Indian Budget Overlooks Unemployment and Farmer Distress, Says Jayati Ghosh

Finance Minister Nirmala Sitharaman's budget proposals lack a strategy to tackle unemployment, inflation, and farmer distress, according to economist Jayati Ghosh. She noted that the minor benefits offered to the middle class are insufficient to stimulate domestic demand significantly.

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Key Issues Unaddressed

The budget fails to address critical issues like unemployment, inflation, farmer distress, and the viability of small and medium enterprises (SMEs). Ghosh stated, "The problems of unemployment, inflation, farmer distress, viability of small and medium enterprises, and climate change -- the central problems of the Indian economy -- have not been addressed."

Ghosh criticised the budget for not recognising the need for substantial changes. "While the government has been forced to recognise that these are problems, it is unwilling to do the kind of change and strategy necessary to actually address the problems," she said.

Farmers' Expectations

Farmers were expecting a formalisation of the Minimum Support Price (MSP) system. Ghosh mentioned, "There are tiny measures that are going to be a disappointment. I think farmers across India were expecting some kind of statement about formalising the minimum support price MSP system, if not given a legal backing."

The budget also missed opportunities to support young people seeking employment. Ghosh highlighted their struggles with a flawed education and testing system that offers no jobs at its end. "You cannot allow this to continue," she added.

Token Measures

Ghosh criticised measures like internships and subsidies as ineffective. She said, "The measures like internship and subsidies announced in the budget are token measures copied out of the Congress manifesto, and are not going to make any difference."

She also dismissed sops like Rs 5,000 for an intern for three months as nonsensical. According to her, job creation requires a much bigger effort, including public employment initiatives.

Lack of Demand

The real issue in India's economy is a lack of demand. Ghosh explained that this affects both big companies and SMEs, leading to no job creation and hence no demand. "It's a vicious cycle. This budget should have tried to change that," she noted.

Private investment responds to demand. Ghosh pointed out that without measures to increase demand by putting money into people's hands through higher wages and more jobs, there will be no improvement.

Angel Tax Abolition

The abolition of the Angel tax will have minimal impact, according to Ghosh. The Angel tax is a 30% income tax on funding raised by unlisted companies or startups if their valuation exceeds fair market value. "A few startups will benefit, but again, even with startups, we are getting much fewer startups today because of inadequate demand," she said.

Vision for 2047

On India's vision of becoming a developed nation by 2047, Ghosh remarked that poor nutrition and low human development indicators hinder progress. "You can't become a developed nation by just having a few very, very rich people -- multi-billionaires and trillionaires. You have to have most of your people actually doing better, and that's not happening," she said.

The budget should have focused on MSMEs and food security while outlining ways to control rising food prices. Without addressing these fundamental issues, achieving significant economic progress remains challenging.