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Resource centre on India's rural distress
 
 

Scrape The Barrel by Indira Hirway


Forget the rhetoric, the FM’s left little for core social sectors

The Union finance minister’s enthusiasm in marking the roadmap to financial discipline and pushing reforms in Budget 2010 is somehow missing in his proposals for inclusive growth. These proposals lack the required homework—in referring to relevant literature, including some recent government reports, and in making estimates of the required funds—and certainly do not reflect much commitment to inclusive growth.

Agriculture—which houses more than 55 per cent of the workforce and bears the disproportionately higher burden of the poor—has been lagging behind the other sectors for the past decades with around 2 per cent annual rate of growth. According to the Economic Survey, this rate declined marginally this year by 0.2 per cent. This sector definitely needs huge investments if it has to grow at a 4 per cent annual rate during the Eleventh Plan. Here, on the face of it, the FM’s four-pronged strategy to help agriculture attain a higher growth arc—promoting production, reduction in wastage of produce, credit support to farmers and impetus to food processing sectors—appears to be sound.

However, the allocation of Rs 400 crore for promoting a green revolution in the water-surplus but poor six major eastern states (Bihar, Chhattisgarh, Jharkhand, eastern UP, West Bengal and Orissa) is too small, particularly when these states are not in a position to invest huge funds of their own. Again, Rs 300 crore for organising pulses and oilseeds in 60,000 rain-fed villages comes to a mere Rs 50,000 per village! Moreover, policy for reduction in wastage of agricultural produce needs to be designed carefully on the basis of some recent studies on retail and on innovative institutions in this area.

Another major concern is employment, which has been growing poorly, quantitatively as well as qualitatively, during the past two decades. The NREGA, a flagship programme, is starved for funds in spite of underutilisation of allotted funds, thanks to the norms fixed for administrative expenses. It needs funds for staffing, as there is a severe shortage of staff; it needs the support of banks, subsidised staff to give timely payment of wages and it needs support for providing facilities to workers. However, the increase in allocation is just Rs 1,000 crore, which cannot even offset the inflationary impact during the year! If NREGA has to expand to larger areas in the coming year, it needs much more funds.

The increase in the allocation to elementary education is of Rs 5,236 crore, with SSA, another flagship programme, getting an addition of Rs 1,900 crore. However, the Right to Education Act, if enforced sincerely, definitely needs much higher central support. Though the setting up of the Rashtriya Madhyamik Shiksha Abhiyan is a good step, the Rs 1,700 crore funds allotted is only a token.

The health sector also needs much more funds than the 1.1 per cent of GDP (against a norm of 2 per cent). The overall health expenditure has increased by Rs 2,700 crore—the nrhm, one more flagship programme, received an increase of Rs 1,510 crore, a 10 per cent increase, which perhaps does not even cover the inflationary increase. Again, the allocation to capital expenditure on health has declined by Rs 390 crore. In short, adequate funding does not back progressive programmes in health and education sectors.

The National Commission on Enterprises in Unorganised Sector (NCEUS) has painstakingly designed a social security package for informal workers. One hoped that the finance minister had paid attention to this report along with the 13th Finance Commission’s report. The increase in the Social Security Fund to Rs 1,000 crore is far from adequate for 350 million informal workers. The recent financial crisis has exposed the high vulnerability of informal workers in the volatile global market. Unfortunately, no lesson has been learnt from the experience and no significant progress has been made in implementing the NCEUS recommendation for universal social protection to informal workers.

The FM is more worried about the income-tax-paying middle class (who got a reduced burden of the tax by Rs 26,000 crore) than about the aam aadmi! The increase in the excise in petrol and diesel prices, which are bound to push the cost-price spiral, would have been avoided otherwise.

Finally, the setting up of an Independent Evaluation Office chaired by the deputy chairman of the Planning Commission is a good idea. But one wonders whether such an office will make much difference given the fact that many evaluation studies are already there demanding more attention and larger funds. In short, the sectors that can make growth inclusive have received a raw deal in the budget.