Today marks one week since Budget 2024 was announced, and most of the political-economic commentary has focussed on the emphasis laid on projects in Andhra Pradesh and Bihar. However, there are three notable absences in the Budget that have political reasons and ramifications that go well beyond this financial year.
The first major absence is the census. As ThePrint reported, the budgetary allocation for the Census has been cut by 17 per cent compared to last year, and it’s now one-third of what was allocated in 2021-22, the year the Census was supposed to be released.
What’s more notable, though, is the complete absence of any mention of the census in either the Economic Survey or the Budget speech. The Survey even has a large boxed item where it discusses in considerable detail the various reforms that are being carried out to India’s statistical system and ways to improve it. This would have been a great place to mention the Census and its importance, but the opportunity was lost.
Finance Minister Nirmala Sitharaman, in her Budget speech, even spoke about how different sectoral databases would be used to improve India’s data governance. Surely an updated Census is crucial here? But here, too, there was no mention of it.
The importance of the census is clear, and is not lost on the government. Apart from the absolute basic data of how big our population actually is and how fast it is growing, it provides the basis for various highly informative nationwide surveys the government conducts.
Each of these surveys, such as the Household Consumption Expenditure Survey 2022-23, released earlier this year, is rendered inaccurate because the samples are increasingly unrepresentative of the population they are trying to measure.
Even further reforms, such as reviewing the Income Tax Act, or improving the taxation system in the country, will need updated and accurate population and income figures.
It is clear to those with a political bent of mind why the Census is still delayed and why there’s no move even this year—four years after its initial deadline—to complete it. The law says that the delimitation exercise can be conducted only on the basis of a census that has been conducted after 2026. If the census had been conducted in 2021 as usual, then the next one would have been in 2031, well after the 2029 General Elections, depriving the BJP of any political benefit from the delimitation exercise.
Now, the question is whether the census will be conducted and released in 2026, or if the 2024 general election results have spooked the government enough that it would rather not do it before the next elections.
More astute political minds than mine will have to answer that one, but it’s pretty obvious that political considerations, not logistical or administrative ones are the reason for the delay.
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RSS support and moving goalposts
The second notable absence from the Budget was any mention of privatisation or disinvestment. In fact, starting this year, even the word ‘disinvestment’ won’t appear in the financial records of the government as laid out in the Budget documents. Previously, the category ‘miscellaneous capital receipts’ used to contain a subhead called ‘disinvestment receipts’.
The Interim Budget 2024, announced in February, did away with this, calling it just ‘receipts’ under the same heading. The full Budget for the year has continued with this change.
Now, apart from the fact that the receipts from this source have been budgeted lower this year than last year, what really highlights the policy change on privatisation is the contrasting ways in which the government talks about it. Back in 2020, when the government was actively using the Covid-19 pandemic to push several pending reforms, it spoke with much enthusiasm and vigour about the Public Sector Enterprises Policy (PSEP).
This was its privatisation policy—the government was to exit all non-strategic sectors and maintain a minimum presence in the strategic ones. This was ambitious, and though no timelines were set, the expectation was that things would move quickly in this regard. Four years later, apart from Air India, nothing has been privatised.
When asked about this, Finance Secretary TV Somanathan told ThePrint that the priorities of the government had certainly changed, with the approach now being four-fold: companies the government will never sell, ones that it will reduce its holdings but retain a majority stake in, ones it will sell, and others that it will hold onto for dividends and sell at the appropriate time.
This is a significant step back from the 2020 policy. Officials in the ministry have stated, off the record, that one of the key reasons for this slowdown in privatisation is because the companies themselves are in no state to be sold or to receive any bids from prospective buyers. That’s probably true, but it was true in 2020 as well.
Either the 2020 policy was announced without the required homework or this excuse isn’t the primary reason driving the weakening intent to privatise. If one is being charitable to the government, one would say the latter is more likely. In which case, the question is, what is the primary reason for this slowdown in privatisation?
Here, too, politics rears its head. It’s no secret that the RSS has been upset with the government over its privatisation policies. With the 2024 elections having gone as they did, the BJP is re-realising the importance of having the RSS’ unwavering support. It’s safe to assume that privatisation has been one of the casualties.
The third absence is a relatively minor one currently, but it could have larger ramifications as the 2029 elections approach. In this Budget, and in subsequent interviews, Nirmala Sitharaman and her team have voiced the government’s intention to move from targeting a single fiscal deficit number to instead managing the deficit in such a way that the debt-to-GDP ratio continues to decline.
This is fine. As far as metrics of financial health go, the debt figure is the more important one to maintain control over. But, what was missing was any set targets for the next few years. Allowing the fiscal deficit to be flexible gives the government more room to increase its welfare spending in the run-up to the 2029 General Elections. By not setting fixed targets for the debt-to-GDP ratio, this flexibility is further enhanced. Once again, it’s politics.
Overall, Budget 2024 can be described as “butter that has been scraped over too much bread”, to borrow a line from the Lord of the Rings. But the focus on what little butter there is shouldn’t distract from the notable absences—each of which has significant political ramifications.
TCA Sharad Raghavan is Deputy Editor – Economy at ThePrint. He tweets @SharadRaghavan. Views are personal.
(Edited by Theres Sudeep)