BUD­GET CAN'T BRING CHANGE

The fi­nance min­is­ter pleased the growth brigade with three letters "PPP" but failed to bring change where it was most needed. Down To Earth lists five such key devel­op­ment ar­eas

Down to Earth - - SPECIAL REPORT - For more on bud­get go to www.down­toearth.org.in

THE FIRST bud­get of a new gov­ern­ment is always an oc­ca­sion to gauge the di­rec­tion it will give to poli­cies. In case of the Na­tional Demo­cratic Al­liance (nda), led by Prime Min­is­ter Naren­dra Modi, the hope for change was over­whelm­ing be­cause change was a prom­ise loud and clear in his elec­tion campaign. The first sen­tence of fi­nance min­is­ter Arun Jait­ley’s bud­get speech termed the party’s vic­tory a verdict for change. But as his more-than-two-hour­long bud­get speech un­folded, it be­came clear that the gov­ern­ment had washed its hands of the theme of change by sug­gest­ing the public-pri­vate-part­ner­ship (ppp) model for al­most all sec­tors of devel­op­ment, from ru­ral devel­op­ment to de­fence. While the space cleared for pri­vate play­ers makes the growth brigade happy, other cru­cial sec­tors where change was needed the most have been sur­pris­ingly left to con­tinue with­out re­forms. Down To Earth dis­sects the bud­get to see whether and how it has ad­dressed the long-pend­ing need for re­form in key devel­op­ment ar­eas.

1 Re­form­ing Cen­tral schemes

The cur­rent bud­get seems to have slowed down the pace of re­form in Cen­tral schemes ini­ti­ated by the pre­vi­ous gov­ern­ment af­ter 45 years.In June 2013,the erst­while upa gov­ern­ment pruned the num­ber of Cen­trally spon­sored schemes from 147 to 66. It also de­cided to give states the free­dom to use 10 per cent of each scheme’s bud­get ac­cord­ing to its own ideas and pri­or­ity. A year ear­lier a high-level com­mit­tee headed by B K Chaturvedi, mem­ber of the Plan­ning Com­mis­sion, had sub­mit­ted a re­port sug­gest­ing such changes. One of the sug­ges­tions was to do away with schemes with an­nual out­lay of ₹100 crore or less (‘Lean, mean scheme’, Down To Earth, Fe­bru­ary 1-15,2013).

The cur­rent budg-

et has done the op­po­site. It has de­clared 28 schemes with ₹100 crore al­lo­ca­tions. Th­ese schemes in­clude the Beti Bachao, Beti Pad­hao Yo­jana, Van Bandhu Kalyan Yo­jana and the Ajee­vika-Na­tional Ru­ral Liveli­hood Mis­sion to name a few, that cover up to half of In­dia’s pop­u­la­tion. Sim­i­larly, states have been de­mand­ing that all the Cen­trally spon­sored schemes should be treated as Cen­tral as­sis­tance, thus, giv­ing them more au­ton­omy. This was not done de­spite Modi’s fo­cus on “co­op­er­a­tive fed­er­al­ism”. The new bud­get has re­tained the last gov­ern­ment’s 10 per cent for­mula.

2 Rais­ing bud­getary sup­port to health sec­tor

The cur­rent bud­get came dur­ing the mid-term of the 12th Five Year Plan, termed the health plan of In­dia. By 2017, the last year of the Plan, the gov­ern­ment is sup­posed to al­lo­cate 2.5 per cent of the gdp to health, an am­bi­tious ob­jec­tive for In­dia but one of the low­est al­lo­ca­tions in the world.It was ex­pected to boost the bud­getary sup­port to the health sec­tor.In the past few years, a public de­bate over public health picked up and at­tracted po­lit­i­cal at­ten­tion.But the cur­rent bud­get has in­creased the sup­port by only 5.1 per cent from last bud­get es­ti­mates.

Giv­ing ac­cess to univer­sal health cov­er­age that in­cludes free treat­ment and ba­sic medicines has been nda’s key campaign is­sue. This is also a na­tional ob­jec­tive that is be­ing pur­sued. The cur­rent bud­get ex­pressed this intention ten­ta­tively but with­out the right bud­getary al­lo­ca­tion.The fi­nance min­is­ter made umpteen an­nounce­ments for the health sec­tor but al­most all fo­cused on med­i­cal ed­u­ca­tion and in­creas­ing ter­tiary care fa­cil­i­ties. Since preventive or pri­mary health­care found no men­tion in the first bud­get speech of the nda gov­ern­ment, free drugs and di­ag­nos­tic fa­cil­i­ties are the only ray of hope for peo­ple. The upa gov­ern­ment had an­nounced that ba­sic drugs would be made

The bud­get has opened the sluice gates of farm credit. Such credit has not ben­e­fited small and medium farm­ers much in the past. This bo­nanza boosts the for­tunes of com­pa­nies in the busi­ness of agri­cul­ture, from ware­hous­ing cor­po­ra­tions to those run­ning trucks with re­frig­er­a­tion unit

avail­able for free at all gov­ern­ment health fa­cil­i­ties and se­lected med­i­cal stores. Though the scheme was launched in some states, it did not take off and largely re­mained a prom­ise on pa­per.In ad­di­tion to the free drug ser­vice, Jait­ley an­nounced pro­vid­ing free di­ag­no­sis ser­vice. “Pro­vid­ing free medicine and di­ag­no­sis re­quires a huge amount of money. Bud­get al­lo­ca­tion for health does not re­flect this need.It is more like a pop­ulist state­ment made by the gov­ern­ment,” says Ravi Dug­gal, In­dia coun­try-co­or­di­na­tor, In­ter­na­tional Bud­get Part­ner­ship.

3 Clean­ing the Ganga

The river be­came syn­ony­mous with Modi as he con­tested the elec­tion from Varanasi.It is not for the first time that a prime min­is­ter took in­ter­est in the Ganga. But Modi and his key min­is­ters have made it a pri­or­ity. Ev­ery­body ex­pected the agenda of change to be more pro­nounced while deal­ing with the Ganga. Jait­ley pro­posed set­ting up an In­te­grated Ganga Con­ser­va­tion Mis­sion, called Na­mami Ganga, and al­lo­cated ₹2,037 crore to­wards the mis­sion but with­out recog­ni­tion that the pro­gramme must be rein­vented to suc­ceed. The fi­nance min­is­ter ut­tered no word about the new di­rec­tion needed to clean the river. Even the pre­vi­ous upa gov­ern­ment had made funds avail­able, even se­cured a loan of ₹4,600 crore from the World Bank for clean­ing the Ganga. But all this money has

not cleaned the river be­cause the ap­proach is flawed. It fo­cuses on build­ing sewage treat­ment plants when our poor cities lack sew­er­age net­work.

4 Giv­ing farm­ers ac­cess to credit

Jait­ley has un­veiled a pop­ulist bud­get in the case of agri­cul­ture. Over­all, it was more of what the upa gov­ern­ment had been dol­ing out in the past decade. There was a steep in­crease in farm credit, more ware­hous­ing and more re­search in­sti­tu­tions, all of which do lit­tle to ad­dress the fun­da­men­tal prob­lems in the farm sec­tor. What the 2014-15 bud­get has opened are the sluice gates for agri­cul­ture credit that has been in­creas­ing by leaps and bounds in the past five years.

In the in­terim bud­get in Fe­bru­ary this year, pre­vi­ous fi­nance min­is­ter P Chi­dambaram had set ₹8,00,000 crore as the tar­get for lend­ing for the cur­rent fi­nan­cial year, and Jait­ley says he will stick by this fig­ure. It is an­other mat­ter that such credit has ben­e­fited small and medium farm­ers very lit­tle. Much of this bo­nanza is boost­ing the for­tunes of com­pa­nies in the busi­ness of agri­cul­ture, from ware­hous­ing cor­po­ra­tions to those run­ning trucks with re­frig­er­a­tion unit, and even state elec­tric­ity boards in the name of help­ing the pri­or­ity sec­tor.

Clearly, the bjp gov­ern­ment sees no prob­lem in widen­ing the credit pipe­line, al­though there is lit­tle ex­pla­na­tion as to how the money will flow to the mil­lions of small and mar­ginal cul­ti­va­tors who com­prise the ma­jor­ity of the In­dian farm­ing com­mu­nity. Anal­y­sis by rbi economists has shown that small farm­ers got a mere 3.77 per cent of the credit in 2007, with the lion’s share go­ing to big farm­ers or agribusi­ness ven­tures. It was the same in 2011-12 when then fi­nance min­is­ter Pranab Mukher­jee an­nounced a big boost in to­tal farm credit. Down To Earth had then pointed out that small and mar­ginal farm­ers got only 5.71 per cent of the credit.

5 Re­new­able en­ergy as new en­ergy

Of all the Gujarat mod­els that now guide bu­reau­crats to draft na­tional pro­grammes, the one on re­new­able en­ergy has a few in­no­va­tions.In his speech the fi­nance min­is­ter used the terms “re­new­able en­ergy”, “so­lar en­ergy” and “wind en­ergy” many more times than the word “coal”. This is a wel­come de­par­ture from the past. While de­scrib­ing new and re­new­able en­ergy as a pri­or­ity for the gov­ern­ment, he an­nounced pro­grammes like set­ting up of four ul­tra mega so­lar power pro­jects and 100,000 so­lar power pumps that can de­liver drink­ing wa­ter as well as wa­ter for ir­ri­ga­tion. In ad­di­tion, he has an­nounced set­ting up 1-MW so­lar parks on the banks of canals.To pro­mote manufacturing of re­new­able en­ergy equip­ment like so­lar pho­to­voltaic mod­ules and wind tur­bines, he has also an­nounced tax ex­emp­tion on im­ported com­po­nents.The size of the Na­tional Clean En­ergy Fund (ncef ) will now more than dou­ble be­cause the cess on coal (which capi- talises ncef ) has been in­creased from ₹50 to ₹100 per tonne.But is the pack­age on re­new­able en­ergy a de­par­ture from the past? No.In fact, th­ese are the same “dis­jointed” schemes pro­moted by the upa gov­ern­ment..

The bud­get does not men­tion re­new­able mini-grids, which the coun­try needs. Nor does it talk about biomass or bio­gas en­ergy.

“Dou­bling of coal cess is a wel­come step but there was no clar­ity on how this money will be spent,” says Gyana Ran­jan Panda, as­so­ciate pro­fes­sor, public pol­icy, Cen­tral Univer­sity of Ra­jasthan in Ajmer. The new gov­ern­ment is treading the path of the pre­vi­ous gov­ern­ment which spent very lit­tle from ncef on clean en­ergy and more on other pro­jects broadly seen as en­vi­ron­ment­friendly, he says. “Sim­i­larly, the Modi gov­ern­ment has al­lo­cated ₹1,500 crore for the Ganga Ac­tion Plan from ncef. This is a vi­o­la­tion of the fund’s man­date, he adds. Panda pre­vi­ously worked on re­new­able en­ergy with the Cen­tre for Bud­get and Gover­nance Ac­count­abil­ity, a non-profit in Delhi.

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