Friday, December 6, 2013

Welfare goals overlooked



Welfare goals overlooked
http://www.powerpolitics.in/Issues/December2013/images/writer_img6.jpgNotwithstanding the moves from those at the helm of national affairs, , the government is gradually slipping away from the goals for which its flagship welfare programmes have been conceived, contends K Veeraiah
The Achilles’ heel of fiscal discipline is now going to hit the so-called game changing flagship programmes of UPA hard. On the one hand, different agencies under UPA II are preparing to bank on their “ game changer” flagship programmes. On the other, the finance ministry is circulating guidance notes to curb the funds for the same flagship programmes. Immediate motivation might have come from the quarterly review of economy that was released by the finance ministry for the quarter ended by September 2013. It states the Centre is moving fast beyond the fiscal deficit target for this financial year.
Just before the finance ministry’s fiscal discipline drive, the government has announced new schemes, programmes and intentions hoping that they will help the government to sail through the forthcoming elections. The 11th Five Year Plan document visualized this linkage and said, “ though the 10th Five Year Plan achieved 7.7 % growth, it is perceived that the growth is not sufficiently inclusive for many groups, especially SC, ST, minorities. Gender inequalities remain a passive problem”.
To bridge this gap in developmental indices the UPA came up with idea of flagship schemes and floated 13 such programmes. Though the schemes which were proposed under this banner are not at all completely new, recognizing the role of their economic linkages ushering in comprehensive development is a new phenomenon. Some of them are completely new whereas some are restructured programmes of old ones. Over the time three more were added to the kitty and thus, as of now, 16 such programmes are under implementation.
The ultimate objective behind the flagship programmes is to achieve broad-based improvement in the living The ultimate objective behind the flagship welfare programmes is to achieve broad-based improvement in the living standards and to ensure that growth is widely spread so that its benefits are adequately shared by all, especially the poor and weaker sections of the society. Additionally, on the eve the general elections, the central government  some more schemes such as delivering to rural working women, primarily agricultural labour, educational reforms worth Rs 3 lakh crore, rechristening of Swarja Jayanti Swarojgar Yojana into National Urban Livelihood Mission and so on apart from the game changer National Food Security Act.standards and to ensure that growth is widely spread so that its benefits are adequately shared by all, especially the poor and weaker sections of the society. Additionally, on the eve of the general elections, the central government cleared some more schemes such as delivering mobile hand sets to the rural working women, primarily agricultural labour, educational reforms worth 3 lakh crore, rechristening of Swarja Jayanti Swarojgar Yojana into National Urban Livelihood Mission and so on, apart from the game changer National Food Security Act.
Since beginning of these flagship programmes the neo-liberal intellectuals cried foul and worried about the return of so-called welfare state. But the Comptroller and Auditor General of India in its latest report ( Report 1 of 2013- Financial Audit), laid bare the claims of the government when it reviewed the expenditure on flagship schemes in different years. Over the last four years cumulative spending in the name of seven flagship schemes stood at 4,07,058.5 crore against the budgetary allocations of Rs 4,13,307.69 crore.
In another sense contrary to the general perception that the UPA government is spending more on the social welfare schemes, the table explains the gradual reduction in expenditure under these schemes. Certain schemes such as RGGVY experienced drastic reduction upto 62% whereas the election winning MGNREGA programme seems to have lost the favor of the government. This is evident that in any single year the government failed to utilize the budgetary allocations for the same.
Way back in 2009 itself finding problems in implementation, the Prime Minister’s Office set up a Delivery and Monitoring Unit to coordinate and sort out the delivery mechanisms. Despite that arrangement, there is no major improvements in on the ground. Recognising this, the National Advisory Council, which advises the government on policy matters constituted a three member sub committee to review the implementation problems and suggest way out under the chairmanship of Mihir Shah, who also happened to be a Planning Commission member. The Mihir Shah committee came out with recommendations on three basic aspects of the implementation of flagship schemes. They are, a) streamlining the funds flow, b) improvements in transparency aspects, c) preparing the knowledge banks at district level implementation. Mihir Shah committee also finds it difficult when it comes to the financing the schemes. That is why its first recommendation centres around streamlining of fund flows. This is what the CAG report also indicates when it looks at the budgetary allocations and expenditure levels under different programmes.
Notwithstanding the moves from those who are supposedly directing the affairs of the government, the establishment is gradually slipping away from the goals for which these flagship programmes are conceived and started applying the fiscal discipline yardsticks. Let us consider the allocations and actual expenditure for financial year 2011-12 as test case.
The cumulative allocations for seven flagship schemes for the 2011-12 financial year stand at Rs 126312 crore and actual expenditure at Rs 109379 crore. Except in the case of PMGSY in the year 2010-11 which experienced almost double amount spent than the budget allocation, for all the flagship schemes, the situation stands same. Year by year the expenditure on these schemes is decreasing.
Look at the nature of the schemes. The MGNREGA is the only scheme that is intended to enhance the livelihood sources and wages for the majority of the rural poor. Hence out of the near about Rs 4 lakh crore of allocations, MGNREGA component itself is about Rs 1,79,079.2 crore. But actual expenditure is only 125842 crore short of nearly Rs 53, 237.2 crore which One must remember the fact that whatever the budget announcements, the government is governed by the budget responsibility and fiscal irrespective of the ruling parties at the centre. This fiscal responsibility and budget management act ( popularly called as FRBM act) imposes the ceiling on the over all expenditure of the government and also fixes the bench mark in terms of is a whopping 29.72 %. That means, over the last four years itself, out of the allocations under MGNREGA, the government could not spend nearly 30% of allocations ! Having stated the facts from government report itself, the finance ministry’s proposal for universal reduction of 15 % for flagship programmes means a further deep cut of their spending as well as reducing the coverage which in all likelihood may go against the spirit of the flagship programmes.
This implicit drive could not help the government to meet its fiscal deficit targets mandated by Fiscal Responsibilities and Budget Management Act 2003 forcing Finance Minister Chidambarm to go overboard in asking concerned ministries to reduce their spending. Majority of the spending under these flagship programmes flows into rural economy unless stifled under the corrupting influence of administration.
The indicators already show that the economy is at snail’s pace and urban consumption has failed to pick up despite all the tax concessions imparted by the government. Surveys from McKinsey to Fitch show that the growth of economy is dependent on the possibility of increase in rural spending. Without money flowing into rural economy under these flagship programmes, no one can expect the rural sectors of economy to contribute to the overall economy of the nation.
P. ChidambaramThe government, it seems, is all out gearing itself to please the international rating agencies whose wrath Chidambaram faced during his latest visit to Washington. Though the Indian media played its due role in airing the news as if the Chidambaram took on the rating agencies as well as the IMF and World Bank for their growth projections, what went behind the screen is altogether different story.
With the latest announcement from the finance ministry it can be construed that the finance minister himself gave a commitment to the international community of finance capital that he would do his best to meet the fiscal deficit within the permissible limits.
One must remember that whatever the budget announcements, the government is governed by the budget responsibility and fiscal management, irrespective of the ruling parties at the centre. This fiscal responsibility and budget management act ( popularly called FRBM act) imposes the ceiling on the overall expenditure of the government and also fixes the bench mark in terms of fiscal deficit. As we know, for more than a year the neo liberal policy analysts, both foreign and indigenous experts, are warning the government about the widening current account deficit. The finance minister’s statement suggesting the universal cut of 15 % on all government expenditure is an indication to this effect. Under this mandate only the finance minister is emboldened to ask the concerned ministries to reduce their budgets. By doing this, it is obvious that the finance ministry is pressing the wrong button.
According to the calculations of CBGA, cumulative tax concessions given out to super rich corporates between 2005-06 and 2012-13 financial years amounts a staggering Rs 31,88,760 crore ! Of this, mere corporate income concessions amount to Rs 474346 crore which is equal to the FRBM deficit target for the current financial year, which is higher than the cumulative allocations for flagship programmes over the last four years. Additionally, another Rs 271512 crore worth personal income tax concessions was doled out during this period which means a grand 20 % of the total tax concessions were accrued to the kitty of few super rich sections.
At the same time, this is also a period during which the government failed to meet the FRBM targets and dwindling tax : GDP ratio. Simply warding off to these telling facts, the finance minister prefers to cut back on the public investment which is life line for rural India. In a simple analysis, to ensure the smiles on the face of a handful bunch of super rich in the country and those in the world of international finance capital, the finance ministry has decided to trample upon the livelihoods of more than 3/4ths of Indians.
Major flagship programmes : actual expenditures and budget estimates (BE in crores)
Sr. No
Programme
2008-09
2009-2010
2010-2011
2011-2012


BE
Acuals
BE
Acuals
BE
Acuals
BE
Acuals
1
SSA
13100.00
12625.80
13100
12825
15000
19637
20413
20841
2
MDM
8000
6540
8000
6932
9440
9118
10061
9891
3
MGNREGA
29939.60
27250
39100
33538
40100
35841
40000
29213
4
RGGVY
5500
5500
6300
5000
5500
5000
6000
2237
5
IAY
5645.77
8795.79
8800
8800
10000
10337
10000
9872
6
PMGSY
3615.00
14698.39
12000
11340
12000
22400
20000
19342
7
NRHM
9191.82
10477.52
155934
15670
17138
16238
19838
17983

Total
74983.19
85887.5
102834
93143
109178
118649
126312
109379
Statistics for the years 2009-10 to 2011-12 are from CAG Report 1 of 2013. Data for the year 2008-09 collected from different government sources.
Abbreviations :
SSA = Sarva Shiksha Abhiyan,
MDM = Mid Day Meal Scheme ,
MGNREGA = Mahatma Gandhi National Rural Employment Guarantee Act,
RGGVY = Rajiv Gandhi Gramin Vidyudeekaran Yojana,
IAY = Indira Avas Yojana,
PMGSY = Pradhan Mantri Gram Swarojgar Yojana,
NRHM = National Rural Health Mission
( From Powerpolitics.in, December 2013 issue)