There are speculations about how the context will impact the interim budget presented on 1st February 2024. Despite global headwinds of growth stagnation, conflicts and oil-price fluctuations, the macro-economic picture of India looks pretty stable. We expect the Finance Minister to continue to tread the path of fiscal consolidation. Several economists expect the Government to meet its current fiscal deficit target of 5.9% and peg the deficit target for FY25 between 5.2% and 5.5%. However, the upcoming general elections make it unlikely that there will be more fiscal austerity just before the general elections. Though we may not see an increase in direct tax rates, there can be expectations of increasing capital gains tax or wealth tax and disinvestments to maintain fiscal consolidation and shore up Government revenues. There have been reports of imposing taxes on rich farmers, who have, till now, stayed out of income tax brackets.

But what would the majorities of working people across the country hope from Budget 2024? They would pin their hopes on efforts for poverty reduction, employment generation and the continuance of welfare programs. In this context, we need to remember the welfare schemes’ role in poverty reduction across the country. Recently, a NITI Aayog working paper has pointed out that India lifted 24.8 crore people out of poverty in the last nine years. This resonates with the UNDP report released in July 2023 that stated that 415 million Indians had come out of multidimensional poverty in the previous 15 years. The NITI Aayog report speaks about the welfare measures and social security schemes that led to this poverty reduction, especially the Public Distribution Scheme under the National Food Security Act, Poshan Abhiyan, Anganwadi Services, Ujjwala Yojana, and Jal Jeevan Mission.

Despite some criticism, such as doubts expressed on the methodology in arriving at the out-of-poverty number and the inconsistencies with data trends on consumption, it is clear that these welfare schemes have played a vital role in advancing poverty eradication and will need to continue. India needs additional steps in the upcoming budget to strengthen this direction of travel.

Budgetary allocations on welfare are likely for four different groups, termed as ‘GYAN’ by the Prime Minister in his earlier speeches. These include the Gareeb (poor), Yuva (youth), Annadata (farmers) and Nari (women).

As stated earlier, poverty reduction depends on the country’s robust welfare systems. MGNREGA has been essential to this, and budgetary allocations must grow. In the past two financial years, the budget for the scheme had been reduced, with the FY24 budget being lower than revised estimates for FY23. As per the MGNREGA website, as of 23rd January 2024, the expenditure excess and payment due for FY24 add up to about Rs 15,000 crore. Similarly, the long-awaited need to boost and support urban employment through guarantees and budget outlays would help efforts focused on the urban poor.

Along with employment, “Housing for All” is another crucial component for poverty reduction targets. Government estimates show a shortfall of 1.5 million houses in the urban areas and 20 million in the rural areas. The extension of Pradhan Mantri Awaas Yojana (Urban and Rural) for another five years beyond 2024 (when it closes) is crucial to meet the needs of the urban and rural poor. This would need budgetary allocations and enhanced outlays. The Prime Minister has recently released the first instalment for pucca houses amounting to Rs 540 crore to one lakh beneficiaries from particularly vulnerable tribal groups (PVTGs). India needs similar measures to benefit other vulnerable groups, including De-notified tribal communities, pastoralists, Dalits and other minority groups.

Food security is another crucial area for sustainable development and further poverty reduction. In January 2023, the Government approved the integration of Pradhan Mantri Garib Kalyan Anna Yojna’s (PM-GKAY) benefits with the National Food Security Act (NFSA) provisions. This integration seeks to streamline the delivery of free food grains. It also ensured that families falling under the Antyodaya Ann Yojana (AAY) and priority household categories receive free food grains according to their entitlement under NFSA. The Government extended the PM-GKAY late last year for another five years. As per news reports, the Ministry of Consumer Affairs, Food and Public Distribution has estimated next year’s food subsidy bill to be 2.2 trillion rupees ($26.52 billion). This is 10% higher than a projected outlay of nearly two trillion rupees ($24.11 billion) for the current 2023-24 fiscal year and will need to see increased outlays in the food subsidy part.

Youth unemployment and underemployment is a challenge India is facing. The Periodic Labour Force Survey (PLFS) Report released in October 2023 revealed that 10% of youth overall (i.e. aged between 15 and 29 years) and 15.7% of urban youth were unemployed. Employment generation, especially in the manufacturing sector, has become a top priority in realising the aspirations of our youth and our demographic dividend. Till now, we have depended on the production-linked incentive scheme offered to 14 types of industries in the manufacturing sector. The Government may extend the scope of the Production Linked Incentive (PLI) scheme to include sectors like garments, jewellery and handicrafts in the forthcoming budget. While this can offer a boost to employment generation in the manufacturing sector, what must also follow is social security provisioning. Jobs created now or generated in the past must provide decent employment conditions and adequate social security provisions. The Social Security Code 2020 and the Occupational Safety and Health Code 2020 are awaiting on-ground implementation, and the interim budget offers an excellent opportunity to announce and make allocations for a robust Social Security Fund.

Budget allocations for the agricultural sector might grow, with news reports suggesting that farmers expect to benefit from a likely 33% increase in the social transfer under the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan). Under the scheme, ₹6,000 is transferred yearly to small and marginal farmers, which may go up to ₹9,000 per annum. However, the beneficiaries of the PM-Kisan scheme include only farmers who own cultivable land. The scheme does not cover agricultural labourers, who form 55% of the agricultural workers in the country. The Standing Committee on Agriculture in 2020 noted that tenant farmers, a significant part of landless farmers in many states, do not receive income support benefits. It recommended that the Central Government examine this issue in coordination with States so that landless farmers can benefit from the scheme. It would be a welcome step to include landless agricultural workers in this scheme and make budgetary announcements to enhance coverage of this scheme to reach the most marginalised in the agricultural sector.

The fourth and perhaps the most critical pillar for development realisation needs to be for the women of India. A focus on women’s empowerment through augmented budgetary backing – and in this budget, we hope to see an increase in welfare support and empowerment-inducing livelihood generation measures. Last year, the Finance Minister’s union budget address underscored women’s economic empowerment, focusing on transforming lakhs of self-help groups (SHGs) in India into viable income-generating producer organisations and sustainable women enterprises. India boasts the world’s largest network, with over eight crore women participating in SHGs. While these networks have significantly contributed to financial inclusion, they have yet to harness self-employment and entrepreneurship to realise the full potential of income generation. The Indian Government envisions the emergence of “Lakhpati Mahila” (wealthy women) from these networks. There is a crucial need to assist these women SHGs in progressing towards larger, value chain-oriented producer organisations engaged in diverse sustainable and green business activities. This transition will unlock not only the potential of the women in these networks but also their leadership in a myriad of production activities, services and manufacturing options in the non-farm and farm sectors. We hope to see special budgetary allocations towards welfare support for single women through pensions and livelihood support, which has been done only by some state governments.

While the Government may focus on these four crucial constituent groups for this year’s interim budget, we should not overlook the emphasis needed on climate change. On 22nd January, the Prime Minister announced a scheme to install rooftop solar systems in 10 million homes nationwide. The Pradhan Mantri Suryodaya Yojana’s main objective is to provide electricity to low and middle-income individuals through solar rooftop installations. It also aims to offer additional income for surplus electricity generation. This will boost the hitherto slow-performing Roof Top Solar (RTS) programme. Similarly, investments into and allocations for climate resilient agriculture and organic farming introduced earlier, particularly in the Budget 2023 through the National Mission on Natural Farming and schemes promoting millet farming, must also be continued and enhanced.

While energy transformation is a big ask of climate policy, climate justice is also essential, specifically for budgetary purposes, the need for the loss and damage compensation fund. World Bank estimates that by 2030, India may account for 34 million of the projected 80 million global job losses from heat-stress-associated productivity decline, with more than 101 billion hours of work lost annually in rural and urban sectors. The Reserve Bank of India’s reports suggest that up to 4.5% of India’s GDP could be at risk by 2030 owing to lost labour hours from extreme heat and humidity. In Delhi, for example, construction sector jobs are impacted for several months each year due to air pollution-related construction bans, impacting lakhs of construction workers. In such circumstances, the operationalisation of the loss and damage fund becomes crucial and budgetary allocations are, therefore, the need of the hour.

Thus, whatever the context, the well-being of majorities of India’s working population looks for robust welfare measures and inclusive development in the Budget 2024-25.

Disclaimer: The article was originally published on Dailyhunt. The views expressed in the article are the author’s and do not necessarily reflect those of ActionAid Association.