The Hindu : Bid to kickstart growth may misfire

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Thursday, Mar 06, 2003

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Bid to kickstart growth may misfire

By Our Staff Reporter

NEW DELHI MARCH 5. The presumed major inducements to kickstart growth may not materialise along the lines expected by those who have hailed the Union Budget 2003-04 as a "dream budget''. The much needed attention to issues such as livelihood and employment is not there and wittingly or unwittingly, it appears to commit itself to neo-liberal orthodoxy in many ways.

This is the conclusion of a report entitled "The Marginalised Matter -- Demystifying the Budget 2003-04'' prepared by the Centre for Budget Accountability of the National Centre for Advocacy Studies in record time after the Budget was presented by the Union Finance Minister Jaswant Singh on February 28.

In terms of resource mobilisation, the FDI cap in the banking sector is to be raised from 49 per cent to 74 per cent. "This will give foreign banks a significant control over the banking sector of India as a result of which the Government might be unable in future to ensure any flow of credit to the priority sectors,'' says Praveen Jha, Honarary Economic Advisor of the Centre for Budget Accountability.

Describing the Budget as highly urban-centric, the report points out that it offers the urban salaried class a higher standard deduction, tax rebates for educational expenses, a new subsidised scheme and abolition of 5 per cent surcharge on income tax. However, the increase in income tax surcharge cannot be expected to generate enough resources as last year only 75,000 people had reported incomes higher than Rs. 10 lakhs per annum.

Providing a social sector perspective, the report says that the real capital allocation on agriculture and allied activities had fallen sharply from Rs. 50.45 crores in the budget allocation of 2002-03 to Rs. 16.6 crores in 2003-04. The proposed hike in the prices of chemical fertilisers like urea and di-ammonium phosphates could mean greater hardships for small and marginal farmers. The budgetary allocations for capital expenditure on irrigation and flood control and revenue expenditure as well as real plan expenditure on rural employment has also declined considerably.

Similarly, there has been a reduction in total expenditure on overall nutrition programmes from Rs. 792 crores in 2002-03 to Rs. 7.77 crores. The allocation of Rs. 507 crores to be made under the antyodaya Anna Yojana to cover 50 lakh more families with a wish to uplift one-fourth of all BPL families in rural areas was described in the report as "a grossly inadequate step''.

The Balwadi nutrition programme has undergone major fund cuts in the last six years. The scheme has witnessed continuous slashing of grants, coming down from Rs. 5.54 crores in 1997-98 to Rs. 1 crore in 2001-02. No more allocations were made in 2002- 03 as it was dropped under the zero-based budgeting exercise after the Integrated Child Development Services was universalised. The budgetary allocation for food storage and warehousing has gone up from Rs. 21,433.46 crores to Rs. 28,040 crores implying a possible rise in the prices of TPDS items in near future.

As regards the welfare of marginalised, the real per capita budgetary allocation for total SC/ST welfare, to cite an instance, has declined from Rs. 39.2 in 2002-03 budget to Rs. 36.9 in 2003-04 budget. Even the miniscule capital account allocation for family welfare has found no mention in the Budget allocation for 2003-04. The share of housing in the total capital account allocation for social sectors is still much less than the figure for 2001-02.

In terms of education, there has only been a marginal increase in real per capita planned budgetary allocation. Revenue account under non-plan allocation in education has declined from a meagre Rs. 15.40 paisa per head in 2002-03 to Rs. 14.68 paisa per head in 2003-04. The National Programme for Women's Education has been scrapped and put under the Sarva Shiksha Abhiyan.

According to the report, the per capita real budgetary allocations for medicine and public health declined for both revenue and capital account under Plan and non-Plan heads. The growth rate of revenue account real per capita allocation for medicine and public health has become negative in 2003-04. The per capital real capital allocation for medicine and public health is too small and in fact has negative expenditure in case of non-Plan allocation.

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