Events & Issues
New Delhi, 5 February
2020
Lacklustre Budget
FAILS TO STIMULATE ECONOMY
By Dhurjati Mukherjee
Budget
2020-2021 presented on Saturday last lacks direction and does not take us
anywhere. Though lot of promises were made in the two-and-half-hour speech by Finance
Minister Nirmala Sitharaman, some calling it a ‘story-telling speech’, it hardly
came up with concrete proposals to stimulate growth. Jargons and projections
have been reiterated like doubling farm income or investment of Rs one lakh
crore without pointing to a definite road map of how this will be achieved.
Apart
from lack of vision, the numbers being dished out in the Budget is difficult to
believe as these are completely unreliable. The cuts in food and public
distribution, agriculture and transfers to State and inadequate social sector
outlay point to the fact that benefits will go to crony capitalists and some
foreign portfolio investors. Besides, reduction in income tax slabs, once
calculate remain an eyewash, except for the pensioners.
Though
the government may project it as pro-rural Budget, in reality the allocations
have been more or less the same. In fact, the allocation for agriculture is down
but there is a slight increase in rural development sector. Keeping the annual
inflation in mind, the overall allocation has been much less. The budgetary
allocation for PM-Kisan Samman Nidhi Scheme, which is considered an ideal route
for increasing farmers’ income, has been reduced to Rs 6000 from Rs 12,000 per
year. In addition, allocations for MNREGA, which would have helped in creating
more rural demand, were anticipated to go up to Rs 70,000 has too been reduced.
This shows that a significant section remains sidelined as various problems in
agriculture and rural demand, which are pressing issues of the day. The total
outlay of Rs 2.83 lakh crore is hardly an increase over the present fiscal’s Rs
2.66 lakh crore.
Unless
public investment is geared up, any significant rural demand would not be
created in the next fiscal. The proposal to create warehousing in the taluk and
village levels through viability funding as also to increase other storage
facilities by SHGs is a good suggestion. But the assertion that farmers’ income
would be doubled by 2022 is again another area of wishful thinking. As of now, the
farmers are in a distressful condition and how they will double their income in
two-three years has not been accepted by experts.
Clearly,
this is not a pro-poor Budget. The proposal to set up 100 airports by 2024 or
the abolition of the dividend distribution tax reveals there has been an effort
to make life easy for the upper income sections and the corporate class. While
a few airports may be considered, the necessity of setting up wellness centres
at the block and sub-divisional levels to help the poor and the EWS should have
been priority. Questions have also been
raised why corporate tax rates have been decreased a few months earlier, which
are not forthcoming in investment.
The
allocation for health of Rs 69,000 crore may be on the higher side but is not
sufficient. There is no announcement of how many hospitals would be added under
PPP mode in Tier-II and Tier-III cities. Moreover, what facilities would be
made available and at what rates so that the lower income sections benefit remains
unanswered. However, the allocation of Rs 35,600 for nutrition related
programmes may help lowering MMR as well as improving nutrition levels,
specially for children.
Regarding
education, the allocation has been increased by around 5% but here again
universities, some specialized ones, are needed at the district levels.
However, attaching medical colleges to medical hospitals may help the country
have more doctors which is critical. Also the announcement of degree level
online educational programme by big institutions could help students as also
the proposal of 150 higher education institutions starting apprenticeship
embedded diploma courses by March 2021.
The
national infrastructure pipeline involving 6500 projects needs to be examined.
There are expectations that 100% tax exemption for sovereign wealth funds may
bring funds to these projects. Also the announcement to increase the FPI limit
for corporate bonds to 15%t from 9% is welcome. But only time will tell how
much money comes to the country in the coming year. Some experts point out that
the infrastructure boost is mostly hype and may not fructify, keeping in view
the needs of the country.
Aviation
is definitely not a priority area for the aam janata but setting up 9000
km of economic corridor may be effective. Regarding Railways, not been much has
been heard, except redevelopment of stations under PPP mode and developing
solar power capacity beside rail tracks. Moreover, having more trains under
Teja type trains to connect tourist destinations are definitely welcome but
more should have been outlined about express trains and facilities that would
be made in such trains. It is believed that the plan for complete
electrification of the Railways by 2024 may reduce emissions. What needs
attention is that while most trains get booking in sleeper class there is need
to add more trains or coaches in congested routes and this should have been
announced.
The
recent Economic Survey advocated ‘Assemble in India’ as an integral part of the
‘Make in India’ is definitely welcome as it may boost manufacturing but it is
difficult believe that it can create 4 crore well-paid jobs by 2025 and 8 crore
by 2030. However, this may give some boost to assembling various types of
electronic products in collaboration with foreign companies.
A
significant point made is the setting up a National Recruitment Agency with an
office in each aspirational district for recruitment to non-gazetted posts in
government and banks. Though there are agencies to monitor such recruitment, it
is good to believe that the government may be interested to gear up employment
generation.
The
disinvestment target of over Rs 2 lakh crores in the next fiscal by disinvesting
in LIC (through an IPO), as also profitable public sector companies like BPCL,
Concor, Shipping Corporation of India (SCI) etc., has been announced. Experts
and opposition leaders are questioning whether the government is privatiwing
every area it can lay hands on. A point here that the finance minister
mentioned about “ethical wealth creation” goes against the character of our
private investors, who are not motivated towards profit maximisation but have
also shown unwillingness to adhere to CSR. How does involving private
investors, some of whom have doubtful integrity, help in creating ethical
wealth creation?
The
path chosen in the Budget, in a poor country like ours, will hardly increase
the purchasing power of the EWS and low income groups. The ‘lower requirement’
in food subsidy as also no plans to gear up rural jobs and the incentives to
the business community shows the negligent outlook of the government towards
the marginalised sections. Moreover, it would not be wrong to predict that the
corporate sector, in spite of the tax slash, has been reluctant to
invest. Thus one may be inclined to question whether the slowdown may
persist and the job growth may be static?
Whether
the much-talked about transition to an economy that is resource efficient and
waste less can be achieved by depending only on the private sector may be the
subject of a debate. But the government needs to gear up monitoring and ensure
that this is achieved through good and effective governance in the next few
years.---INFA
(Copyright, India News
& Feature Alliance)
|