-based entrepreneurship also appears calamitous. As discussed recently, if we look at the recent data extracted from round 73 of the National Sample Survey (NSS), there are less than 21 per cent of women entrepreneurs in the MSME sector, which holds the bulk of the share in India’s manufacturing landscape.
In the organised formal jobs sector, only seven of 100 entrepreneurs in India are women, and of them, nearly half (49.9 per cent) get into business ‘out of necessity rather than aspiration’, as per a recent IWAGE report.
Globally, India ranks third among countries reporting gender gaps in business: only 33 per cent of early-stage entrepreneurs in India are women. The Finance Minister could have done more to specifically target fiscal incentives for women-led entrepreneurial setups across sectors.
Given the lack of jobs in the organised (formal) segment, the better treatment of the (un)organised sector via the protection of MSMEs is also vital. Unfortunately, the second wave fiscal response measures by the government failed to do much to protect the affected MSMEs, adversely affecting employment in unorganised-organised sectors.
In context to MSMEs, one of the larger job-creating segments for both the unorganised-organised employment landscape, the only positive from the allocative announcements made was in the direction of extending the emergency loan guarantee (ECLGS) amid the COVID crisis. The scheme will now be extended till March 2023 and its guarantee cover will be expanded by Rs 50,000 crore to a total cover worth Rs 5 lakh crore, said Finance Minister Sitharaman.
Will Ailing Banks Really Support MSMEs?
I am not sure but the scheme provided immediate relief to small enterprises. The concern is that there is still no clarity on the quality of these loans, how they will be allocated, and the role of banks. It is also not clear whether scheduled commercial banks or public sector banks, already affected by ‘poor quality loans’ on their balance sheets and weak Insolvency and Bankruptcy Code (IBC)-driven recovery of bad loans, will actually walk the talk on extending credit to MSMEs.
With a high government debt-to-GDP ratio, the government would also need to tread with caution on how it implements the credit guarantee allocations, as such guarantees will be a contingent liability on the government’s books.
Govt's Social Welfare Spending Is Dismally Low
As argued in my pre-budget analysis, it was shown how dismal the Union government’s social welfare spending levels have been, even during the pandemic years. The Economic Survey 2021 report highlights it as well. The combined aggregate spending in areas of education, healthcare (outside COVID-19) has been less than 9% of the GDP. As a percentage of total government expenditure, the aggregate expenditure on social services is around 26.6% (it is 9.7% in education and 6.6% in healthcare). The level of public expenditure on nutrition-centred programmes, including those focusing on early child development, has been dismally low.
For FY 2022-23, the Union Government allocated Rs 1,04,278 crore for the education sector, which is 11,054 crore higher than the amount allocated to the education sector in the financial year 2021-22. Last year, the Union Budget allocated an amount of Rs 93,224 crore to the education sector. The revised estimate made this to be Rs. 88,002 crore. This indicates an increase in the budgetary allocation for education by 11.86%
Learning Loss, Dropouts Ignored
It would be interesting to see how the allocation happens for this increased outlay in education, as a slew of new schemes have been announced by the Finance Minister this Budget, including a digital university to provide education in different Indian languages that will be built on a hub-and-spoke model, and a one-class one TV channel e-learning service.
Compared to the colossal degree of learning loss and high dropouts seen in education across rural and urban areas for young girls and boys over the last two years, a lot more was expected to be done in supporting educational institutions that have been adversely affected.
The government’s budgetary allocations have also seen a decline in child-related departments FY 2020-21 onwards. The Union Ministry of Women and Child Development saw a decline in budgetary spending from Rs 30,007.1 crore to Rs. 24,435 crore. The budget for the Department of Education and Literacy was already slashed to Rs 53,600 crore from 59,370 crore. The budgetary allocation for child protection was cut down by 40 per cent from Rs 1,500 crores to Rs 900 crores. This has affected the states’ ability to spend on existing child-related programmes.
Centre Has Abdicated Its Responsibility
States like Chhattisgarh, Kerala, Odisha, Tamil Nadu and Telangana have a higher decline in public expenditure on children in the post-COVID period as the difference between their actual expenditure and budget estimates is higher than the difference between their actual expenditure and budget estimates in the pre-COVID period.
Kerala and Tamil Nadu have made sustained investments for children. Thus, a cut in expenditure for a year might not adversely impact the welfare of children in these two states. However, Chhattisgarh, for example, which has been grappling with a high under-5 mortality rate, stunting and wasting rates, was not able to prioritise child expenditure in the post-COVID year in spite of its fiscal prudence.
As most states’ spending capabilities have been adversely affected during COVID years, the bulk of the fiscal responsibility of redistribution of additional resources towards social welfare, including for child-women development, fall directly on the Central government. That responsibility, it seems, has been abdicated.
In sum, both the 2022-23 Budget and the Finance Minister’s ‘India at 100’ long-term vision blindly ignore the need for establishing a robust social and economic safety net for the most vulnerable populations, including women and children across communities in India. What it indicates is a wide degree of abdication of responsibility on the Union government’s in addressing deep-rooted inequities and exacerbated levels of poverty, which have worsened during the last two years.
(The author is Associate Professor of Economics, OP Jindal Global University. He is currently Visiting Professor, Department of Economics, Carleton University. He tweets @Deepanshu_1810. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)
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