The Great Indian Budget Tamasha - The Nothing Much about Nothing Much

Let’s admit it – we love hype. Unless there is hype in the TV news, we find it boring. And our TV channels judge themselves by the amount of hype and hysteria they create. The presentation of the Union Budget every year is a mandatory and routine exercise of every democratic, elected government, sanctioning expenditures and revenues for various activities of the Centre and States for the financial year. In India, we have made it something akin to a carnival. Speculation and debates precede the budget presentation, about authentic GDP growth, deficit financing, inflation rates, FDI, foreign exchange reserves, etc. Big business houses and their lobbyists position themselves visibly or invisibly in Lutyen’s Delhi , either trying to lobby for taxation and exemption proposals in their interest, or using their more surreptitious resources with politicians and bureaucrats to get inside information regarding taxation proposals.

Well, coming back to the Budget, and particularly about the Finance Minister’s Budget speech, it really appears to be nothing much about nothing much. Nothing innovative, the usual tweaking of taxes, this way or that, and recycling of old schemes into new avataras with a few extra flourishes. 

First of all, I hope that the Government will fulfill its promises made to the Defence Forces regarding OROP. I have written extensively about the subject in my blog of March 3, 2016. To give the 75% of what was promised and hold back on 25% which directly and adversely affects the lowest but most critical segments of the defence forces shows complete insensitivity and national imprudence. I hope pensions for the retired soldiers or their widows will be in accordance with the promises made to them. I’m sure the Government realizes that India cannot afford to have disgruntled defence forces, particularly in the present geo-political scenario.

The Budget also suggests that it is relying more on extra-programmatic interventions to secure the welfare of the most distressed sections off our people. Take for example the Pradhan Mantri Fasal Bima Yogana, which seeks to provide relief to distressed farmers not through government initiatives, but through Insurance Companies. Or the Health Insurance Scheme, that is supposed to pay for hospitalization expenditure of the poor. The hidden message in these programmes is that the governmental machinery that was created to provide these services is incapable of doing so and has irretrievably broken down, beyond repair. I congratulate the government for having made this admission.

Regarding the Agenda to Transform India, I am happy that the Finance Minister has placed Agriculture and Famers’ Welfare at the top of the agenda. I look forward to seeing how he proposes to give them ‘income security’ and double their incomes by 2022! Irrigation and fertilizers is what we have been speaking about since the First Five Year Plan, and though at a very difficult time, we succeeded in a Green Revolution, we are now faced with its unintended consequences of poor soil health and depleted, contaminated water resources.

I wish the Finance Minister had also given us a White Paper about the real agricultural situation and projections in India. The issues I would consider important as India progresses are - What is the agricultural demand to provide food security in India for the next 20 years at least for its growing population? What special measures in agriculture does he propose for the chronic drought prone and arid zones of India, like Bundelkhand, that tragically remain the same year after year, even though scientific agricultural practices can redeem the lives of the farmers, as has been proven in Israel? What is the projected acreage available for food production, after factoring in the insatiable demand for land for housing, urbanization and industrialization, that is already happening as our society is demographically transforming from the agricultural to the industrial and service mode. I’m sure experts are aware that India is not following the sequential pattern as most industrial societies did, but is entrapped in several time warps, where the service sector has overtaken the industrial sector in the GDP, thanks to the IT revolution and liberalization. What is the projected irrigation cover, what will be the food deficit, and how do we plan to cope with it, as more and more agricultural land becomes non-agricultural land? Year after year, we see agricultural land and production declining, without much improvement in per acre productivity. What is the projected pattern and numbers of rural urban migration, and how will urban India cope with it? Why has the State agricultural cooperative credit structure broken down, that farmers have to turn to commercial banks for agricultural loans, the default of which is driving them to suicide? Does the Finance Minister know that one of the weakest and understaffed Departments at the Block and village level is the Agriculture Department? How does he propose to overcome these constraints? Until these vital issues are understood and addressed through a well thought out strategy and interventions, ad hoc Government’s schemes will only become another bunch of symptomatic measures, draining money out of government coffers, with little transformational or permanent impact. While Rural India will benefit from a Digital Literacy Mission, if it means digital capacity building and not computer marketing, what it urgently needs is a National Agriculture Mission. 

The most disappointing portion of the speech is about the Social Sector. The Budget speech provides no hint as to how it will improve the quality and productivity of our vast human resources, considered to be our greatest strength in this century – the demographic dividend. His statements regarding education and skills are standard, something being repeated from the 1970s. But there is not a word about malnutrition that still continues to afflict at least 50% of the population, despite his 2014 Budget announcement of a National Nutrition Mission. Per capita calorie, protein and micronutrient intake among our children, adolescents, and adults of the poorer sections continues to be far below recommended standards; undernutrition and stunting is rampant, reducing children’s capacity to study, adults’ capacity to work and earn and contribute to the GDP. This, in my view is more important than a Digital Literacy Mission. 

The Finance Minister’s insensitive proposal to tax EPF withdrawals above 40% has thankfully been withdrawn after the wide public protest. But what prompted him include it in the first place?

But his greatest duplicity has been regarding the repatriation of black money stashed away in off shore banks. This is what he says in Para 61 of his speech:

“Our Government is fully committed to remove black money from the economy. Having given one opportunity for evaded income to be declared once, we would then like to focus all our resources for bringing people with black money to books.” (Note the word ‘books’ and not ‘book’)

He consciously reiterates his Party President’s disgraceful charge against Prime Minister Modi of having deceived the people of India by his promise of sharing with every poor family fifteen lacs ( Rs. 15,00,000). It is primarily all about the three cheats in the BJP and a large number in the earlier regime with former Finance Minister Chidambaram heading them all. More about him and Jaitley in my next piece.