A Bonanza for Corporates

If the denial of the steady slowdown in the economy has been the hallmark of last year’s budget, this year’s budget has gone a step further by refusing to acknowledge the millions of informal and formal sector jobs lost to the pandemic and by ignoring the plight of the migrant workers, whose long march back home was the most visible face of the pandemic. All that the budget promises the migrant labour is the One Nation One Ration Card scheme and a portal to collate their whereabouts. In fact, the informal sector even fails to find a mention in the budget speech. And worse, even as the pandemic pushes millions back below the poverty line, the budget only makes haste in cutting down even the little subsidies and social security available. While the overall budget subsidies have been pared down by 43% to `3.7 lakh crore, the outlay of the Mahatma Gandhi National Rural Employment Guarantee programme has been cut by 34.5% to `73,000 crore.

A cue to the broad thrust of the budget is clearly evident from the nature of resource mobilisation, the emphasis of which has shifted from direct taxes, paid by the middle- and high-income segments and corporates, to indirect taxes that fall on the whole population, including the most disadvantaged groups. Numbers show that though gross tax to gross domestic product (GDP) ratio has slipped only marginally from 9.9% in 2019–20 to 9.8% in the revised estimates for 2020–21, and is expected to revert once again to 9.9% in the budget estimates for 2021–22, the share of direct taxes has fallen from 5.2% of the GDP in 2019–20 to 4.7% in 2020–21, while that of indirect taxes has increased from 4.7% in 2019–20 to 5.1% in 2020–21. And the share of indirect taxes will remain at a higher level even in 2021–22. Clearly, the budget has now shifted a disproportionately larger share of the tax burden from corporates and more affluent groups to the poor and disadvantaged who face the brunt of the pandemic.