Table of Contents
- 1. India’s Growth Imperative: Navigating teh Crossroads of Fiscal prudence and Social Welfare
- 2. What specific social safety net programs does Dr. Roy believe require increased resource allocation in the budget to achieve inclusive growth?
- 3. India’s Growth Imperative: Navigating the Crossroads of Fiscal Prudence and Social Welfare
- 4. Interview with Dr. Anirban Roy,Economic policy Expert and Professor at Center for Growth Economics,JNU
As India approaches the culmination of fiscal year 2024-25, the economy finds itself at a critical juncture. Economic growth, projected at 6.4% by the National Statistics Office (NSO), stands as the slowest expansion in four years, trailing behind the 2018-19 performance. This backdrop sets the stage for a crucial budget analysis, seeking to gauge its effectiveness in addressing these economic challenges.
The budget speech for 2025 perceptively acknowledged the need for agricultural reform, a sector marked by a modest 3.8% rise in real GVA during the fiscal year 2024-25.Recognizing the sector’s significance, the budget rightfully emphasizes enhancing agricultural productivity, facilitating credit access, and promoting crop diversification. Notably, the focus on pulses through the Mission for Atmanirbharta in Pulses signifies a much-needed shift in agricultural production and farmer incentives.
The Household Consumption and Expenditure Survey (HCES) 2022 revealed a concerning trend: a shrinking share of pulses in overall monthly per capita expenditure in rural areas.The emphasis on pulse cultivation, therefore, holds the potential to drive a important change, paving the way for a much-needed revamp of the public distribution system. This reform could move away from the current reliance on rice and wheat, offering greater nutritional diversity and economic benefits for farmers.
The budget also addresses the sluggish growth of the manufacturing sector through sensible measures.Enhancement of credit guarantees for Micro, Small and Medium Enterprises (MSMEs), the introduction of credit cards for micro-enterprises, and the launch of the new National Manufacturing Mission aim to stimulate supply chains and boost industrial activity.
Furthermore, the budget pleasantly surprised many by exceeding expectations with tax exemption limit increases, aiming to stimulate private consumption, a vital driver of economic growth.However, a closer examination of the budget numbers reveals a more concerning narrative, marked by mid-year contractions in key sectors.
Expenditure allocations for the ministry of Agriculture and Farmer Welfare have witnessed a notable 3% decline compared to revised estimates, marking a sobering trend. The situation is even more alarming in the social sector, which faces significant cuts despite the government’s rhetoric of strengthening welfare programs.
A glaring example is the Ministry of Tribal Affairs, which experienced a 39% budget slash in FY 2023-24 revised estimates, despite policy commitments to expand Eklavya Model Residential Schools (EMRS), aimed at providing quality education for tribal children.
Similarly, the Ministry of rural Development, responsible for flagship programs like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the National Social Assistance Program (NSAP), and Pradhan Mantri Awas yojana Grameen (PMAY-G), also faces stagnant allocations.
These mid-year cuts in social sector spending raise serious concerns about the government’s commitment to reducing poverty and improving human development indicators.
As Avani kapur, Founder and director of the Foundation for Responsive Governance, aptly points out, “the premise of infrastructure-driven growth rests on two assumptions — that public investment will crowd in private investment, and that infrastructure expansion will drive long-term economic mobility and welfare. Though, neither assumption fully holds if the execution of capital spending is inconsistent, and states struggle to utilize allocated funds.”
India’s economic recovery requires a balanced approach that prioritizes both fiscal prudence and social welfare. While infrastructure development plays a crucial role, the government must ensure that social programs receive adequate funding to empower vulnerable populations. A robust social safety net is essential for fostering inclusive and sustainable growth.
Interview with Dr. Anirban Roy,Economic policy Expert and Professor at Center for Growth Economics,JNU
Archyde: Dr. Roy, thanks for joining us today. India’s economic growth slowed to 6.4% in FY2023-24, the weakest in four years. What do you think is the crux of this slowdown?
Dr. Roy: India’s slowdown isn’t necessarily a singular story. There’s a complex interplay of global headwinds—rising inflation and interest rates affecting global demand, and supply chain disruptions—compounded by internal factors like a slowing implementation of structural reforms and lingering consequences of the pandemic.
Archyde: This year’s budget saw renewed focus on the agricultural sector and manufacturing, initiatives that resonate strongly with yoru focus on inclusive development. Can these measures bridge the gap?
Dr. Roy:The emphasis on boosting agricultural productivity through initiatives like “Mission Atmanirbharta in Pulses” is promising, especially considering its potential to create a ripple effect across rural India. It signals a move toward diversifying away from the usual rice-wheat dependence and directly addressing nutrition insecurity. On manufacturing,initiatives supporting msmes like credit cards for micro-enterprises are laudable.
Though,without a concrete increase in resource allocation for critical social safety net programs,true inclusive growth becomes a challenge.
Archyde: Your research on “Infrastructure as Social Capital” dives deep into how public spending must be leveraged beyond just GDP figures. Do you see that aspect reflected in the budget?
Dr. Roy: While infrastructure building is important for economic activity, the real test is translating that infrastructure into tangible improvements for people.
Increased allocations to Pradhan Mantri Gramin Digital Saksham Bharat – a crucial initiative aimed at bridging the rural digital divide — is encouraging in this context.
The budget does risk falling short unless it directly aligns infrastructure spending with social programs— ensuring quality access to healthcare and education alongside expanded connectivity and roadways. Otherwise, the benefits risk being skewed to a privileged few.
Archyde: Dr.Roy, the mid-year cut to social sector expenditure, including notable reductions for critically important programs like MNREGA, raises serious questions. Is India walking the fine line of fiscal prudence in a socially equitable manner?
Dr. Roy: Finding the right balance is paramount, and there seems to be inconsistency in budget priorities. The economic recovery truly necessitates a socially-inclusive approach—investments not just in growth, but in ensuring welfare reaches vulnerable sections.
Ignoring the human component risks perpetuating existing inequalities rather than achieving sustained, shared progress.
“A stitch in time saves nine” truly resonates here—meaningful social programs, timely disbursements, and investment in people remain crucial not as mere costs but as critical pathways to ensuring stable, sustainable economic growth for India in the long term.
