Economic Highlights

New Delhi, 13 June 2014

Meaningful Budget

SCRAP TRIVIAL PROGRAMMES

By Shivaji Sarkar

The nation is looking towards mid-July, when the Union Budget is to be presented in a fresh package. It eagerly awaits the new product. Undeniably, it will be the Narendra Modi Government for achieving the miracle of revival within the limited available resources, burden of carrying out populist impractical programmes and reallocating finances at a time when it would not be in a position to increase taxes.

The country needs $5 trillion investments during 2014-20. It is a large sum, which the Government cannot raise through normal resource mobilization. The Government cannot expect all of it to come from foreign direct investment (FDI).  It has to spend itself a lot for creating the infrastructure, putting the books in order for departments such as Railways and other public sector undertakings.

It has to contend with Rs 77,000 crore less realization on revenues indicated in the UPA’s interim budget of Rs 17,63,214 crore. The UPA cut allocation on education, health, water supply, sanitation, food security, renewable energy, women and child welfare, social security, rural and urban development. Even the actual Plan expenditure in 2013-14 was slashed to Rs 4.75 lakh crore from the allocated Rs 5.55 lakh crore by cutting infra expenses. The revenue generation projected by the previous Finance Minister P Chidambaram would be almost 17.4 per cent less.

Additionally, it also has to infuse Rs 11009 crore capital in public sector banks hit by NPAs of Rs 2.44 lakh crore. Further, it also has to look to pay the government employees more by 2016, when the Seventh pay panel report is expected.

Indeed, the Modi Government has to function on razor’s edge. Chidambaram has limited the leeway. Converting “scam to skill” India, as the Prime Minister said in his maiden speech in the Lok Sabha, is an arduous task.

The Government has to look for increased support to agriculture, may be in terms of direct subsidies to the farmers, boost manufacturing, increase industrial production, check prices, create jobs and eliminate corruption, provide houses to all, spend on skill development, clean Ganga and create a new urban India - the promises made in the BJP manifesto as well as the presidential address.

It is an agenda for revival but everyone would look at Modi and his Finance Minister Arun Jaitley to accomplish this feat. All of it requires resources. But these have been frittered away by the UPA Government on unproductive populist measures such as MNREGA and the Food Security Bill. The two programmes are symptomatic of the failure of the previous government on providing jobs to the people and inability to curb whopping food prices. The two programmes cost the Government Rs 1.58 lakh crore a year as per budgetary statements. The plan panel points to ghost beneficiaries in each of these programmes.

Another biggest scam had been the unique identity card called UID or Aadhar. The UID, a baby of the Planning Commission, has been termed as a “corporate scam”, a term used by writer and activist Arundhati Roy. She says it funnels billions into the IT sector hit by the US and European recession. Nandan Nilakeni had been shoving an illegal Aadhar card in the name of empowering the poor.

The cost benefit analysis done by National Institute of Public Finance and Policy at the behest of the Planning Commission found that it has costs beyond the actual programme, almost at every level of governance. The bio-metric tools have to be replaced every three years. It notes that a series of anomalies have been reported by various State-level audits in eight States. The Government itself has allocated Rs 14232 crore for UID in 2013-14 and every year there is an incremental increase without any benefit to the people.

The Modi Government has rightly sounded that it wants to scrap this white ant – that nibbles into every programme without a tangible result, according to the NIPFP. On the face of it, scrapping the programme, which so far has covered 57 crore people but has not issued card to most of them, would save at least Rs 25,000 crore a year.

Further, it can also look at leasing out Air India, which has been draining public finances to at least Rs 5000 crore a year, for keeping it flying and if debt burden and cost to fleecing bureaucrats are included it would almost be double. Leasing it out would save outgo and may even fetch a good lease fee every year. With increased competition, Air India has little chance to survive otherwise.

The NDA Government has also to scrap programmes such as the four-year degree as introduced by Delhi University. It is a drain on resources of both the Government and individual citizens, given as that the worldwide trend now is to clearly reduce the term of education. More a child spends for education more is a burden on the society. The HRD ministry has to tailor out compact short-term high utility programmes. The longer terms spent in the universities do not equip the children better. Mere setting up new universities, IITs and IIMs is not the solution.

There are many Government organizations, which have outlived their lives. At the same time there are many which require a little push to make these useful tools. The State police force and bureaucracy has lost their credibility. The Government needs to take steps to reform policing in real terms. It should become a friend from an organized gang of criminals. It does not require much funding. It needs new administrative approach.

The programmes such as housing have become expensive with speculative private funding. It would not require much Government funding but it would require honest government intervention. 

Food prices have not yet moderated. The Government has rightly taken the first step to stop food grain exports by the Food Corporation of India (FCI). It should have to be turned into a market intervention agency to keep prices in check. The commodity exchange market operators did not allow the UPA Government to do that. Thus, the FCI has to be entrusted a new role.

The country hopes to become a super power, but the last dispensation has created a situation that makes survival difficult. The Budget has to deliver a lot for rebuilding the country.---INFA

(Copyright, India News and Feature Alliance)