With an eye on the upcoming elections in different States, Union Finance Minister Arun Jaitley has declared that he is presenting a Budget that provides “additional resources for vulnerable sections, rural areas and social and physical infrastructure”. But since aggregate expenditure in nominal terms is slated to rise by just 10.8 per cent between this financial year and the next, that seems difficult to believe.
Consider, for example, the scheme that even the National Democratic Alliance government declares as being one of its flagship programmes for the poor: the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). It is widely known that over the last two years, that scheme has been slipping in terms of both resource allocation and man-days of employment generated. The number of man-days of employment provided was down to less than 40 per household, as compared with the promised 100. Moreover, many workers have not been paid, with large accumulated arrears. What was needed, therefore, was a substantial step-up in allocations. But the Budget for 2016-17 provides just Rs.38,500 crore for the programme, which is not much higher than the revised estimate for the poor performance year 2015-16. If we take account of the arrears from the previous year that must be met, the allocation for the coming year on a programme which is known to positively affect the poor and the vulnerable would, in all probability, fall.
Inadequate resources In many cases, the figures quoted in the Budget speech to back its welfare thrust are misleading, to say the least. The government has declared that it would double the income of farmers by 2022. In pursuit of that goal, the Finance Minister has provided a total allocation for Agriculture, Cooperation and Farmers’ Welfare (ACFW) of Rs.35,984 crore. On the surface, this seems to be a huge increase in the allocation for this sector when compared to the revised estimate of Rs.15,809.54 crore for 2015-16. But that is a result of a change in classification. The Budget Estimate for 2016-17 includes Rs.15,000 crore for “interest subsidy for short term credit to farmers”. This head earlier appeared as part of the demand for grants of the Finance Ministry, and its inclusion inflates the ACFW figure for 2016-17. Adjusting for that, the nominal increase in allocation to “farmers” is just 33 as opposed to the impressive 128 per cent.
In some areas with welfare implications, such as health and family welfare and school education and literacy, the incremental spending projected for 2016-17 is not much above the difference between the revised estimate for 2015-16 and the actuals for 2014-15. While health insurance schemes for the poor are welcome, they do not make up for the gross inadequacy of spending in these areas. In the case of women and child development, where spending fell by Rs.1,188 crore in 2015-16 relative to 2014-15, the budgeted increase in spending in 2016-17 is just Rs.56.23 crore. As a result, spending on the all-too-important Integrated Child Development Services, which fell from Rs.16,415 crore in 2014-15 to Rs.13,636 crore in 2015-16, is now budgeted to receive only Rs.15,873 crore.
In sum, while the rhetoric is pro-farmer and pro-poor, inadequate resource mobilisation and an obsession with fiscal deficit targets ensure that the government cannot give its growth strategy a much-needed human face.
(C.P. Chandrasekhar is Professor of Economics and Social Sciences at JNU, Delhi.)
