In the absence of any vision document becomes even more important in a global pandemic, in which the world economy contracted by 3.1% in 2020 but India’s economy contracted by 7.3% – the worst among major economies.
The only serious intervention that finance minister Nirmala Sitharaman’s budget for FY 2023 has made for jobs is the increase in capital investment.
It seems that finance minister Nirmala Sitharaman realised that the states are in no position to increase public investment this year, since they have borne the responsibility of managing the second wave of COVID-19.
This is very stingy – measly in fact – compared to the emerging market economies in 2020 alone stimulating their economies by 4.7% of GDP; and the Union government’s own fiscal stimulus in 2008, after the much smaller global economic crisis, of 3.5% of the GDP.
First, the FM implicitly recognised the problem of joblessness when she said early in her speech that the Union government plans to create six million jobs over the next five years.
Two, there were already 30 million unemployed in 2019 – and at least 10 million have been added to that number since the COVID-19 pandemic began.
The Union government had allocated Rs 60,000 crore in FY21, then increased it to Rs 1.1 lakh crore but still, there were arrears left to be paid to states in FY22.
Worse, notified MGNREGA wage rates increased by 4% between FY 2020-21 and FY 2021-22, but actual wages paid remained lower than the notified wage rates for most states till December 31, 2021.
Finally, from the jobs perspective, Budget 2023 has given more funds to the Emergency Credit Line Guarantee Scheme for MSMEs: Rs 50,000 crore in FY23.
Similarly, what the new allocation for MSMEs does not recognise is that per capita private consumption expenditure had dropped by 5% in real terms between FY’22 and FY’23 – according to the first advance estimates of the GDP for FY’23.