Interim Budget 2024: What The Budget Means For Workers In The Unorganised Sector

In the interim budget 2024-25, a study of the existing social security schemes for the unorganised sector shows that while there are many, the actual allocations on them reveal a different story. There is a lack of clarity and transparency in budgets meant for the unorganised sector workers. This makes it difficult to truly assess the impact and effectiveness of the existing social security measures in addressing the needs of the unorganised sector.

In her budget speech, finance minister Nirmala Sitharaman announced the achievements of the PM-SVANidhi scheme which provided credit assistance to 78 lakh street vendors, and the PM Mudra Yojana which sanctioned 43 crore loans aggregating to Rs 22.5 lakh crore for entrepreneurial aspirations of the youth population. One of the other major announcement was about extending healthcare coverage under the insurance scheme Ayushman Bharat to all ASHA workers, anganwadi workers, and helpers. 

While all these announcements are positive, adequate budgetary outlays towards schemes that broadly or exclusively address the issues of the unorganised sector are necessary to ensure social protection for the unorganised sector workers.

The Fineprint

Several ministries and departments run schemes that benefit workers from unorganised sectors or provide social security cover to those who need them. The schemes run by these ministries/departments address the issues of both the urban and rural poor. Moreover, the policy decisions of each of those ministries have an impact on the total budgetary expenditure for the unorganised sector. The total allocations for the unorganised sector in 2024-25 was Rs 4.2 lakh crore, up 8% from the previous year’s budget estimates. 

The Ministry of Rural Development (MoRD) and the Department of Food and Public Distribution (DFPD) contributed nearly 89% of the total budget for the unorganised sector between 2019-20 to 2024-25. In 2019-20, MoRD allocated Rs 1.1 lakh crore towards the unorganised sector which then increased by 54% to Rs 1.7 lakh crore in 2024-25. The schemes under MoRD primarily contributing to social security for the unorganised sector are Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the rural affordable housing scheme Pradhan Mantri Awaas Yojana- Grameen (PMAY-G), social pension plan National Social Assistance Programme (NSAP), and the rural entrepreneurship scheme National Rural Livelihoods Mission (NRLM). Compared to the previous budget, MoRD’s outlay towards the unorganised sector workers increased by 19% in FY 2024-25 because of the rise in allocations towards MGNREGA by 43%.

Figure 1: Ministry-wise expenditure towards unorganised sector (%)

 

Source: Compiled by CBGA from Union Budget documents, various years

The housing ministry allocated  34% of its budget in 2024-25 under the Pradhan Mantri Awas Yojana Urban (PMAY-U) and was given a budgetary provision of Rs 26 thousand crores, a 4% increase from last year’s budget (Figure 2). The Ministry of Micro, Medium, and Small Enterprises (MSME) allocated 56% of its budget towards the unorganised sector under the Prime Minister Employment Generation Programme (PMEGP) and other credit support schemes.  

 Figure 2: Allocations to major schemes for unorganised sector workers
                                            (Rs thousand crore)

 

Source: Compiled by CBGA from Union Budget documents, various years

However, the allocation to the MSME ministry declined by 28% relative to last year’s budget to Rs 12,463 crore. For PMEGP in particular, the allocations declined by 15% to Rs 2,300 crore. Since the programme was launched to provide financial assistance to self-employment ventures and generate sustainable employment opportunities for unemployed youth and traditional artisans, the decline in its outlay could hamper the program's effectiveness.

Are Needs Being Addressed?

In FY 2024-25 (I), apart from MGNREGA and PMAY-G, food subsidy has the highest budgetary allocation of Rs 165 thousand crore, which is a 19% increase from the previous budget. As far as schemes meant to specifically address social security for the unorganised sector go, PM SVANidhi had the highest allocation in FY 2024-25 of Rs 326.32 crore. Despite that, it was 30% lower than the previous budget estimates and revised estimates. Similarly, for Pradhan Mantri Shram Yogi Maan-dhan the allocation in FY 2024-25 declined by 49% to Rs 177.24 crore while the allocation under Atal Pension Yojana, a pension plan for unorganised sector workers, remained stagnant at Rs 521 crore compared to 2023-24 (BE).

Therefore, despite the increase in the overall allocations towards the unorganised sector, the allocations towards schemes exclusively meant to address the issues of the unorganised sector have either declined or remained stagnant in the latest budget.

There has been a demand for a Universal Basic Income (UBI) and for creating public employment opportunities by extending schemes like MGNREGA to urban areas. There is an expectation that the Union government would come up with something similar to states like Kerala, Rajasthan, and Madhya Pradesh, which have already begun work on it. The interim budget 2024-25, however, did not address these demands for the unorganised sector. Since this is an interim budget, it is expected that in the full budget (2024-25) there should be some commitment to address the needs of the unorganised sector, more specifically women unorganised workers as they are more vulnerable.  

It is crucial to ensure some immediate relief along with long-term structural reforms to ensure sustainable development and inclusive growth for all.

 

(With contribution from Ajay Pal Singh, data lead, Centre For Budget And Governance Accountability)