Budget 2023 | Capex at the cost of social expenditure

Budget 2023, with its myopic vision of just increasing capital investments, has brushed aside the social aspect of human lives

The broad direction of the Union Budget presented on February 1 is for more capital expenditure at the cost of social expenditure. Massive cuts have been made in rural employment guarantee, and other social sectors.

Reduced Budgetary Spending

The total Union government expenditure in relation to GDP has not risen: from 15 percent in 2009-2014, it is currently at 14.9 percent. So, the much-acclaimed figures of increased government expenditure, in fact, remain almost the same.

What is the urban story?

In urban development, the total expenditure of the Union government has fallen from 0.5 percent of the GDP in 2021-22 to 0.3 percent in the budgetary estimates for 2023-24. The only increase is in the capital expenditure from 2.5 percent of the GDP in 2021-22 to 3.3 percent in the budgetary estimates.

The rise in capital expenditure when taking into consideration inflation at 6 percent would be not of much value. Though the push for an increase in capital expenditure, particularly in the cities, it means a push for more capital-intensive technologies — and not on the social sector spending.

The total budget outlay for the ministry of housing and urban affairs (MoHUA) has seen a fall. The 2022-23 proposal was Rs 76,549.46 crore (capital Rs 27,341.01 crore and revenue Rs 49,208.45 crore), and for 2023-24, the proposal is Rs 76,431 crore.

Committed to benefit large corporates, the current budget spends nearly 30.32 percent of the total urban budget on metro construction. This is limited to a few cities, and most of the metros are running huge losses. The total outlay under this head is Rs 23,175 crore with a capital expenditure of Rs 23,056 crore.

A Drastic Fall

Social housing has not found mention in the speech. Transit-oriented development (TOD), throughout the world, is a model of private partnership meant for just a small section of the urban population. There is a huge reduction in the allocation for PMAY(Urban) from Rs 59,963 crore in 2021-22 to Rs 28,708 crore in 2022-23 to further fall to Rs 25,103 crore in the 2023-24 Budget.

The smart cities mission, the flagship programme of the Narendra Modi government, does not find a mention in the Finance Minister’s speech. The allocation on the smart cities mission has seen a fall of Rs 800 crore from the last year’s Budget. The total outlay under the urban rejuvenation mission comprising both AMRUT and smart cities mission is Rs 16,000 crore (last year it was Rs 15,300 crore), which once again fails to address the growing demand of urban infrastructure in India. The only notable feature is the promise of providing mechanical sewer cleaning machines in all towns.

Misplaced Priorities

Under the head ‘Sustainable cities of tomorrow’, the Budget explains sustainability. Accordingly, sustainability comes from the TOD, municipal bonds, enhanced availability of urban land, efficient use of land resources, etc. This is not the way to achieve the 17 SDGs, most of them linked to cities.

It is ridiculous to even imagine municipal bonds as a mode for generating revenue resources in the cities when most of the cities are not even able to bear their expenses under a non-plan head. Who will buy municipal bonds in such cities?

Urban Employment Guarantee

An urban employment guarantee scheme is direly required across India. The pandemic has shown how important this demand is. The Budget does not talk about this.

Likewise, the Budget failed to address the issues pertaining to the migrant workers in the cities. More than 280 million people have gotten themselves registered under this portal. The least that the government could have done is to have announced the construction of houses, particularly rental and labour hostels for the working people in the cities.

The Budget is also silent on pollution and the impact of Climate Change in the cities. Pollution is killing people; we have one of the highest polluting cities in the world. There should have been an integrated approach to dealing with it. In fact, urban mobility, instead of focusing on metros, should have been the priority of this government. The disaster risk reduction and mitigation, and adaptation strategies could have been important areas of capacity building in the cities and grants linked to such programmes would be highly beneficial.

However, Budget 2023, with its myopic vision of just increasing capital investments (whether that will happen or not is another question), has brushed aside the social aspect of human lives.

Tikender Singh Panwar is former deputy mayor of Shimla.

Disclaimer: The views expressed are the author's own. They do not necessarily reflect the views of DH.