THE
second full budget and third one by finance minister Arun Jaitley has
been applauded for “revival of rural India”. In his budget speech,
Jaitley said the buoyancy in tax income, an indicator of the market’s
confidence in the Modi government, has helped them spend more than the
earmarked amount while sticking to the fiscal discipline. The government
blatantly concealed the fact that the buoyancy in tax income is only in
terms of direct taxes which does not need any confidence of the market
in the government of the day. Thus, the richest of the country retained
their tangible benefits intact whereas rural India is lured with
intangible benefits.
Real indicators of such confidence -- trends in corporate tax earnings and export earnings -- fell flat. Despite the fact that fiscal discipline and welfare spending are two swords that cannot fit-in together, it is only with the mastery of fudging the facts, true to their nature, they want us to believe so. The budget for 2016-17 got more favourable attention from media than the last budget of UPA-I which waived off farmers’ loan, the second such instance in independent India. As is evident, this is the first ever government that does not hesitate to tell a blatant lie on the floor of Parliament. One such lie is about allocation to rural job scheme MNREGA. When confronted by a vocal Shashi Tharoor, Jaitley stood up to defend his lie and said that this is the highest ever amount earmarked for MNREGA as, in the last decade, amounts that were allocated were not spent fully. On several occasions, BJP took credit, while referring to the revised estimates for the year 2015-16, that the spending surpassed the allotment, thereby concealing the fact that last year’s allotments were at dead storage level.
The key announcement that caught the eyeballs of analysts and media at large is the doubling farmers’ income in five years. This led the analysts to jump immediately to the conclusion that it is aimed at increasing non-farm opportunities rather than reviving the agricultural sector such as making cultivation sustainable. The latest NSSO findings define farmers as those who earn a monthly income of Rs 3,000 (which is far below the income limit that was set by some state governments to issue certificate that makes a student eligible for scholarship). The Economic Survey found the falling rate of productivity as the key reason for falling income of farmers. Though it looks correct dissection, it failed to read through the reasons for falling rate of productivity in agriculture. Unless the stagnation in irrigation infrastructure is addressed, it is impossible to increase the productivity rate and double the farmers’ income. After admitting the fact that 56 per cent of cultivable land is still dependant on rain, the budget announced a target of extending the irrigation facilities to another 28.5 lakh hectares. By keeping 140 lakh hectares out of irrigation facilities, how it is possible to double farmers’ income in five years, is only known to the government. Another scheme, Paramparagat Krishi Vikas Yojana (PKVY), announced in the name of encouraging traditional organic farming, does not fit in well with the fact that the farmers are constantly losing their Paramparagt rights over seed, soil and other indigenous resources of cultivation. The Indian farmers have become an unbridled market for multinational seed and fertiliser companies. Without addressing this issue, mere institution of PKVY would not be of much help to revive viable farming. There was hype about the allocation to animal husbandry which in fact spent less than Rs 113.5 crore in budget allocations and the so-called rise shown in 2016-17 is only Rs 295.35 crore. The allocation for research and extension, which is key to doubling farmers’ income in next five years, could not see any increase from the levels of 2015-16 budget estimates.
When we look at the budget from the point of view of welfare spending, the figures show that there is an overall increase of 6 per cent, due to the increased expenditure above the budget allocations for MNREGA and ICDS as well as some other welfare provisions. What the government left unsaid is that all allotments are contingent upon the global economic conditions. This is what the finance minister implied when he said in his initial section of the address that due to buoyancy in government earnings they could upwardly revise the allocations for several departments and ministries in their revised estimates. Another important aspect remains in the dark. That is the social welfare spending that has to come from the state government’s share. On the recommendations of the Fourteenth Finance Commission (FFC), the enhanced transfer of central funds supposed to be earmarked for welfare spending. Now the state governments are mandated to spend their 40 per cent share before starting to draw the central share. Thus, FFC not only transferred the funds but also put the burden of implementation of centrally-sponsored schemes on the shoulders of state governments. The so-called intended additional income that the state governments are supposed to have is nullified leaving little scope for improved spending on welfare schemes on account of FFC recommendations. Moreover with this current pattern, the state governments have to spend their matching amount of 40 per cent to avail the benefit of remaining 60 per cent from the central government. Thus, the states are forced to advance their expenditure which necessarily involves the drain from states’ resources. Only advantage of these recommendations is that with the amount, the state governments can coin their own schemes and can get credit as if they are spending for such schemes out of their pockets.
With regard to the over-all impact of the welfare expenditure, the budget confirms both the lack of vision as well as unwillingness on the part of the government. The government refused to gain from the field studies that have proved the limited role of JAM (Jandhan Yojana-Aadhar-Mobile trinity which was espoused during the last year budget) in universalising welfare spending impact. In fact, the latest study from Karnataka is an indictment of the government and unabashed supporters of this unrealisable trinity. Moreover, the budget announced a scheme for sanctioning free LPG connections at a time when the supply of LPG cylinders are being reduced and contingent upon working of JAM.
The National Rural Health Mission, which is conceived to focus on the rural health infrastructure, is clubbed with National Health Mission, thereby opening up possibilities of discrimination towards rural India. This also opens up possibilities for losing the gains, however limited, more than what the rural India achieved under the aegis of National Rural Health Mission at a time when rural poor are plagued with under-nutrition along side communicable deceases such as malaria and tuberculosis. The budget aimed at expanding the footprints of insurance tied up health services delivery rather than providing the services by the state, thus indicating a clear shift from state-led services to market-led health service delivery. Thus from the goal of achieving universal and free access to health services, there is a boost for the market facilitated health care system in 2016-17 budget. This needs to be seen in the background of failure of private health insurance firms, which are cleverly tied up with the banking services in rural India. With the presence of government-funded universal access to health care in rural India, with all its limitations, played a critical role in restricting the entry of private firms into health insurance business. With this budget, government wants to withdraw that cover which consequentially results in improving the opportunities for the market oriented health care delivery system. This implies crippling of state-backed health infrastructure which is already facing severe crunch that too when India is lagging behind in six out of ten health targets under Millennium Development Goals.
Let us look at another important foundation of social welfare expenditure, i.e. food subsidy, particularly allocations for the implementation of food security act. The Parliamentary Standing Committee on Consumer Affairs has already warned the government about the implications of meagre allocations for implementation of food security act. It seems, as in case of many other such warnings, it has not reached the ears of North Block. Though the allocations for department of consumer affairs increased four-fold from Rs 321.13 crore in revised estimates of 2015-16 to Rs 1257.11 crore in 2016-17, the key component of food security, allocations for food and public distribution witnessed considerable reduction of allocations. The revised allocations for 2015-16 budget stood at Rs 1,62,249.41 crore where as the budget estimates for 2016-17 are downwardly revised to Rs 1,52,704.11 crore. Almost down by Rs 10,000 crore. More than half of the states have not started the implementation of food security act which was passed by Parliament three years ago. It shows scant regard for enactments. There is no word about this lag in the budget speech. The so-called price stabilisation fund could not attract the attention of the government even at a time when the price of dal which was around Rs 40-60 per kg jumped to Rs 200 and stabilised around Rs 175 in very short span of time. Moreover, the allocations for pulses import are a clear signal to the market to ransack the consumers.
Last but not the least comes rural development. Rural development has multiple facets that are linked directly or indirectly with the lives of the rural poor. Drinking water and sanitation is one such key aspect of rural development. Though the budgetary allocations present a rosy picture of increase from Rs 10,906.53 crore in revised estimates to Rs 14,009.70 crore, the actual central component for these schemes saw meagre increases. The amount that is to be transferred to the states as part of 14th Finance Commission recommendations has been added to the totals and shown as an increase of about 100 per cent. The water supply and sanitation budget is increased from Rs 4,265 crore in revised estimates to Rs 5,000 crore. Rest of the allocations goes to Swachh Bharat Abhiyan. This clearly indicates the misplaced priorities of the government in a year which is experiencing 13 per cent overall deficit rainfall according to the finance minister himself. This kind of misplaced priority is going to put further stress on rural drinking water supply. Thus the budget, which is hyped as one of the best budget in terms of rural India’s needs, fails to meet their needs leaving them high and dry.
Real indicators of such confidence -- trends in corporate tax earnings and export earnings -- fell flat. Despite the fact that fiscal discipline and welfare spending are two swords that cannot fit-in together, it is only with the mastery of fudging the facts, true to their nature, they want us to believe so. The budget for 2016-17 got more favourable attention from media than the last budget of UPA-I which waived off farmers’ loan, the second such instance in independent India. As is evident, this is the first ever government that does not hesitate to tell a blatant lie on the floor of Parliament. One such lie is about allocation to rural job scheme MNREGA. When confronted by a vocal Shashi Tharoor, Jaitley stood up to defend his lie and said that this is the highest ever amount earmarked for MNREGA as, in the last decade, amounts that were allocated were not spent fully. On several occasions, BJP took credit, while referring to the revised estimates for the year 2015-16, that the spending surpassed the allotment, thereby concealing the fact that last year’s allotments were at dead storage level.
The key announcement that caught the eyeballs of analysts and media at large is the doubling farmers’ income in five years. This led the analysts to jump immediately to the conclusion that it is aimed at increasing non-farm opportunities rather than reviving the agricultural sector such as making cultivation sustainable. The latest NSSO findings define farmers as those who earn a monthly income of Rs 3,000 (which is far below the income limit that was set by some state governments to issue certificate that makes a student eligible for scholarship). The Economic Survey found the falling rate of productivity as the key reason for falling income of farmers. Though it looks correct dissection, it failed to read through the reasons for falling rate of productivity in agriculture. Unless the stagnation in irrigation infrastructure is addressed, it is impossible to increase the productivity rate and double the farmers’ income. After admitting the fact that 56 per cent of cultivable land is still dependant on rain, the budget announced a target of extending the irrigation facilities to another 28.5 lakh hectares. By keeping 140 lakh hectares out of irrigation facilities, how it is possible to double farmers’ income in five years, is only known to the government. Another scheme, Paramparagat Krishi Vikas Yojana (PKVY), announced in the name of encouraging traditional organic farming, does not fit in well with the fact that the farmers are constantly losing their Paramparagt rights over seed, soil and other indigenous resources of cultivation. The Indian farmers have become an unbridled market for multinational seed and fertiliser companies. Without addressing this issue, mere institution of PKVY would not be of much help to revive viable farming. There was hype about the allocation to animal husbandry which in fact spent less than Rs 113.5 crore in budget allocations and the so-called rise shown in 2016-17 is only Rs 295.35 crore. The allocation for research and extension, which is key to doubling farmers’ income in next five years, could not see any increase from the levels of 2015-16 budget estimates.
When we look at the budget from the point of view of welfare spending, the figures show that there is an overall increase of 6 per cent, due to the increased expenditure above the budget allocations for MNREGA and ICDS as well as some other welfare provisions. What the government left unsaid is that all allotments are contingent upon the global economic conditions. This is what the finance minister implied when he said in his initial section of the address that due to buoyancy in government earnings they could upwardly revise the allocations for several departments and ministries in their revised estimates. Another important aspect remains in the dark. That is the social welfare spending that has to come from the state government’s share. On the recommendations of the Fourteenth Finance Commission (FFC), the enhanced transfer of central funds supposed to be earmarked for welfare spending. Now the state governments are mandated to spend their 40 per cent share before starting to draw the central share. Thus, FFC not only transferred the funds but also put the burden of implementation of centrally-sponsored schemes on the shoulders of state governments. The so-called intended additional income that the state governments are supposed to have is nullified leaving little scope for improved spending on welfare schemes on account of FFC recommendations. Moreover with this current pattern, the state governments have to spend their matching amount of 40 per cent to avail the benefit of remaining 60 per cent from the central government. Thus, the states are forced to advance their expenditure which necessarily involves the drain from states’ resources. Only advantage of these recommendations is that with the amount, the state governments can coin their own schemes and can get credit as if they are spending for such schemes out of their pockets.
With regard to the over-all impact of the welfare expenditure, the budget confirms both the lack of vision as well as unwillingness on the part of the government. The government refused to gain from the field studies that have proved the limited role of JAM (Jandhan Yojana-Aadhar-Mobile trinity which was espoused during the last year budget) in universalising welfare spending impact. In fact, the latest study from Karnataka is an indictment of the government and unabashed supporters of this unrealisable trinity. Moreover, the budget announced a scheme for sanctioning free LPG connections at a time when the supply of LPG cylinders are being reduced and contingent upon working of JAM.
The National Rural Health Mission, which is conceived to focus on the rural health infrastructure, is clubbed with National Health Mission, thereby opening up possibilities of discrimination towards rural India. This also opens up possibilities for losing the gains, however limited, more than what the rural India achieved under the aegis of National Rural Health Mission at a time when rural poor are plagued with under-nutrition along side communicable deceases such as malaria and tuberculosis. The budget aimed at expanding the footprints of insurance tied up health services delivery rather than providing the services by the state, thus indicating a clear shift from state-led services to market-led health service delivery. Thus from the goal of achieving universal and free access to health services, there is a boost for the market facilitated health care system in 2016-17 budget. This needs to be seen in the background of failure of private health insurance firms, which are cleverly tied up with the banking services in rural India. With the presence of government-funded universal access to health care in rural India, with all its limitations, played a critical role in restricting the entry of private firms into health insurance business. With this budget, government wants to withdraw that cover which consequentially results in improving the opportunities for the market oriented health care delivery system. This implies crippling of state-backed health infrastructure which is already facing severe crunch that too when India is lagging behind in six out of ten health targets under Millennium Development Goals.
Let us look at another important foundation of social welfare expenditure, i.e. food subsidy, particularly allocations for the implementation of food security act. The Parliamentary Standing Committee on Consumer Affairs has already warned the government about the implications of meagre allocations for implementation of food security act. It seems, as in case of many other such warnings, it has not reached the ears of North Block. Though the allocations for department of consumer affairs increased four-fold from Rs 321.13 crore in revised estimates of 2015-16 to Rs 1257.11 crore in 2016-17, the key component of food security, allocations for food and public distribution witnessed considerable reduction of allocations. The revised allocations for 2015-16 budget stood at Rs 1,62,249.41 crore where as the budget estimates for 2016-17 are downwardly revised to Rs 1,52,704.11 crore. Almost down by Rs 10,000 crore. More than half of the states have not started the implementation of food security act which was passed by Parliament three years ago. It shows scant regard for enactments. There is no word about this lag in the budget speech. The so-called price stabilisation fund could not attract the attention of the government even at a time when the price of dal which was around Rs 40-60 per kg jumped to Rs 200 and stabilised around Rs 175 in very short span of time. Moreover, the allocations for pulses import are a clear signal to the market to ransack the consumers.
Last but not the least comes rural development. Rural development has multiple facets that are linked directly or indirectly with the lives of the rural poor. Drinking water and sanitation is one such key aspect of rural development. Though the budgetary allocations present a rosy picture of increase from Rs 10,906.53 crore in revised estimates to Rs 14,009.70 crore, the actual central component for these schemes saw meagre increases. The amount that is to be transferred to the states as part of 14th Finance Commission recommendations has been added to the totals and shown as an increase of about 100 per cent. The water supply and sanitation budget is increased from Rs 4,265 crore in revised estimates to Rs 5,000 crore. Rest of the allocations goes to Swachh Bharat Abhiyan. This clearly indicates the misplaced priorities of the government in a year which is experiencing 13 per cent overall deficit rainfall according to the finance minister himself. This kind of misplaced priority is going to put further stress on rural drinking water supply. Thus the budget, which is hyped as one of the best budget in terms of rural India’s needs, fails to meet their needs leaving them high and dry.
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