By Dhurjati Mukherjee
Finance Minister Sitharaman has done a reasonably good job in presenting a Budget with a sharp focus on healthcare and infrastructure, both which have received a great boost as these are vital. However, while there is confidence that demand creation would increase due to the increase in infrastructure spending, it needs to be admitted that in view of the present situation unemployment and underemployment will continue to haunt the economy.
At the same time, as expected, there are no major taxes announced. While the disinvestment target has been quite ambitious at Rs 1.75 lakh crore, Sitharaman also stated there would be increased buoyancy in tax revenue through strict compliance. But the question that arises is whether the revenue collection would be adequate to fund the large amount of expenditure announced. Also the fiscal deficit has been kept at 9.5% of the GDP this year, which may be 6.8% in 2021-22. But economists feel this may go up further in the next fiscal, keeping in view the government’s target realisation.
While a certain section had spoken of the necessity of imposition of a Covid tax, which has not been announced, a recent Assocham Primus Partners survey had found that the healthcare sector should get maximum attention. Thus, the Budget has rightly got the necessary focus with around 82% increase, with allocated funds increasing from over Rs 65,000 crore this fiscal to Rs 71,268 crores in 2021-22, obviously due to the vaccination programme undertaken by the government. Not just the allocation of Rs 35,000 crore but Sitharaman announced a new centrally sponsored scheme – Pradhan Mantri Aatmanirbhar Swasth Bharat Yojana – with an outlay of over Rs 64,000 crore over six years. This would support 17,788 rural and over 11,000 urban health centres, set up integrated public health labs in all districts and 3382 public health units in 11 States etc.
Moreover, the National Institute of Virology, Pune will now have four more new regional institutes. Though one cannot deny that health has been a neglected sector with India having one of the lowest health budgets over the years, in the next fiscal, Sitharaman has shown a genuine desire of strengthening public health units.
The thrust on infrastructure has also rightly been given. Out of the financing mix of National Infrastructure Pipeline (NIP), which was set up in December 2019 with 6835 projects it has now expanded to around 18-20% of the outlay and shall be funded through the Central government’s budgetary support while another 24-26% is expected to come from State government budgets, with the balance coming from extra budgetary resources, include private financing. The NIP would take up 7400 project. However, the setting up of a Development Finance Institution (DFI) is significant news aimed at asset monetisation and building infrastructure for health, agriculture and other sectors.
An anticipated increase of 37% is expected in this sector and realising the financial challenge, the government has announced a new Infrastructure Development Cess. Also a new development finance institution would be created to cater to the financing requirements. However, Rs 5.54 lakh crore has been earmarked for capital expenditure which is very high and indeed quite ambitious.
A major segment of this is on road transport sector for which Rs 118,101 lakh crore has been given to the Ministry of Road Transport. National highways are being planned, specially in Tamil Nadu (3500 km), Kerala (1100 km) and West Bengal (675 km). But while these highways are no doubt necessary, there is need to allocate resources to States for rural roads, where majority of the people struggle for existence. The increased allocation of Rs 40,000 crore find for rural infrastructure may not be sufficient, keeping in view the existing conditions in most States, specially in the backward districts of the North and Eastern States.
Regarding Railways, the announcement of full electrification of broad gauge by December 2023 is indeed encouraging. The other important news made in the Budget is the eastern and western corridors dedicated freight corridors expected to be completed by June 2022 and monetising these corridor assets for operations and maintenance after commissioning. In addition, the Railways will have to monetise all brownfield assets.
The proposed earmarking of Rs, 20,000 crore for public sector banks’ recapitalisation has been a step in the right direction though the amount looks insufficient if the banks have to be made vibrant. Also another important announcement of setting up as asset a reconstruction company to consolidate and take over existing stressed debt from banks attracted attention and bank scrips rallied on this news. Some of the other allocations that need mention are around Rs 114,678 for Urban Swatch Bharat Mission and Rs 2.87 lakh crore for Urban Jal Jivan Mission. The contamination of water is a matter of serious concern and this money may go a long way in ensure potable drinking water. Sadly and surprisingly focus on rural sector has gone missing.
Coming to the agricultural sector, the creation of an Agri Infrastructure Development Fund with a corpus of Rs 40,000 crore is a good sign of resources being given to a large number of people working in this sector. In addition to this, agricultural credit target enhanced to Rs 16.5 lakh crore. But many may not agree that the government is committed to the welfare of farmers, more so because of the prolonged protests by farmers mainly from Punjab, Haryana, Uttar Pradesh and some other States.
Dishing out data, Sitharaman sought to show government concern for helping farmers but, considering the huge population dependent on agriculture, these do not look quite encouraging. Moreover, though she proudly announced Rs 75,000 crore paid to wheat MSP farmers in the current fiscal, the big question is why the bills couldn’t be withdrawn?
As regards social security measures, this has been extended for Gig and platform workers. But keeping in view the large number of migrant and informal sector workers, the Finance Minister should have come forward with more specific incentives as a large segment of the population is involved. Sitharaman was silent on the demand for an employment assurance scheme on the lines of MGNREGA for the urban poor. Moreover, the Budget made no allocation for Social Security Fund provided under the Code on Social Security 2020, which was passed in the last session of Parliament. It cannot be doubted that this segment of the population has been grossly neglected with their financial situation made worse during the pandemic and their day-to-day struggle unending.
The slashing of MGNREGA allocation is no doubt quite distressing. This will have a negative effect in the rural sector, more so with a major section of migrant workers having not returned to their workplace. Even unemployment may be affected. Does this reflect that the government is not really concerned with the impoverished and the economically weaker sections, as alleged by the Congress and the Left parties? One would also venture to ask can’t the defence budget be slashed by say Rs 10,000 crore and given to MGNREGA?
Another sector where the thrust is completely missing is in education with a 6% cut as the allocation for HRD Ministry has been slashed to a little over Rs 93,000 crore from over Rs 99,000 crore this fiscal. The neglect of education is also manifest in the Samagra Shiksha scheme, the main vehicle for implementing Right to Education, where allocation have dropped by over Rs 7000 crore. However, the government announced its plan to strengthen 15,000 schools and set up 750 Eklavya model schools in tribal areas in the next fiscal, which is definitely insufficient. Good schools with proper infrastructure are needed in every village or at least 5 in each Block, making the allocation for school education far below expectations.
The funding for National Research Foundation of Rs 50,000 crore spread over a period of 5 years is significant but it’s important that in the first two years more funds, if necessary, may need to be given. R&D expenditure has been quite poor over the past few years and the present move may be in the right direction with innovation and technology development being the key word in manufacturing and making ‘Atmanirbhar Bhart’ a reality.
A point that comes up whether the allocations earmarked would actually be given as statistics reveals that the government doesn’t release funds as announced and the present fiscal bears this out for the period April till December will show. Though Sitharaman has talked of massive spending, the government has to be in the forefront to release adequate funds to gear forward economic recovery which is imperative at this stage.
Finally, one cannot deny that the Budget points to neo-liberal thrust of economic policy continuing and the focus being on privatisation and helping corporates, selling profitable State assets (the PSUs), deregulating as many markets as possible etc. Obviously, all this cannot benefit the lowest segments of society, who will continue to face hardship and exploitation. — INFA