FROM THE ED­I­TOR-IN-CHIEF

India Today - - CONTENTS -

Go­ing into the last full Union bud­get of his term, Prime Min­is­ter Naren­dra Modi has not only bet on the farm­ers, but bet the farm on his ru­ral vot­ers. Ar­tic­u­lat­ing his vi­sion for the gen­eral elec­tion of 2019 quite clearly, he has recog­nised the ex­is­tence of ru­ral dis­tress, am­pli­fied by a string of farmer protests and sui­cides last year pro­voked by fall­ing com­mod­ity prices and in­creas­ing debt. Hop­ing to de­liver on his prom­ise to dou­ble farm­ers’ in­comes by 2022, when In­dia cel­e­brates 75 years of in­de­pen­dence, the bud­get has shown ev­ery in­ten­tion of boost­ing farm­ers’ in­comes by rais­ing the min­i­mum sup­port price for crops to 1.5x the cost of pro­duc­tion, lib­er­al­is­ing ex­port of agri-com­modi­ties, and mod­ernising agri­cul­tural mar­kets. This comes in the wake of agri-GDP reg­is­ter­ing an in­sipid av­er­age an­nual growth rate of 2 per cent in the first three years of the Modi gov­ern­ment—in the last three years of the UPA rule, it was nearly twice this fig­ure.

The sec­ond clear nar­ra­tive in Modi Vi­sion 2019 is the cre­ation of jobs. The bud­get has seen a push to small busi­nesses, which were badly hit both by de­mon­eti­sa­tion and the ini­tial im­ple­men­ta­tion of GST. The cor­po­rate tax re­duc­tion for firms with turnovers be­low Rs 250 crore as well as Rs 3,794 crore in credit sup­port to MSMEs could help. The con­tin­u­ing push to in­fra­struc­ture, with ex­pected in­vest­ments in ex­cess of Rs 50 lakh crore in roads, air­ports, rail­ways, ports and in­land wa­ter­ways, is also of a piece with this strong ef­fort—un­em­ploy­ment emerged as the biggest con­cern among re­spon­dents to the in­dia to­day Mood of the Na­tion Poll last week, along with ris­ing prices.

Equally clear is the gov­ern­ment’s be­lated recog­ni­tion of the im­por­tance of health­care and ed­u­ca­tion. As Amartya Sen says, no de­vel­oped coun­try in the world has pro­gressed with­out in­vest­ing in these key ar­eas. On ed­u­ca­tion, the bud­get has an­nounced Eklavya schools for trib­als as well as 24 new med­i­cal col­leges and 1,000 new fel­low­ships for doc­toral stu­dents. In health­care, Union fi­nance min­is­ter Arun Jait­ley an­nounced an am­bi­tious Na­tional Health Pro­tec­tion Scheme, which will pro­vide up to Rs 5 lakh per year to 100 mil­lion fam­i­lies for sec­ondary and ter­tiary health­care. Im­pres­sive as this sounds, I am not sure the mech­a­nisms or de­tails of fund­ing have been worked out. The ex­pense could be mon­u­men­tal. There is a dis­con­cert­ingly fa­mil­iar sense of too many an­nounce­ments and too lit­tle im­ple­men­ta­tion. Take the ex­am­ple of the Smart Cities Mis­sion, an­nounced in 2015, which aimed at build­ing 100 Smart Cities with state-of-the-art ameni­ties. So far, 99 cities have been se­lected with an out­lay of Rs 2.04 lakh crore. But projects worth a mere Rs 2,350 crore have been com­pleted. The rest re­main ‘in progress’. That’s a pa­thetic strike rate, which doesn’t ex­actly in­spire con­fi­dence in the gov­ern­ment’s abil­ity to de­liver.

Given the ad­di­tional spend­ing, meet­ing the fis­cal deficit tar­get of 3.3 per cent of GDP for 2019 will re­quire dis­in­vest­ment and the high­est ever gross taxes as a per­cent­age of GDP. It is a tough ask, ac­cord­ing to Crisil chief econ­o­mist Dhar­makirti Joshi, one of the em­i­nent economists in our panel of com­men­ta­tors, but not en­tirely un­achiev­able. The bud­get has noth­ing for the mid­dle class and large cor­po­rates, who in many ways are the bul­wark of the econ­omy. The big ques­tion is, whether all this will be enough—es­pe­cially given that the GDP growth rate is ex­pected to fall to 6.75 per cent for the cur­rent fis­cal, com­pared to 7.1 the pre­vi­ous year. So far, the eco­nomic en­vi­ron­ment was con­ducive, but now oil prices have crossed $70 a bar­rel in­ter­na­tion­ally, and retail in­fla­tion has breached the RBI’s tar­get, hit­ting 5.21 per cent in De­cem­ber. Also, there is noth­ing to spur the in­vest­ment rate which has fallen from a peak of nearly 34.3 per cent in 201112 to 26.4 per cent in 2017-18. Un­less the gov­ern­ment is able to move the nee­dle on this, it is dif­fi­cult to imag­ine the ac­cel­er­a­tion in eco­nomic growth so nec­es­sary to fi­nance its am­bi­tious schemes.

My own nag­ging con­cern is an old one: I am not sure how much of gov­ern­ment ex­pen­di­ture ac­tu­ally reaches the in­tended ben­e­fi­ciary. In 1985, on a visit to droughtaf­fected Kala­handi in Odisha, the late Ra­jiv Gandhi said that of ev­ery ru­pee spent by the gov­ern­ment, only 15 paise reached the in­tended re­cip­i­ent. Has that leaky bucket been fixed? If not, the elec­toral ben­e­fits this gov­ern­ment is hop­ing for after this bud­get may not ma­te­ri­alise. Elec­tions are not won on grand an­nounce­ments or man­i­festos but on real de­vel­op­ment on the ground which peo­ple can feel.

(Aroon Purie)

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