editorial

Bread and Budget

THERE are certainly some bright spots in the third budget presented by the Congress lead United Progressive Alliance on February 28. Railway budget had presented a rosy picture after many years. Growth rate now is pegged at 8.1 per cent. Financial prudence is working as government borrowing to meet the budgetary deficits is placed at 3.8 per cent from 4.1 per cent of gross domestic product. Imagine the current American deficit at 57 per cent. Total receipts from the government are a good 5,63,991 crore and total expenditure is fixed at 5,63,991 crore. Also, the budget provides a push to demand side of the economy and there is money available for the core and infra structure like roads, power, health and education.  The National Rural Employment Guarantee Scheme gets Rs.11, 300 crore. An additional Rs.3, 000 crore could be provided for other rural employment projects. Overall, the eight flagship programmes in the social sector; rural employment, health, education, mid-day meal, and urban renewal get a huge increase of 43.2 per cent. Happy tidings indeed!

But then the non-plan expenditure of the government too has increased to an enormous Rs 3,91,263 crore. There is more spending on salaries, pensions and other expenditure and against this plan expenditure is placed at 1,72,728 crore. The government had promised to control extravagant spending and there is not even a word about that in the budget. Government’s own internal reports and those of the Comptroller General of India indicate huge wastage of taxpayer’s money. Also, in case of majority of the centrally sponsored schemes, the government agencies are not able to achieve anything substantial, allowing grants to laps. What good are these exercises at planning and budgeting then? What happened to decentralisation, allowing states and village panchayats to do some planning, budgeting and spending?

High growth is indeed a big idea behind this whole exercise. Our worthy Finance Minister during his endless television appearances is in high spirits. Even his wife has appeared on the networks giving him full marks. Three cheers of for the competing television networks that now normally trivialize news and analysis.  But the push either from the side of investments in infrastructure or from the side of incentives has not been particularly strong.  High growth rate of 8 per cent on average over the past three years made the Finance Minister feel he does not need to do more. Economy will take care of itself. But if India is to achieve the East Asian levels of 8 to 10 per cent, often declared by Prime Minister Manmohan Singh, the budget should have been more ambitious. It is not. This time the minister has not even talked about tax reforms. Taxation collection system is cumbersome, bogged by procedures and the corrupt collectors play truant. No evidence is required to establish this.  And, how about those billions of rupees of black money. Any effort to unearth.

Finance Minister P. Chidambaram in his budget speech and during his endless interviews is never tired about taking care of anti-poverty and rural programmes. Let us look what he proposes to do. Indeed farmers can be happy the interest on short-term loans up to Rs three lakh at 7 per cent and the total amount available has been raised to Rs 17,500 crore.  Enhancement of agricultural credit and the plan to bring 5 million more farmers is a welcome one. Yet the government ought to know 51 per cent farmers cannot access any farm credit and depend heavily on those blood-sucking moneylenders.

There is also a provision of providing Rs 4,700 crore for over 22,000 to meet irrigation needs through traditional water harvesting bodies in 13 states. In fact, there is a plethora of schemes in the budget and in the plans of the states to look after small needs of the farmers.

A major constraint on growth is the poor infrastructure; particularly power, roads, ports, and communications and the higher outlays on these areas are welcome.  Last year the need to foster institutions of excellence in education was recognised and a grant of Rs.100 crore was made to the Indian Institute of Science. This year the three oldest universities in the country, Kolkata, Mumbai, and Madras are to get Rs.100 crore each as also the Punjab Agricultural University, Ludhiana for its contribution to the Green Revolution.

The allocations for rural infrastructure development through Bharat Nirman and to bring 6 lakh hectares of additional area under irrigation would certainly help to improve farm productivity.  The National Rural Employment Guarantee Scheme, if properly implemented should upgrade degraded land and improve soil health and water management.

Past experience tells us that shortfall is the order of the day. People do not know about the employment guarantee scheme, the much- hyped plan to transform the Indian rural life from poverty to abundance.  Many of the budget proposals during the past years have not been even half fulfilled. What came of the food for work programmes and water supply missions or rural road missions? Rural scene is dismal if there are schools, no teachers, if there are dispensaries, no doctor or medicines and so on. Who would whip the lethargic government into action?

Another  crucial issue is the subsidy. The poor and the farmers need support in terms market access, remunerative prices for their produce and sense of belonging.  But subsidies are going to the pockets of the rich industrialists and traders. A Planning Commission study has shown that to confer a benefit of Re.1 through the public distribution system, the government spends Rs.3.65. Subsidies are no doubt a political minefield, but there is not even a plan to make the delivery system more effective. What happened to those initial brave words announcing reforms?