3rd February, 2021
The Union Budget 2021-22 coming as it does as a continuation of the mini-budgets in post-Covid-19 period is rather disappointing for the income-earners and the working people. The two labour market outcomes from the COVID-19 hit economy are, unemployment and underemployment and diminution in incomes. The Union Budget does not address either. The post-Covid-19 economy needs three primary measures to address these, which are missing in the Union Budget.
1. To revive business especially those ravaged by the COVID-19 like the hospitality and tourism sectors in a direct manner rather than through extending credit and ensuring liquidity (whose effectiveness is less stronger).
2. To strengthen the aggregate demand in the economy. This can be achieved by putting more money in the pockets of people. For example the government could have provided some income tax sops to the income earning people. It is rather puzzling as to why the government is still not willing to implement direct benefit transfer (DBT) to the marginalized workers for a defined tenure on some criteria. It is still not late in the day to implement it. There are no direct tax sops which would make the middle class people to go to the market as they would have little more money left in their pockets.
3. To provide for employment generation. Of course, the huge investments in the infrastructure like construction of roads (though election-prompted) will generate some jobs. The Budget's allocation of Rs.73,000 is much less than the eventual 1.12 lakh crores during COVID-19. The government is not keen on creating urban employment assurance schemes akin to rural scheme. Is it not high time to start URBAN employment assurance scheme given that there is NO unemployment insurance/assistance scheme (save a narrowly-defined one under the ESI Act, 1948 which has few takers) for the people in the urban areas (coinciding with secondary and the tertiary sectors). The Economic Survey did not acknowledge the problem of unemployment during the COVID-19 and skirted the whole issue of it and thus ignored the elephant in the room. Rather it sought to create a feel good factor by relying on annual and quarterly data unrelated to COVID-19 period. Now the Union Budget follows the same and save for derivative macro strategy of providing for mega textile parks and infra-investments (which are essentially election driven, though) does not address the issues concerning labour in a comprehensive manner which is not only expected of but also is the dharma of the State in the distressed times.
The Budget has merely reiterated the legislative measures such as universal minimum wages, night shift in all sectors for women workers, social security for gig and platform workers, etc. There is not any financial allocation made in the Union Budget for them to assume a sense of relevance. For example, the social security fund or a skilling fund (given the huge magnitude of job losses and the technological challenges) and some DBT - then they assume budgetary significance. For example, what is the budgetary allocation for aiding the electronic system of labour administration that has been envisaged in all the four Labour Codes? Does it not need funds for both the Central and the resource-constrained State governments? Lest these run the risk of degenerating into platitudes.
On the other hand, the Budget has intensified the reform processes. Following up on labour law liberalization, now the government has made bold to switch from disinvestment to privatization of public sector (both Central and the state governments') and to increase the FDI from 49% to 74% in the Insurance sector. The working people have clearly protested these very reform measures and the government is quite clear to pursue the same relentlessly. The high target of 175,000 lakh crores is slightly less than last year's target around 200,000 lakh crores though the achievement was barely inadequate thanks to COVID-19. But what is significant is the reform mindset of liberalization, privatization and broadening the spaces for foreign capital.
On the whole, this Budget has little to offer to the income earning and working people and nothing to address the COVID-19 inflicted emotional and financial wounds from which millions have not recovered. On the other hand, it will intensify the insecurities of workers. IN sum, this is a Budget that reflects the not unjustified impression in the minds of trade unions and workers that they cannot expect much or even anything from the Union Budget even though unions ritualistically submit their views to the Finance Minister.