2012-13 provides conclusive proof that the UPA government
has lost its way. It has managed the remarkable feat
of upsetting almost everyone and making no one happy.
The Budget is highly regressive in both taxation and
spending terms, and will raise prices of essentials,
so aam aurat and aam aadmi are not happy. Farmers,
still the bulk of the workforce in India and the source
of food for the country, are adversely affected by
rising prices of inputs and have little else to celebrate
in the fiscal policy. Surprisingly, even corporate
India and foreign investors, who would seem to be
the main beneficiaries, are up in arms against the
Budget. They are protesting about the lack of movement
in areas like FDI in retail and other deregulation
as well as at the retrospective opening up of tax
cases through amendments in the Direct Tax Code.
But the Budget provides deeper evidence of the way
being lost, because the UPA government seems to have
forgotten the importance of its own ''flagship schemes''.
It should not be forgotten that these schemes (which
were ultimately brought in and implemented also because
of outside pressure from the Left parties) were the
basic building blocks of any success achieved by UPA-1.
The Common Minimum Programme worked out with the internal
and external allies created a cohesive framework within
which the government operated, despite the many pulls
and pushes, and despite the contradictions of implementing
progressive and pro-poor policies within a broadly
neo-liberal economic policy framework. In fact, these
schemes contributed in no small measure to the electoral
victory of the Congress Party in 2009 and the subsequent
emergence of UPA-2.
Of course, we must be the only country in the world
where basic public delivery of essential social services
is thought of in terms of ''schemes'' that are provided
as ''populist spending'' gifts by a government to
a supposedly grateful population. In most other countries,
the job of the government is precisely to deliver
nutrition, health, education, sanitation – and indeed,
employment, or at least the conditions that enable
more employment and livelihoods. Perhaps because we
persist in seeing these as ‘schemes'', we are grateful
for so little, and happy when spending on something
does not decline even if it is still at abysmally
low levels of spending.
So, in Budget 2012-13, social sector spending overall
has increased. This is certainly welcome, but only
because we are so grateful for crumbs. For example,
allocations for school education have been increased
by around 17 per cent compared to the current year's
revised estimates, though the increase is mostly in
elementary education. As it happens, secondary education
increasingly needs much more money, but the increased
outlay barely keeps pace with the projected inflation
(which incidentally is likely to be much higher than
the anticipated 7.2 per cent because of the inflationary
effect of the Budget itself).
Similarly, the outlay for health and family welfare
has gone up by nearly 22 per cent compared with the
current year's revised estimates, but that reflects
a significant shortfall in spending in the current
year – of Rs 1643 crore. In any case, at a total of
only Rs 30,702 crore, health spending by the central
government is still embarrassingly small in relation
to India's projected GDP – only 0.3 per cent! Compare
this to the promise made by the UPA-1 government to
increase health spending to 3 per cent of GDP. Even
the poorest countries of Sub-Saharan Africa manage
better ratios than this, and it helps to explain why
India performs so poorly in all international indices
of human development and conditions of life.
The National Rural Health Mission was always low in
ambition, and attempted to provide essential public
service ''on the cheap'', by using the unpaid or underpaid
services of local women who were involved in some
minimal training. Even now, the appallingly low remuneration
provided to ASHAs and the expectation that they should
carry the burden of the public health system is shameful.
But even the pathetically small amount provided for
the NRHM (around Rs 16,000 core in the current fiscal
year) has not been fully utilised, and there is an
estimated shortfall of nearly Rs 650 crore. In the
face of such disinterest, even the paltry increase
by around Rs 2400 crore in the proposed Budget must
be taken with a pinch of salt, since it is not clear
how much will be spent.
The Budget also provides for a substantial increase
in outlay for the ICDS compared to the previous year's
budget estimates. But this essentially reflects the
increase in remuneration for anganwadi workers and
helpers, which was implemented in the middle of this
fiscal year and therefore raised the actual spending
by about Rs 3,000 crore. In fact the effective increase
in projected spending compared to the current year's
revised estimates is hardly anything. The increase
in outlay needs to be much more, because the ICDS
is still not fully universal despite seven years of
Supreme Court strictures, and because the ICDS workers
still do not receive legal minimum wages.
The food subsidy allocation provides another big disappointment.
The UPA government has trumpeted the proposed Food
Security Bill as the fulfilment of its promise to
aam aadmi. This has become even more important as
in the past four years, food prices have skyrocketed.
They are likely to increase in the coming year, not
only because of global pressures but because of the
impact of this budget on fuel and fertiliser prices.
But the current government has already displayed a
rather cynical approach to the Food Security Bill,
seeking to reduce it to a travesty of the original
In this context, the fact that the Finance Minister
has maintained the food subsidy at more or less the
current level (Rs 75,000 crore compared to Rs 73,000
spent in 2011-12) seems to confirm that cynicism.
Obviously, the Finance Ministry at least does not
anticipate that the Food Security Act when it is passed
will lead to an increase in the central government's
spending commitments in order to ensure minimally
adequate food grains to all citizens. Indeed, we are
even supposed to be grateful that the food subsidy
bill has not actually been cut along with the fuel
and fertiliser subsidies. So low are the current expectations,
that there was actually applause in Parliament when
the FM graciously declared that there would be no
cut in the food subsidy.
Finally, the most important flagship scheme of all–
the Mahatma Gandhi National Rural Employment Guarantee
Act – is being given such obvious step-sisterly treatment
by the central government that it is now an open question
whether the scheme will actually survive in the medium
term. The combination of vested interests that have
come together to undermine this scheme need not be
gone into here, but the effects are obvious in the
spending data. In the current year, only Rs 31,000
crore was spent out (around three-quarters of the
budgeted amount) and the Government has been quick
to reduce the coming year's allocation to only Rs
33,000 crore. Since on average less than half the
promised 100 days of work are being provided across
India, this suggests that the government has stopped
taking its own scheme too seriously, and may even
be part of the attempt to undermine it.
But the concerns around employment involve more than
the MNREGA. Overall, the macroeconomic policy context
is unfavourable to more productive employment generation,
and this Budget does little to address the problem.
In fact, by raising the costs facing micro and small
entrepreneurs, it may be making the issue of sufficient
livelihood for petty producers even worse. Remember
that more than half of India's work force is self
employed, and the other half is dominated by workers
in very small enterprises. In such a context the complete
absence of any positive approach towards small business
in the Budget is part of a piece with the overall
large corporate-oriented strategy of this government,
but it is worrying nonetheless.
It is also remarkable that the government is apparently
unaware of the policy challenges thrown up by the
large pool of young people – growing numbers of whom
are going through relatively expensive private tertiary
education in the hope of gaining a better life through
employment. Nothing in the Budget suggests that employment
generation for these different categories of potential
workers is even on the radar of the central government,
even though ignoring this challenge is fraught with
all sorts of risks.
Why all this should be so is a real mystery. Does
the government not realise that its economic success
and continued political existence both depend increasingly
on a greater focus on the domestic market, on ecologically
sustainable production trajectories based on more
employment in decent conditions, and on better delivery
of essential goods and services? Is it not aware of
the changing aspirations of people, especially younger
people, in both rural and urban areas? Is it news
to them that sustainable economic growth cannot be
generated without a healthy and educated population
with access to the minimum basic amenities of life?
Why does it continue to neglect these issues to the
detriment of the society as a whole and even at the
threat of its own survival?
*This article was originally
published in the Frontline, volume 29, Issue 06: March
24-April 06, 2012.