Book, Line and Thinker | Looking back at a decade of Modi Budgets

By the time the next day comes along, the only thing most Indians care for is whether their tax liability went up or down. More often than not, there is no time to discuss whether the country is spending enough on issues like health and education. Or, even broader issues like what was the government’s strategy or intent of the Budget.

So it is interesting to pick up a book — Union Budgets 2014–24: An Analysis — that attempts to analyse the first decade of Budgets under PM Modi.

At one level, for a big and varied country such as India, with a fairly fractious political landscape and a never-ending electoral cycle, it might be hard to argue that the Modi government could have presented one bad budget after another and yet continued to stay firmly in power.

But this book makes that argument. And it makes in a manner that it doesn’t even attempt to hide the author’s stark ideological differences with the Modi government.

Union Budgets 2014–24: An Analysis — attempts to analyse the first decade of Budgets under PM Modi. (Generated using AI)

The Author

The author, Neeraj Jain, is the editor of Janata Weekly (an online magazine promoting socialism). Jain is a B Tech from IIT BHU and is described as a “people’s economist”. However, Jain has not based the whole analysis on his own work. He depends heavily not just on a lot of media reports but also observations and papers by (mainstream) economists who have questioned the government’s claims.

The book is divided into 18 Chapters and instead of analysing each year’s Budget individually, Jain has looked at the main areas of concern for lay readers — such as education, health, agriculture, poverty, employment etc. — as individual chapters.

There are some gaps though, owing presumably to Jain’s lack of interest. For instance, there is no chapter on defence allocations. Not having to worry about defence is a luxury afforded only to analysts and sector experts, not to any Indian Finance Minister. Adding defence in the Budget analysis often fundamentally reshapes calculations, as European countries are in the process of realising in the wake of the Trump trauma.

The Main Contention

In the introduction, Jain writes that when he matched the official claims about the economy — as Budgets provides an annual account of how the economy is doing — with data from independent reports and studies, “the conclusions were starling”.

“The actual financial allocations made in the Union Budget papers revealed that the priorities of the Modi government were very different from the tall claims made in the Finance MInister’s budget speech and the Economic Survey,” he writes.

Jain starts off with some very relatable queries: “Can’t the government of India — the Centre and the states — provide free, good quality education, free/affordable health care, subsidised food and nutrition, and decent pension to all our people? Can’t it increase spending on agriculture to make it profitable, increase the availability of decent jobs in the economy to bring back dreams in the eyes of our youth, genuinely increase spending on the schemes directed at benefitting women, Dalits and Adivasis, minorities?”

However, before you can wrap your head around the cumulative effect of all these demands, Jain answers his queries: “Of course, it can.” He then points to the last chapter in the book that provides an alternative budget proposal that can help the government to achieve these goals.

The Analysis

Given the ideological standpoint and the exalted demands from annual incremental Budgets, there are two main problems that this book’s analysis throws about budget allocations during Modi aforementioned years.

One, is that often enough budget allocations are found to be inadequate.

For instance, allocations towards education and health — arguably the two most important aspects that will determine the future of Indians and India’s economy — are not only low but also falling.

Allocation for health, which have traditionally been well below the global average, was 2.2% of the total Budget outlay in 2014-15 (Financial Year 2015), went up to 2.6% in 2017-18 and then kept falling notwithstanding the Covid pandemic to stand at 1.96% of the total Budget expenditure in 2024-25. This is not to say that budget allocations towards health did not go up in absolute terms; they did, rising from Rs 39,200 crore in FY15 to Rs 94,700 crore in FY25. But as a percentage of the total budget expenditure, they have gone down and that, unmistakably, suggests the lack of adequate emphasis on this issue by the Modi government.

Similarly, allocations to the Ministry of Education were 4.6% (of the total Union Budget) in FY15 but fell to just 2.5% in FY25.

Similarly, subsidies for food, fertiliser and fuel (LPG and Kerosene) were 15% of the total outlay in FY15 and fell to less than 8% in FY25.

The second problem is that often what the Modi government may quote as a data point underscoring its success could be viewed as a failure. The subsidies data is a case in point.

But perhaps the best example is about what has happened to capital expenditure — an issue that the Modi government considers its great success and the author lists as a colossal failure.

Capital expenditure (capex) is the kind of expenditure that the government makes towards building productive assets such as roads, bridges and ports etc. Such investments into the economy often “crowd in” or incentivise the private sector to invest and expand its footprint.

The other kind of investment is called “revenue expenditure” and it is essentially of the kind that involves daily expenses such as salaries.

The data shows that capex, both in absolute terms as well as a percentage of the total Union Budget, has been going up. This also means that revenue expenditures have been falling as a percentage of total Budget outlay. The government shows this data with pride, claiming that it is switching from inefficient kind of spending to more productive kind of spending.

Jain looks at these very trends but views them in the context that overall size of the Union Budget (as a percentage of GDP ) has been coming down. Jain thus claims that the government is not spending enough overall to boost demand, and that, with the total budget outlay getting smaller in size relative to the total GDP, the government is losing its ability to boost total demand in the economy.

Jain points to private sector investments still struggling — more than 6 years since the push for capex started — to claim that this was an ill-advised move (Read the latest ExplainSpeaking). The government on the other hand, while still unhappy about lack of private investments, points to higher GDP growth rates and lower unemployment data to claim that its strategy worked.

Jain counters by questioning the credibility of GDP growth and unemployment data.

Conclusion

Thanks to massive data gaps — possibly the biggest one created by the lack of Census in 2021 — any analysis can end up with people disagreeing on the underlying facts.

Beyond the questions of data credibility, the analysis suffers from the fact that all of it has been done from an ideological frame that is diametrically opposite to the Modi government. As such, as shown in the case of capex, the government and its critics could be pointing to the same data and to buttress completely different claims.

For instance, Jain, often enough, argues that the government has tried to look at a sector as an opportunity for the private sector to make money, instead of the government providing services itself for much cheaper. The Modi government has done it because it believes that the government should retract from the “commanding heights” it occupied during the decades preceding economic liberalisation of 1990s. The government, to give an example, considered it more prudent to sell off a loss-making Air India that its civil servants were struggling to run. Jain looks at that very decision as an example of how the government is enriching the private sector by giving away valuable public assets at throwaway prices.

In other words, be clear about your ideological stand before analysing Budgets or reading any analysis.

Are you happy with the Modi government budgets over the years? Even if you believe they could have done more, do you see them as steps in the right direction? Or do you believe that the Indian economy needs a radical (socialist) turn?

Share your views and queries at udit.misra@expressindia.com

Take care,

Udit