Interim budget 2024 : Need for comprehensive reforms in health, education, and social sectors

Priyanka Saurabh *

The interim budget of 2024 is an administrative tradition because the full budget will come in July, on which the report card of the new government will be visible. There is a need to create an enabling environment for businesses to flourish, focus on environment-related issues, and upliftment of the marginalized section of society. Focus on the quality of development to ensure that development is equitable, sustainable, and green.

Instead of focusing on big schemes, the government needs to focus on comprehensive reforms in the health, education, and social sectors. While these are important schemes for the poor, it does not take away from the fact that health, education, and social security budgets are grossly inadequate, even as these services suffer from poor infrastructure, huge vacancies, and inadequate resources.

Union Finance Minister Nirmala Sitharaman presented her sixth budget on February 1, where she focused on the government's wide-ranging achievements in the last 10 years. Since it is an election year the budget was not a full one, but a vote on account and did not include major announcements on the revenue or expenditure account.

An interim budget, separate from the regular annual budget, is presented in an election year (2024 is an election year for the Lok Sabha). Similar to the Union Budget, it is debated in the Lok Sabha and remains valid for the entire year (even though it is meant to serve as a transitional arrangement for about 2-4 months).

Commonly known as 'vote-on-account', it authorizes specific expenditures until the new government takes office. Article 116 allows the advance allocation of money from the 'Consolidated Fund of India' to meet immediate expenditure requirements.

The government did not make any changes in the income tax slabs in the last budget of its second term. Nor are any changes being made in direct or indirect taxes. As experts say, one should not expect too much from the election year budget.

However, if the government wanted, it could have given a list of populist cuts and benefits. Despite the fiscal deficit being estimated at 5.1 percent, the government will have to be prepared to bear the brunt of the announcements of free distribution, vaccination, benefits to farmers, expanding the scope of Ayushman Yojana, and providing free electricity.

This budget, which is inclined towards women, also focuses on their health. However, by not announcing MSP for farmers, the government seems to be failing to fulfill its guarantee. On the one hand, it argues that twenty-five crore people have been brought out of the poverty line, while on the other hand, it pats itself on the back for giving free rations to eighty crore people.

Overall this is an administrative tradition. In the last ten years, direct tax collections have more than tripled and the number of returns filed has increased by 2.4 times. Two crore more houses will be built in the next five years under PM Awas Yojana (Rural).

Although this interim Union Budget is not very expensive. Therefore, only time will tell how much public-private partnership will be promoted to strengthen development ambitions and meet budget commitments.

Both higher and school education got increased allocation in the budget and schemes like PM School for Rising India (PM SHRI) got almost 50% more allocation than the previous budget. The total allocation for the school education department is Rs 73,008.10 crore which is more than the previous allocation.

Critics argue that a large portion has gone into funding the PM-SHRI project which aims to upgrade existing government schools in the country and not allocate funds to enhance government schools. A major announcement in the budget relates to health coverage extension for ASHA and Anganwadi workers under the PM-Jan Arogya Yojana.

The allocation for the health sector has been increased from Rs 89,155 crore to Rs 90,658.63 crore. Experts in this field argue for the government to focus on non-communicable diseases, increase tax exemptions for preventive health care, and improve and upgrade the quality of subsidized treatments. The budget allocation for most social sector schemes and departments is more or less the same as last year.

Allocations for school and higher education as well as health and family welfare departments show a somewhat modest increase over last year's BE, around 6-8%. Although no new announcements of major schemes were made in the Budget, the Finance Minister highlighted that 25 crore people have been brought out of multidimensional poverty (MPI) in the last 10 years.

Experts argue that the MPI does not tell us about trends in income poverty, which is a useful indicator of economic well-being. The further claim that "people's average real income has increased by 50%" does not tell us much about how the lives of the poor changed because what matters is the distribution of national income.

Experts also argue that there has been modest growth in average rural worker income which is also reflected in poor growth in private final consumption expenditure. There has been a notable reversal in the structural transformation of employment, marked by an increase in the share of agriculture in total employment. This shows the lack of employment opportunities other than agriculture.

The recent increase in women's labor force participation rate over the past 4–5 years appears to be crisis-driven, as large numbers of women are engaged in unpaid family labor rather than gainful employment.

At the macroeconomic level, the Budget claims that in 2023-24, the central government has managed to ensure that its receipts, other than borrowings, are almost equal to the budget. It has met budgetary expectations concerning tax revenues and is also expected to grow its non-tax revenue receipts by 25% relative to the budget.

There is a need to create an enabling environment for businesses to flourish, focus on environment-related issues, and upliftment of the marginalized section of society. Focus on the quality of development to ensure that development is equitable, sustainable, and green. Instead of focusing on big schemes, the government needs to focus on comprehensive reforms in the health, education, and social sectors.

While these are important schemes for the poor, it does not take away from the fact that health, education, and social security budgets are grossly inadequate, even as these services suffer from poor infrastructure, huge vacancies, and inadequate resources.