Budget snubs Manipur crisis, economic mess
Source: Chronicle News Service / Prof Chinglen Maisnam

Imphal, February 01 2025: The 2025-26 Union Budget presented by Finance Minister Nirmala Sitharaman on February 1 (Saturday), is a disappointing one for the violence-hit Manipur, The budget needs to make an immediate and substantial intervention to halt the unparalleled economic breakdown, address the humanitarian crisis, and lay the groundwork for lasting peace and development in the state.

This includes bearing in mind a comprehensive relief and recovery plan, enlarged financial aid and support.

The people of the state hoped for a special economic package from the budget.

The budget, however, ignores the current humanitarian crisis and collapsing economy of Manipur.

Prof Chinglen Maisnam

Ongoing violence in the state of Manipur has led to an unprecedented loss of life and properties, large scale forced displacement, staggering scale of economic devastation and unprecedented decline in economic activity in the state.

The huge spike in prices (inflationary burdens) combined with mounting unemployment and collapsing incomes, have severely impoverished state's living standards and household incomes.

One of the key drivers of the economy of the state, the private sectors especially the MSMEs are also being hardest hit.

The breakdown of the productive base has continued to deteriorate as the violence lingers.

The budget needs to respond to the urgent needs of violence-hit Manipur.

What is needed at present is larger Central government's transfer to the violence-hit Manipur.

This would generate a righteous spiral.

Demand would pick up in the economy because greater purchasing power is put into the hands of the people, and also greater spending by the government on social welfare.

Regarding overall allocations, this budget reflects, once again, clear commitment to fiscal consolidation.

The Union Budget 2025-26 squeezes the government expenditures to reduce the fiscal deficit from 5.6 per cent of the GDP in 2024-25 BE to 4.4 per cent in 2025-26 .

It is, thus, a contractionary budget.

It means that there will be further reduction of government expenditures.

A closer look at the budget shows us that it has actually cut back on its expenditure and the size of the government expenditure has in fact become smaller.

The Finance Minister said that the Revised Estimate of the total expenditure is Rs 47.16 lakh crore, of which the capital expenditure is about Rs 10.18 lakh crore.

It shows that there is huge gap of one lakh crore in what government said it would spend in 2024-25 that is Rs 48.2 crore - and what is actually spent is Rs 47.16 lakh crore.

There is also cuts of Rs 3.4 lakh crore in all Centrally Sponsored Schemes from budget estimates in actual expenditures.

The tax exemption limit has provided some relief to the salaried sections.

However, this will be more than offset by inflation and cuts in social sector expenditure making people spend more on essential services including health and education.

The MNREGA budget of Rs 86,000 crore was less than the amount actually spent the previous year.

The average number of work days per year has come down to just 35 days in Manipur, instead of the mandatory 100.It is a lifeline for rural and agricultural workers of the state and this will help to increase their purchasing power.