2025-26 Budget Have Two Tasks Pep Up Demand And Generate More Jobs

Let us look at the latest trends in the Indian economy. First, the consumption pattern of the people and second, the job generation scenario. Both these issues are intricately linked with the growth of the country's economy and the raising of living standards of the people. Growth just does not mean the high GDP figure, it is related to the quality of the growth and whether the additional hike in GDP growth has helped the major sections of the country's population in terms of rise in wages and other social indicators including health and education.

In the last more than ten years of the Narendra Modi Government, the emphasis was on programmes focusing on boosting both infrastructure development and private investment. There were no special programmes for channelizing funds to the rural as also the urban poor. The pandemic in 2020 and 2021 hit the living conditions of the poor and the middle classes in a big way having its impact on the consumption. The situation has not substantially changed as the latest household consumption data show. The high price of food items have eroded the capacity of the lower as also middle classes to spend more on the purchase of more non food items. Further the health care costs have brought down in the last two years a large number of people to poverty level from their earlier outside poverty level position.

Recent studies made by some experts have revealed that the real wages for regular workers- including those belonging to better paid category has declined by 0.9 per cent per year in rural areas and 0.7 per cent in urban areas between 2017-18 and 2022-23. The decline is real even compared to 2011-12. This means that the purchasing capacity of the lower middle class people as also comparatively better sections, has declined compared to even 2011-12. This has led to the sluggishness in demand as all the FMCG companies have been mentioning. They are saying that the white goods sector market in rural areas is getting the heat due to the lowering of the paying capacity of the people. The consumers are too preoccupied with taking care of the essential requirements including food items, health and education.

The stagnation in demand for consumption of non-food goods has become so worrying that the CEOs themselves are talking of the need for the Government doing something urgent for increasing the spending capacity of the low income families. The Confederation of Indian Industry(CII), the organization of big employers of the country including the manufacturers of white goods, has been flooded with continuing requests by the FMCG companies to seek central intervention to pep up demand for white goods. In an unusual demand, the CII has listed among its budget proposals a scheme to introduce consumption vouchers to low income families covering both urban and rural areas, to pep up demand. Further, there should be hike on wages given under the government programmes and enhancing cash support given to farmers under PM-KISAN.

The Indian industry bodies are at last saying the same thing which the Left parties and many leading economists like Dr. Amartya Sen and Dr. Pranab Bardhan have been saying for long. The Congress leader Rahul Gandhi is also underlining the need for higher cash payments to the poor to boost demand in the economy. There has to be more money in the funds of the poor and other low income families for spending and that is how the consumption will increase leading to the pepping up of demand.