As the dust settles on the proposals that the Finance Minister made in the Budget earlier this month, some aspects have become clearer while questions remain on others.

Budget 2024-25 saw several initiatives around employment and skilling being proposed. Do these form a good first step in addressing the jobs challenge the country faces? Or should the government have begun addressing the problem at the level of primary school and worked upwards?

Guest: Amit Basole, Professor of Economics at Azim Premji University

Host: K. Bharat Kumar

Edited by Jude Francis Weston

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Strongly countering West Bengal Chief Minister Mamata Banerjee’s claim that her microphone was switched off and she was only allowed to speak for five minutes at a key Niti Aayog meeting, Finance Minister Nirmala Sitharaman has accused her of “trying to build a narrative out of falsehood”.

The finance minister said all chief ministers were allotted “due time” to speak and the Trinamool Congress chief could have also requested to talk for longer rather than “looking for an excuse” to get out of the meeting. 

Ms Banerjee – who was the only INDIA bloc chief minister not to boycott the Niti Aayog general council meeting on Saturday – had alleged “political discrimination” and said she was allowed to speak for only five minutes while some of her counterparts from other states got to talk for over 15. She said her microphone was turned off and a bell was rung repeatedly to remind her that her allotted time was up. 

“Chief Minister Mamata Banerjee attended the Niti Aayog meeting. We all heard her. Every chief minister was given the allotted time, and that was displayed on the screen, which was present before every table. Apparently she has now conveyed through the media that her mic was turned off. That is completely false. Every chief minister was given their due time to speak,” the finance minister told ANI.

Stating that the meeting was chaired by Prime Minister Narendra Modi but organised by Defence Minister Rajnath Singh, Ms Sitharaman said that when any chief minister’s allotted time was over, Mr Singh tapped on the microphone.

“This was done for all chief ministers but it is unfortunate that Ms Banerjee said her mic was switched off, which is not true. It is unfortunate because we are happy that she participated in this meeting, put forth her case, spoke for West Bengal and, as she said in the meeting, spoke for all the opposition,” the finance minister said. 

“As per the procedure, if she’s reminded that her time is over, even with the mic on, she could have requested that she would like to continue speaking, like some other chief ministers did. She could have continued speaking as long as she wanted, but she chose to use it as an excuse so that she could get out of the meeting. And then to say that the mic was switched off is just so unfortunate. I wish she would say the truth behind this, rather than again build a narrative based on falsehood,” she added.

‘Effort To Keep INDIA Allies Happy”

The alleged discrimination against Ms Banerjee was also taken up by some of her colleagues in the INDIA alliance, including the Congress’ Jairam Ramesh, who called Niti Aayog meetings a farce. 

Taking to X, Mr Ramesh said “It (Niti Aayog) muzzles all divergent and dissenting viewpoints, which are the very essence of an open democracy. Its meetings are a farce to be reckoned with. Its treatment of the West Bengal chief minister today, although typical of the NITI Aayog, is unacceptable.”

Ms Sitharaman hit back at Mr Ramesh, retorting that the Congress wasn’t even at the meeting and Ms Banerjee’s statement seemed like an effort to keep her INDIA allies happy. 

“Jairam, you weren’t even there! We all heard Hon. CM @MamataOfficial. She spoke her full time. The screen in front of our tables kept showing the time. A few other CMs spoke beyond their allotted time. On their own request, extra time was allowed without any fuss. Mikes were not switched off, not for anybody, particularly, not for CM, WB. Mamata ji has chosen to spread falsehood,” the finance minister wrote on X. 

Following this up with a jibe, Ms Sitharaman added, “I was happy she attended. Was happier when she said she is speaking for Bengal and in fact for the entire opposition. I may agree or disagree with what she had to say.  But now with her saying baseless things outside, I can only conclude that she is making an effort to keep I.N.D.I alliance happy.” 

Union Finance Minister Nirmala Sitharaman.
| Photo Credit: PTI

Finance Minister Nirmala Sitharaman on July 23 proposed to increase the rate of securities transaction tax (STT) on futures and options (F&O) trade to discourage retail investors’ participation in the risky instrument.

“It is proposed to increase the rates of STT on the sale of an option in securities from 0.0625% to 0.1% of the option premium, and on sale of a futures in securities from 0.0125% to 0.02% of the price at which such futures are traded,” she said in the Union Budget speech.

This came after the Economic Survey flagged concerns over rising retail investors’ interest in derivative trading. The survey stated that speculative trade has no place in a developing country.

It also pointed out that the sharp increase in retail investor participation in F&O trading is likely driven by humans’ gambling instincts.

“Derivatives trading holds the potential for outsized gains. Thus, it caters to humans’ gambling instincts and can augment income if profitable. These considerations are likely driving active retail participation in derivatives trading,” according to the Economic Survey 2023-24.

Recently, Sebi chief Madhabi Puri Buch also cautioned investors against heavy bets on F&O. Before that, Ms. Sitharaman and Chief Economic Adviser V, Anantha Nageswaran flagged the growing risk of F&O trading for retail investors.

F&O trading continues to grow in popularity, and market experts believe that this is driven by the potential for profit and the rising trading volumes. Experts said investors who lack understanding or risk appetite should avoid derivatives trading.

The segment’s popularity is evident from its massive growth, with the monthly turnover in the F&O segment reaching ₹8,740 lakh crore in March 2024, compared to ₹217 lakh crore in March 2019.

At the same time, the average daily turnover in the equity cash segment was ₹1 lakh crore, while the F&O segment saw an average daily turnover of about ₹330 lakh crore.

Futures and Options trading involves contracts that derive their value from an underlying asset, such as stocks or commodities. Futures contracts obligate the buyer and seller to transact at a predetermined future date and price, while options give the holder the right, but not the obligation, to buy or sell the asset at a set price within a specific period.

These financial instruments are used for hedging risks, speculating on price movements, and arbitraging price differences. However, they come with significant risks, including leverage risk and market volatility, which can lead to substantial losses.

Futures and Options trading is largely being utilised as a speculative tool for quick profits in the stock market. However, the reality is that most retail investors are losing money.

A study by the Securities and Exchange Board of India (Sebi) revealed that 89 per cent of individual traders in the equity F&O segment suffered losses, with average losses of Rs 1.1 lakh in FY22.

Additionally, there was an exponential increase in the F&O segment participation during the pandemic, with the total number of unique individual traders increasing by over 500% from 7.1 lakh in FY19 to 45.24 lakh in FY21, the study noted.

Earlier, Buch stated that the capital markets regulator is “compelled” to warn against speculative bets in the F&O segment because it has become a “macro issue”, affecting the broader economy now.

Household financial savings are going into the speculative bets, belying the expectations of being used for capital formation, and the youth is losing tonnes of money in such trades, she stated.

Last month, the Sebi board approved stricter norms for the entry of individual stocks in the derivatives segment. The proposal is aimed at weeding out stocks with consistently low turnover from the F&O segment of the bourses.

Congress leader Jairam Ramesh. File
| Photo Credit: ANI

Continuing its attack on the economic policies of the Narendra Modi government ahead of the first budget of the NDA government on July 23, the Congress on Wednesday said that “India has been locked into a cycle of low investment since 2014” due to a combination of “erratic policy, rampant cronyism, and the ED/IT/CBI raid raj”. The party said the country needs a new liberalised approach to political economy.

Congress general secretary (communications) Jairam Ramesh said the single most important statistic that explains India’s inability to grow faster since 2014 is the “sluggish investment rate”.

“India has been locked into a cycle of low investment since 2014, due to a combination of erratic policy, rampant cronyism, and the ED/IT/CBI raid raj,” Mr. Ramesh said in a statement.

Low investment drags down the medium and long-term GDP growth rates, which in turn brings down wages and consumption growth, he said.

The biggest component of investment, Mr. Ramesh said, the private domestic investment, has been in doldrums since 2014. In comparison to the UPA years, when the investment was in the 25-30% range of the GDP, it has been reduced to 20-25% of the GDP range, he said.

“This is, however, only part of the story. Since at least 2016, multinational companies across the world have been looking to divest from China and invest in other developing countries. India, with a large and growing labour pool, was at the right place at the right time – but this generational opportunity to garner FDI and become a manufacturing and export-oriented economy has been squandered,” Mr. Ramesh said.

Instead of India, Bangladesh and Vietnam have capitalised and have walked away with the benefits, he said. “Sops like corporate tax cuts and PLIs can’t compensate for a freer society, polity, and economy – one that is free from demonetization-like masterstrokes, cronyism, and Raid Raj,” Mr. Ramesh said. Marginal policy tinkering will not work, he said.

Congress general secretary Jairam Ramesh. File
| Photo Credit: PTI

The Congress on July 12 said the forthcoming Budget must address fundamental questions such as why private investment is “very sluggish” and private consumption is not picking up as the party dismissed claims that economic growth is accelerating sharply and large numbers of jobs being created.

Union Finance Minister Nirmala Sitharaman is scheduled to present the Budget for 2024-25 in the Lok Sabha on July 23.

Congress general secretary, in-charge communications, Jairam Ramesh said, “The non-biological PM’s cheerleaders and drumbeaters claim that economic growth is accelerating sharply and that jobs are being created in large numbers. But if this was the case — and it is not — Why is private investment, a key engine of economic growth, still so very sluggish recording a 20-year low during April-June 2024? Why is private consumption, another key engine of economic growth, not picking up except at the high end,” Mr. Ramesh asked.

“Why have household savings plummeted to record lows and household debt shot up to record highs? Why have rural wages continued to fall and why is the wage share of national income declining?” he said, adding, why is manufacturing as a share of GDP at a record low and still decreasing? Why has the informal sector lost 17 lakh jobs in the last seven years? Why did unemployment reach a 45-year peak, with unemployment for young graduates at 42%?” the Congress general secretary said.

“These are fundamental questions that the forthcoming Budget will have to address while the Finance Minister sings praises of the non-biological PM,” Mr. Ramesh said.

On Thursday, the BJP claimed that around 12.5 crore jobs were created in the last 10 years of the Modi government and cited the latest Reserve Bank of India report to assert the creation of “five crore jobs in 2023-24 alone”.

Several experts have urged the government to provide tax relief to the common man to boost consumption and take steps to check inflation and accelerate economic growth.

The economy has recorded a growth rate of 8.2% in 2023-24. Earlier in February, Ms. Sitharaman presented an Interim Budget for 2024-25 in view of the Lok Sabha elections.

Well before Finance Minister Nirmala Sitharaman rose to present the Interim Budget for 2024-25, there were indications as to what its focus would be. Doubts that this would be anything more than a vote-on-account had been settled when Prime Minister Narendra Modi publicly declared that “when polls are this close, the government presents an interim budget” — and went on to say with confidence of a victory in the polls, “we will bring a full budget when a new government is formed”.

Meanwhile, an ‘interim Economic Survey’, innocuously titled “The Indian Economy: A Review”, has presented a survey of post-Independence economic development, with a periodisation that divides those years into the pre- and post-Modi government eras. In language reflective of an electioneering pamphlet, peppered with the Prime Minister’s own assessments of his government’s record, the document concludes that the decade 2014-24 was one of “transformative growth”. Periods of significant or even high episodes of growth prior to that transformative decade are identified as wanting, on the grounds that such growth either left structural challenges unaddressed or was the result of an unsustainable credit boom that damaged the banking sector.

A eulogy

Given this background, it was to be expected that the Budget speech would be a vocal expression of this eulogy of the two governments of the last 10 years. For years, Part A of the Budget speech has been a tiresome recounting of policies already adopted, and to be adopted, many of which have little to do with the issues of resource mobilisation and allocation and the strategy they signal, which must be the actual concern. That has been true of this year’s Interim Budget as well, which focused on all the “welfare” schemes, in areas varying from housing to food, which have been largely attributed to the Prime Minister. It is another matter that the Prime Minister has in the past dismissed such schemes as representative of a “revdi” (sweet gifts) culture when implemented by non-Bharatiya Janata Party (BJP) State governments.

With the Interim Budget being identified as a mere vote-on-account, Part B of the speech was a declaration that while pursuing consolidation in the sense of achieving periodically revised fiscal deficit to GDP ratios, the government will be stepping up spending on infrastructure and welfare. In the circumstances, what can be assessed from the detailed Budget documents is the fiscal performance of the Centre in the current (rather than next) financial year, 2023-24. Even that exercise is fraught with difficulty because the practice of presenting Budgets on February 1 adopted in recent years has meant that “revised estimates” for the financial year incorporate projections relating to most of the last quarter of the financial year extending to March 31.

CGA data sheds more light

The only substantial figures at hand are the estimates of actual expenditure under different broad heads for the first three quarters of 2023-24 provided by the Controller General of Accounts (CGA), which can be compared with the estimates for the whole year provided in the Budget. This is, in certain areas, quite revealing. For example, if we take the estimates for the Department of Rural Development, under which the all-important Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme falls, as compared to budgeted expenditures of ₹1,57,545 crore for 2023-24, the revised estimates are placed at a much higher ₹1,71,069 crore. That points to a significant step up relative to that budgeted, despite claims that the NREGA scheme is being inadequately funded, wages are in arrears and job card holders are being excluded from work because wage payments are to be linked to Aadhaar.

Editorial | Poll posture: On the 2024 Interim Budget

But a comparison of revised and budgeted expenditures conceals what is actually occurring. The actual expenditure on the MGNREGA scheme was ₹1,11,170 crore in the COVID-19 year 2020-21 and ₹98,468 crore in 2021-22. That came down to ₹90,806 crore in 2022-23 and the revised estimate projects spending on the programme in 2023-24 at an even lower ₹86,000 crore. The figures clearly do not match the government’s pro-poor rhetoric. Interestingly, the CGA reports that expenditure of the Department of Rural Development till December 2023 amounted to only ₹1,07,912 crore or 63% of the total projected in the revised estimates. So, more than a third of the estimated expenditure for the financial year is projected to occur in the last quarter of the year.

That deviation between revised expenditures over the financial year and the actual till December 2023 is even larger in the case of the Department of Agriculture and Farmers Welfare, under which the much-touted Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme of transfers falls. The budgeted expenditure for 2023-24 for that department was placed at ₹1,15,532 crore and the revised estimate is projected at ₹1,16,789 crore. The actual till December is placed at ₹70,797 crore by the CGA, or 61% of the revised estimate. Spending on the PM-KISAN scheme alone, which amounted to ₹66,825 crore in 2021-22, fell to ₹58,254 crore in 2022-23 and is projected at ₹60,000 crore in 2023-24.

There are two ways in which such deviations between actual spending till December and the revised estimates in the Budget can be interpreted. One could be that the Finance Minister has chosen to inflate revised estimates of spending to back her claim that the government has provided massive support to farmers and rural workers. The other could be that, despite tardy spending till December, the government plans to launch a pre-election spending blitz in areas where it believes it can swing votes in favour of the BJP. Being election season, the latter is a possibility. But trends of the kind noted with regard to spending on the MGNREGA scheme suggest that the government believes that rhetoric can be a substitute for actual allocations. Thus, despite claims that free rations for 80 crore people are a huge expansion of food support under the National Food Security Act, the total food subsidy has fallen from ₹5,41,330 crore in 2020-21 to ₹2,88,060 crore in 2021-22 and a projected ₹2,87,194 crore (RE) in 2023-24.

Estimates and projections

At the macroeconomic level, the Budget’s claim is that in 2023-24, the central government has managed to ensure that its receipts other than borrowing are almost equal to that budgeted. This is because it has met budgetary expectations with respect to tax revenues as well as expects to raise its non-tax revenue receipts by 25% relative to budget. The explanation for that hefty increase is that income from dividends and profits is slated to rise from ₹99,913 crore in 2022-23 to ₹1,54,407 crore in 2023-24 (RE). This is because, as compared with a budgeted ₹48,000 crore to be received as dividend/surplus from the Reserve Bank of India and nationalised financial institutions, the revised estimates suggest that the actual inflow will be more than twice that figure at ₹1,04,407 crore, largely because of transfers from the central bank. This has more than made up for a projected fall in miscellaneous capital receipts, consisting of receipts from disinvestment from a budgeted ₹61,000 crore to ₹30,000 crore. It is not clear whether even the figure of ₹30,000 crore can be realised, since the CGA estimates that ‘other non-debt capital receipts’, consisting of disinvestment proceeds, just crossed ₹10,000 crore by December.

Estimates and projections of this kind allow the Finance Minister to claim that even while ensuring total expenditure in line with the budgeted, she has managed to keep the fiscal deficit, at 5.8% of GDP, marginally below the budgeted level, hoping to please financial markets with her government’s prudence. Whether it would please voters to give the National Democratic Alliance a “resounding victory”, as she hopes, is yet to be seen.

C.P. Chandrasekhar is an economist and columnist based in New Delhi

India’s Finance Minister announced a new scheme to develop deep tech for defence purposes while presenting the Interim Budget for 2024-25.
| Photo Credit: SHIV KUMAR PUSHPAKAR

For tech-savvy youth, a corpus of ₹1 lakh crore will be established with 50-year interest free loans for providing long term financing or refinancing with long tenures and low or nil interest rates, announced Finance Minister Nirmala Sitharaman while presenting the Interim Budget for 2024-25.

“This will encourage the private sector to scale up research and innovation significantly in the sunrise domains,” she added.

The Finance Minister also said that a new scheme will be launched to develop deep tech for defence purposes.

On electric vehicles, she informed Parliament that government will expand and strengthen the sector through greater manufacturing and charging infrastructure.

(For top technology news of the day, subscribe to our tech newsletter Today’s Cache)

The government has allocated ₹1,500 crore for setting up semiconductor fabs in India under the Modified Scheme, she said.

Counting the achievements of Union Government, the FM said that the Skill India Mission has trained 1.4 crore youth, upskilled and reskilled 54 lakh youth. She added that 3,000 new Industrial Training Institutes (ITIs) were opened.

Nirmala Sitharaman informed that in the last ten years 7 Indian Institutes of Technology (IIT), 16 Indian Institutes of Information Technology (IIIT), 7 Indian Institutes of Management (IIM), 15 All India Institute of Medical Sciences (AIIMS) and 390 Universities have been set up in the country.

She briefed that ₹34 lakh crore worth of Direct Benefit Transfer (DBT) has been achieved in the last decade, and it saved ₹2.7 lakh crore of government as a result.

More than 1360 Agricultural Produce Marketing Committees (mandis) have been digitised, doing a business of 3 lakh crore, she told.

FM informed the house that Digital Public Infrastructure (DPI) has been instrumental in formalisation of the economy.

“Technological advancements are transforming lives and businesses, creating new economic opportunities,” she said.

Watch | Interim Budget 2024 | What’s in it for health sector?

| Video Credit:
Richard Kujur

Health cover under the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana will be extended to all Accredited Social Health Activist (ASHA) and anganwadi workers and helpers said Finance Minister Nirmala Sitharaman on Thursday, while announcing the interim Union Budget 2024-25.

While a full budget for 2024-25 will be announced after the new government is formed following the Lok Sabha elections later this year the budget allocation saw an increase from ₹89,155 crore in 2023-24 to ₹90,658.63 crore for the Ministry of Health and Family Welfare while Ayush Ministry also saw a hike from ₹3,647.50 crore to ₹3,712.49 crore.

Budget 2024 live | Interim budget leaves tax structure untouched; FM details Centre’s achievements

For the health sector, the Minister added that India will be bringing in the services of the newly designed U-WIN platform for managing immunisation and intensified efforts of Mission Indradhanush.

“This is to be rolled out expeditiously throughout the country,” the Minister said during her nigh hour long speech.

The other major addition in the sector includes utilising the existing hospital infrastructure under various departments to offer medical seats to students and encouraging HPV vaccination for girls in the age group of 9 to 14 years for prevention of cervical cancer.

The government also proposed to combine various schemes for maternal and childcare and bring them under one comprehensive programme for synergy.

The Minister added that, as part of the Skill India Mission, youth are being trained through various world-class institutes including 15 newly constructed All India Institute of Medical Sciences.

“Several youth have the ambition to get qualified as doctors. They aim to serve our people through improved healthcare services. Our Government plans to set up more medical colleges by utilizing the existing hospital infrastructure under various departments. A committee for this purpose will be set-up to examine the issues and make relevant recommendations,” the Minister said.

The Minister added that geopolitically, global affairs are becoming more challenging with wars and conflicts.

“Globalisation is being redefined with reshoring and friend-shoring, disruption and fragmentation of supply chains, and competition for critical minerals and technologies. A new world order is emerging after the COVID-19 pandemic,” the Minister said. The budget also announced upgradation of Anganwadi centres under ‘Saksham Anganwadi’ and Poshan 2.0 will be expedited to improve nutrition delivery, early childhood care, and development.

The sectors that saw increased allocation of funds in the last 2023-24 budget included Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana, CGHS pensioners, and the National AIDS and STD programme. This year continued with that trend although allocation for development of nursing services did witness a drop.

Image for representational purposes only.
| Photo Credit: The Hindu

As many as 1.4 crore youth were trained and upskilled under the Skill India Mission, Finance Minister Nirmala Sitharaman said while presenting the interim Budget on February 1.

The mission focuses on skilling, re-skilling and upskilling through short-term and long-term training programmes.

Also Read | Budget 2024 live updates

Under the mission, the government, through more than 20 central ministries/departments, is implementing various skill development schemes across the country.

She also said there is a macro-economic stability and the country’s economy is doing well.

Also Read | Interim Budget 2024: Highlights

The government is focused on more comprehensive GDP, governance, development and performance, she added.

A farmer at his paddy field on the outskirts of Bhubaneswar. File (Representational image only)
| Photo Credit: The Hindu

Finance Minister Nirmala Sitharaman on February 1 said as many as 11.8 crore farmers were provided financial assistance under the PM KISAN Yojana.

Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) is one of the world’s largest Direct Benefit Transfer (DBT) schemes.

Also Read | Budget 2024 live | FM Nirmala Sitharaman focusses on women, poor, youth and farmers in Budget

Under the PM-KISAN scheme, the government provides a financial benefit of ₹6,000 per year in three equal four-monthly instalments. The money is transferred into the bank accounts of farmers’ families across the country through DBT mode.

Announced in February 2019 in the Interim Budget, the scheme was effective from December 2018.

“Modi government addresses systematic inequalities”

The government under the leadership of Prime Minister Narendra Modi is addressing systematic inequalities, which have plagued the society, Finance Minister Nirmala Sitharaman said.

Also Read | Interim Budget 2024: Highlights

Presenting the Interim Budget 2024-25, Ms. Sitharaman said economic management over the past decade has complemented people-centric inclusive development. “All forms of infrastructure are being built in record time,” she said. She observed that tax reforms have led to widening of the tax base.

“STEM (Science, Technology, Engineering, and Mathematics) courses have seen enrolment of 43% women, the highest in the world,” she added.