Show commitment to equity in the Budget

News: Recently, Oxfam International presented “Inequality Report” with the title “Inequality Kills”.

What does the report say?

One, the report highlighted the growth in wealth of a few and the simultaneously increasing poverty among millions.

Two, more than half the world’s new poor are from India and 84% of Indian households have suffered a loss of income during the pandemic, with 4.6 crore people falling into extreme poverty. However, Oxfam says the combined wealth of India’s 142 billionaires has increased by a massive ₹30 lakh-crore.

Why budget should show commitment to equity?

Inequality threatens basic rights, and there is also a constitutional mandate to reduce inequality. Directive Principles of State Policy should be a guiding light for the budget. For example, Article 38(1) states that the State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic, and political, shall inform all the institutions of the national life.

Article 39 (c) states that the State shall secure an economic system that does not result in the concentration of wealth and means of production.

Which issues should be immediately addressed by Budget 2022?

First, India witnessed a decline in health budget during the COVID-19 pandemic by a huge 10% in the last year. Social security expenditure has declined from 1.5% in 2020-21 to 0.6% of the Union Budget in 2022.

Second, people are deprived of the most basic services and entitlements. Social security pensions, for the elderly, the disabled, and widows have been frozen at ₹200-₹300 a month for almost 15 years.

Third, during the pandemic, National Food Security Act (NFSA) and the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) have saved millions of Indians from hunger and premature death.

However, after increasing allocations in the first phase of the pandemic, allocations were frozen in Budget 2021-22. It undermines the legal guarantee of work on demand.

Fourth, the priority list of households under the NFSA is based on the 2011 Census. However, the population has increased, and therefore 12% of legally entitled people cannot get subsidized food grain.

Fifth, the pandemic has affected formal education and many teenagers from poor households have already joined the workforce. But the budget 2021 reduced the education budget by 6%, which will further institutionalize multidimensional poverty.

What is the way forward?

First, programmes such as the food security Act should receive the quantum of allocations needed, as India has food grain stocks of more than 90 million tons.

Second, The People’s Action for Employment Guarantee (PAEG) has estimated that ₹2,64,000 crore will be needed to guarantee 100 days’ work for currently active job cards. Hence, there is a need to increase allocation to MGREGA.

Third, to deal with resource scarcity and to reduce inequality, the budget should introduce a 2% wealth tax and a 33% inheritance tax on the top 1% of our population. It will fetch an estimated ₹11 lakh crore per annum to support basic social sector entitlements.

Fourth, it is time to introspect, generate robust data, and follow a rights-based policy framework to protect the poor and the marginalized.

Source: This post is based on the article “Show commitment to equity in the Budget” published in The Hindu on 31^st Jan 2022.