Economic
Highlights
New Delhi, 3 June 2019
Farmer, Trader
Welfare
BIG BUDGET PATH NOT
EASY
By Shivaji Sarkar
The Narendra Modi government begins its
second term by opening up its kitty for the newly- emerging rural farm sector
supporters and traders even as the Economic Affairs Department has painted not
so rosy a picture.
The now seamless PM Kisan Samman Nidhi (KSN) extends
benefits to all farmers without ceiling of land holding. It would cause an additional
burden of Rs 87,000 crore. Pension for all of them and traders is yet another
socialistic benefit with a view to sustaining the people who contribute to the
nation but do not get government support. The new scheme will cover 5 crore
farmers and 1.5 crore traders and self-employed. If it is implemented
efficiently then over 15 crore farmers would be benefited across the country.
The Rs 6,000 a year KSN has been a great
electoral success and washed out the Congress’ campaign of Rs 72,000 a year. In
States such as Rajasthan, Madhya Pradesh and Chhattisgarh, where the Congress
won the December 2018 Assembly polls, this time round it suffered a setback as
it couldn’t fulfill the promise of waiving farm loans. Minister for Information
and Environment Prakash Javadekar says the Congress’ failure turned the wave in
favour of the Modi government.
A national livestock vaccination programme,
for 30 crore cows, buffaloes and bulls; 20 crore sheep and goats and one crore
pigs would now reduce expenses of the farmers for cattle health care. For this
the Centre would need to bear expenses of Rs 13,343 crore. The Government is
also unfolding schemes to create jobs in rural India, says Minister for Food Processing
Harsimrat Kaur Badal.
The Modi government is working with a focus
to consolidate itself among the masses with a socialistic integral humanism
propounded by late thinker Deen Dayal Upadhyay. The cost is heavy, but the ruling
BJP believes that the deprived farming and small business classes need official
support to add to the overall growth. The concept – ‘kisan sukhi desh sukhi (happy farmer makes country happy) would in
all probability change the contours of economy.
For making the targets sharper, a new Ministry
of Animal Husbandry, Dairying and Fisheries to be headed by Giriraj Singh, has
been created. Equal importance is being given to manage water shortage through
Jal Shakti Ministry under Gajendra Singh Shekhavat. The purpose is to take care
of criticalities and global warming.
While the Government is aiming at making the State
more muscular for national security under new Home Minister Amit Shah, it also
has plans to create synergies between Home and External Affairs with former MEA
secretary S Jaishankar as the country’s Foreign Minister. Security would now be
a coordinated affair, particularly in the wake of the recent serial blasts in
Sri Lanka. Other than enhancing sub-continental security this will give a boost
to safety at home.
However, each of the new activities would
require additional funds. Preparing the budget in the limited resources would
not be an easy task. Plus, the nation now has global aspirations, with Prime
Minister Modi creating a niche in the international comity. He is, as is being
seen, keen on a key role in the UN Security Council.
The ambition of a blue water navy, partly
achieved through critical rescue missions in West Asia and other parts of the
world, is yet another move to influence the neighbourhood and beyond. In all,
the tasks set out are not easy to achieve. These require maneuvering,
diplomacy, soft and hard skills. Having a vision is not difficult, but
implementing it requires international networking, backroom channel support and
the most important, critical financial backing.
In the long run, the country is aiming at
creating an international market for its agro products as well as to improve
manufacturing and industrial activities. And, while the new Government is
confident of taking the nation forward, the leadership must realize that it
would have to face and overcome difficulties.
Even as the Government was taking oath,
economic indicators have reasons to cause anxiety. The country’s GDP grew at
5.8 per cent in January-March 2019 quarter. It drags down the full year growth
to five-year low of 6.8 per cent. Joblessness rose to 45-year high of 6.1 per cent
in 2017-18, as per data of the National Statistical Office (NSO).
Contraction of farm output causes the
slowdown. So the stress on the farming classes is a corrective step. Infrastructure
sectors -- coal, crude oil, natural gas, refinery products, fertilizers, steel,
cement and electricity -- also slowed down to 2.6 per cent in April. Even ONGC’s
production fell by 32 per cent.
The slowdown, as per Finance Secretary SC
Garg, is due to temporary factors such as stress in the Non Banking Financial
Company sector (NBFC), affecting consumption of finance. The NBFCs are facing
cash crunch after the collapse of IL&FS making banks reluctant to lend
them. The Serious Fraud Investigation Office (SFIO) files charge-sheet against
IL&FS as it found the company had overvalued Tata Teleservices shares.
These affected the Mumbai stock sensex too which
saw wild swings and closed with losses of 700 points. The NSE’s Nifty also lost
200 points. The rupee is also on a roll. And apparently, the market is on a
cautious mode.
There are clear reasons as well. In a few
days, the preparation for the Union Budget has to begin. There will be a need for
several rope tricks as the overall revenue is under stress. Chopping off a
sizeable section of up to Rs 5-lakh earning population in the Interim budget
would see sizeable revenue loss, though the Government would also have savings.
Another aspect is that overall debt of the Government
has also risen to Rs 83.4 lakh crore up from Rs 82.03 lakh crore. Increase of
sovereign debt has ramifications. More so owing to GST and possible further
adjustment in income tax, the scope for direct revenue generation is reduced.
Literally it would be a tough task to tailor
the Budget. Chances are that the Government may have to increase taxes and
levies. This causes rumblings as has the recent increase in gas, petrol prices
and highway tolls done.
The Government faces the problem of whether
it should raise taxes or service costs. Both become inflationary. This also
increases governance cost. Food prices are also slowly increasing and may cross
the RBI tolerance limit. In such a scenario, if it reduces bank rates, it may
have deleterious effect. Worse, the international scenario is also not benign.
Realistically speaking, people should be
prepared for some small sops but a tough budgetary approach. The Government is
cautious not to turn the sweet mood to a sour one, but the path is certainly
not going to be easy.---INFA
(Copyright,
India News & Feature Alliance)
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