Union Budget contractionary: Prof Chinglen
Source: Chronicle News Service

Imphal, July 23 2024: The union budget for 2024-25, placed in parliament by finance minister exposes the squeezing of expenditures in order to reduce the fiscal deficit.

The squeezing of expenditures has fallen on outlays on welfare schemes.

The budget should have focused on expanding economic activities.

Instead, it is contractionary as subsides have been considerably cut, including fertilizer subsidy slashed by Rs 24,894 crore and food subsidy by Rs 7082 crore.

Expenditures on education, health and rural development as a percentage of GDP remain more or less unchanged.

MGNREGS remains to be ignored further.

Budgetary allocation is Rs 86,000 crore which was less than what was spent in FY 2023.Obviously, this will be grossly insufficient to address the deep job crisis in rural areas.

The Employment Linked Incentive offers a one-month wage to new entrants in the formal sector earning less than Rs 1 lakh.

Eligible workers will receive a maximum of Rs 5,000 in three monthly instalments.

However, employers receive a benefit of Rs 72,000 for each new employee hired with a monthly salary of up to Rs 1 lakh in 24 monthly instalments, for every additional job created in two years.

Such strategy is not worker-friendly.

Budget proposed new schemes to enhance skills among youth.

But the question is their placement.

The job opportunities will grow Only when economy expands.

Regarding the GDP calculations, the Nominal GDP growth is estimated at 10.5 per cent.

Real GDP projected to grow 6.5 to 7 per cent.

However the 'core' inflation rate is 3 per cent which does not include food inflation thus overestimating real GDP growth.

Despite all talks of 'cooperative federalism', this budget makes no announcements about immediate relief for the internally displaced people of violence hit Manipur.

No major recovery plans have been announced for Manipur which badly needs huge fiscal package in the current explosive situation.

The relief and resettlement of displaced people of the state must also be the key priority for the budget.

It does not reflect any seriousness to address the worsening economic crisis of the violence-hit Manipur.

The finance minister while talking about the rising economy of the country avoided any mention of the larger interest of the north east and Manipur.

Hope that the budget will bring some relief to the NER in general and violence hit Manipur in particular.

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