The problem of moving attention away from services

Key Highlights

Poverty and income

• The Finance Minister said that 25 crore people have been brought out of multidimensional poverty (MPI) in the last 10 years.
• The limitations of the MPI in estimating changes in poverty have been discussed extensively.
• For instance, the MPI does not tell us about the trends in income poverty, a useful indicator of economic well-being.
• While this used to be captured by the consumption expenditure survey of the National Sample Survey, no data on this are available for the period after 2011-12.
• The further claim that the “average real income of the people has increased by 50%” is also misleading.
• According to the last Economic Survey, the real per capita income in 2003-04 was ₹42,995 and increased to ₹68,572 in 2013-14.
• The advanced estimates for 2023-24 place per capita income in 2011-12 prices at ₹1,04,550. So, in both periods, the per capita increased by a similar factor of 1.5 (1.59 and 1.52).
• On the other hand, if we look at real wages during this same period, there has been a stagnation.
• As reported in a recent report by an international periodical, “In 2004-05 the average rural worker earned an adjusted $3 per day.
• That jumped to $4.80 by 2014 and has remained flat ever since”.
• There is other evidence to show that the incomes of the poor are depressed.
• This is also reflected in the poor growth in private final consumption expenditure.
• Structural change in employment is seeing a reversal with the share of agriculture in total employment going up, which is an indication that there are not enough jobs available outside of agriculture.
• Even the increase in women’s labour force participation rates in the last 4-5 years seems to be a sign of distress
  • As most women are in unpaid family labour and not in gainful employment.
• The demand for jobs under MGNREGS is still high despite the low wages being given and the various bottlenecks in accessing the Scheme.
• This is reflected in the fact that as per the Revised Estimate (RE) for 2023-24, the outlay for MGNREGS is ₹86,000 crore (compared to the Budget Estimate of ₹60,000 crore), which is also the budgeted allocation for FY2025.
• A number of estimates show that to meet the full demand and increase wages to at least minimum wage levels, much more would be needed.

Allocations for social sector

• The Budget allocations for most social sector schemes and departments remain more or less the same as last year.
• The allocations for school and higher education as well as the health and family welfare departments show some nominal increases compared to last year’s BE, about 6-8%.
• Although upgradation of Anganwadi centres was mentioned in the speech, the budget for Saksham Anganwadi at ₹21,200 crore is slightly lower than the RE of ₹21,523 crore for 2023-24.
• The budget for PM-POSHAN (school mid-day meals) is ₹11,600 crore compared to the RE of ₹12,800 crore for 2023-24.
• It must be remembered that in real terms, most of these schemes have seen reductions of 25-30% over the last 10 years.
• The allocation for the National Social Assistance Programme, which includes old age, widow and disability pensions, in nominal terms, was ₹10,618 crore in 2014-15 and is now only ₹9,652 crore.