Media Coverage

By no means a ‘socialist’ Budget

Hindu

  • 1st March 2016

Be it education, health, pensions for the socially vulnerable, distressed farmers, or MGNREGA, the 2016 Union Budget has nothing radical to offer.

Appearances can be deceptive. Finance Minister Arun Jaitley’s emphasis on doubling farm incomes, rural development, and allocations for a battery of impressively named schemes for the social sector may give the impression that the right-wing NDA government has suddenly taken a ‘socialist’ turn. The reality, however, is otherwise.

Howsoever one defines it, an essential feature of socialist policy making is increasing government expenditure. But Union Budget 2016 marks a new low for government expenditure as a percentage of GDP. As N.C. Saxena, former National Advisory Council member, says, “Declining government spending has been a trend that began in UPA II and continued into the NDA years. From a high of 15.9 per cent of the GDP in 2009-10, government spending was down to 13.3 per cent last year, and in this year’s Budget, it’s slipped to 12.6 per cent of the GDP. How can such a steady reduction of government expenditure be termed socialist?”

Also, far from any radical hikes in social spends that a ‘socialist’ tag would suggest, 2016 budget is a holding operation that seeks to reap electoral dividends by passing itself off as ‘socialist’. The recently published Economic Survey 2015-16 had clearly spelt out the importance of increasing investments in health and education for reaping the demographic dividend. This piece of advice, however, has gone unheeded in this Budget.

Percentage game

While the health budget has seen a marginal increase of 9-10 per cent, it is way below the 30-40 per cent increase needed to keep India on course for a health allocation of 2 per cent of GDP in the medium term. Even the two interesting initiatives announced by the Finance Minister – health cover of Rs.1 lakh per family and a National Dialysis Service Programme — betray an anxiety to help the private sector (through the PPP framework) rather than the Indian patient.

Says Amit Sengupta of Jan Swasthya Abhiyan: “Both these programmes reveal how the present government wants health care delivered by private players, while itself playing the role of a manager. This is the right-wing model where the government steps back from providing public services.”

Education fares even worse. While there has been a slight increase in the allocation in absolute terms, the budgetary allocation for education has declined, both as a percentage of GDP and as a percentage of the total Budget. It was 0.5 per cent of GDP and 3.8 per cent of the revenue expenditure for 2015-16, and it is down to 0.48 per cent of GDP and 3.7 per cent of the Budget estimates this year.

According to the Socio-Economic and Caste Census (SECC) data made public last year, the main earning member in 75 per cent of India’s rural households had an income of less than Rs.5,000 a month, and 50 per cent of rural households make a living through casual manual labour. This suggests that a major chunk of the rural population is living at subsistence levels. What this calls for is greater public spending on social entitlements – which are conspicuously missing from the Budget.

As Happy Pant of the Centre for Budget and Governance Accountability, Delhi, points out, “The allocation for the National Social Assistance Programme (for the aged, disabled, widows, the Annapurna Scheme) has gone up only marginally, from Rs.9,000 crore last year to Rs.9,500 crore. At the same time, two long-standing demands have been ignored: universalising social pension for those over 55 years old, and increasing the minimum pension amount from the abysmal Rs.300 per month to Rs.500 per month.”

As for the farm sector, whose welfare is purportedly the primary focus of this Budget, the allocation of Rs.35,000 crore is woefully inadequate given the drought-related distress that farmers have faced for consecutive years. Says Ms. Pant: “Even the crop insurance scheme, which has seen a big increase in budgetary allocation, is more about government paying the subsidy premium. It covers only 20 per cent of farmers, and there has been no effort to bring a greater number of farmers into the net. It’s a good sign that small and marginal farmers find a mention, but there was no mention of the landless farmer.”

Iconic barometer

Coming finally to that iconic barometer of a government’s welfare intentions, the MGNREGA, the budgetary allocation of Rs.38,500 crore, while marginally higher than last year, is way below the amount needed (estimated to be at least Rs.50,000 crore) to keep this scheme going in any meaningful fashion.

So be it education, health, pensions for the socially vulnerable, distressed farmers, or MGNREGA, the 2016 Union Budget has nothing radical to offer.

sampath.g@thehindu.co.in