| If
anyone asked an average citizen of India today what
her (or his) most significant economic problem is today,
my guess is that the answer would be: rising food prices.
The second issue that would probably be highlighted
is employment, most of all the difficulty of finding
decent paid employment or remunerative livelihood in
self-employed form, whether in agriculture or industry
or services. The third might be the problems of ensuring
minimal health security for the household, as well as
of providing adequate education for the children.
So, how far has the Finance Minister, who claimed in
his Budget Speech that he was concerned with improving
the conditions of the people, actually delivered on
any of these issues? This is in fact a Budget that is
remarkable for its effective rejection of the material
concerns of most of the population. On the question
of food security and food prices, the FM did make some
sympathetic noises and talk about measures to improve
agricultural productivity. But on the more pressing
question of ensuring adequate distribution of food to
prevent local speculation and rising prices, and to
make sure that the poor are able to access food at reasonable
prices, he was silent. To add injury to insult, he has
actually reduced the allocation for the food subsidy
by Rs 424 crores! This suggests that the Government
does not see public food distribution as an important
means of curtailing food inflation, and moreover is
not really serious about the Food Security legislation
that it intends to enact.
On employment, the presumption once again seems to be
that economic growth on its own will deliver more jobs,
even though all the recent evidence suggests that without
active labour market policies, this is not likely. Some
concessions are to be granted to small and medium enterprises,
especially in the export sector, but these may be more
than counterbalanced by the rise in excise duties and
indirect inflationary effects of the rise in petrol
prices. Meanwhile, there is hardly any increase in the
allocation to the National Rural Employment Guarantee
Scheme (though it will be argued that since this is
demand-led, the amount may still increase) and laughable
amounts have been provided for various urban livelihood
schemes.
The regressive nature of the tax measures in the Budget
provides the strongest indication of the FM's apparent
lack of concern for the bottom three quarters of the
population. Direct tax payers – the corporations and
the less than 5 per cent of the population who even
file income tax returns, let alone pay such taxes –
have been given a bonanza of tax reductions, which will
cost the exchequer an estimated Rs 26,000 crore (on
top of benefits in the current year that are projected
to have cost about Rs 80,000 crore). But indirect taxes
have been raised across the board, including for items
of mass consumption, so that the common people will
now contribute disproportionately to the additional
Rs 60,000 crore that is being raised.
This rise is bound to generate further inflationary
pressures, especially given the increase in petrol and
diesel prices that will cause direct and indirect increases
in many other prices. In a context in which concerns
about inflation are already becoming marked, this is
a strange move to make, and certainly one that will
negatively impact the ordinary citizen.
So what about social sector spending? The Finance Minister
made much of the substantial increase in plan allocation
for social services, and indeed, at Rs 26,000 crore
it does seem significant given the paltry nature of
increases in this area in the past. But non-plan revenue
expenditure on social sectors is actually slated to
be cut by nearly Rs 6,000 crore, so the increase is
not as much has been trumpeted. Since the central government
has allocated only Rs 8000 crore more for school education,
it seems that the financial burden of ensuring the right
to education is to be thrust on the state governments.
But many of them are already facing fiscal crises and
will find it difficult to raise the required resources.
In fact, since the state governments are largely responsible
for social sector spending and still account for around
80 per cent of total social sector spending in the country,
it matters critically what resources are made available
to the states. Here, it turns out that total support
from the Centre to state and UT plans is less than Rs
6500 crore, which is completely inadequate for the most
obvious needs of health, education, housing and other
infrastructure. In fact, this increase of around 7.5
per cent over the previous year's spending will barely
keep pace with inflation and is well below the projected
increase in GDP.
So the FM seems to have forgotten about most common
people of the country, barring the voters of his own
constituency who will benefit from some special schemes!
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