The budget pays attention to some important sectors and issues, such as rural and urban infrastructure, fertiliser subsidy, rural livelihood, farmers' debts and higher and technical education. However, the allocations and proposals for the social sectors seem to fall far short of expectations. The finance minister spoke of a 'paradigm shift' his government has made over the last five years for making development more inclusive and how it had resulted in budgetary policies for creating entitlements for the poor.
However, it may be argued that NREGS is the only Plan scheme rooted in an entitlements-based approach. In contrast, most social sector Plan schemes of the government continue to follow a welfarist approach and provide low-cost, ad hoc interventions. An entitlements-based approach towards the social sectors would require significant strengthening of the regular and sustained government interventions.
For instance, the finance minister has stated that all services under ICDs would be extended, with quality, to every child under the age of six by March 2012. However, the officials handling ICDs in the districts are now being asked to take up additional responsibility as protection officers for implementation of the Domestic Violence Act in many states, which could weaken the implementation of ICDs. Moreover, we need to ask why ICDs continues to operate as a Plan scheme 35 years after it was introduced. Such a crucial intervention should rather be made regular and financed by non-Plan spending.
By relying heavily on the Rashtriya Swasthya Bima Yojana (RSBY) for the BPL population instead of expanding public sector healthcare infrastructure, the government is revealing its inclination for greater privatisation of healthcare. Instead of moving towards universal, free healthcare for the poor, the government is banking on health insurance, which has caused serious problems in many countries.
We may note that the previous government had made a commitment in its Common Minimum Programme (CMP) that it would raise total public spending on health in the country to the level of two to three per cent of the GDP by 2009-10. However, the country's total public spending on health continues to be abysmally low at less than one per cent of the GDP, in which the share of the Union government has been less than 40 per cent. Even with the increased allocations for health proposed in Budget 2009-10, the magnitude of Union government spending on health would be only around 0.39 per cent of the GDP.
Likewise, the previous government's CMP commitment of increasing public spending on education to at least six per cent of the GDP seems to have been long forgotten. The country's total public spending on education continues to be less than 3.5 per cent of the GDP; even with the increased allocations for education proposed in the budget, the magnitude of Union government spending on education would be only around 0.76 per cent of the GDP.
Some of the much-publicised flagship schemes of the previous government—Sarva Shiksha Abhiyan, mid-day meals and total sanitation campaign etc—did not even find mention in this year's budget speech. On the other hand, allocations for important schemes for protection of children in difficult circumstances, like the National Child Labour Project and the Integrated Child Protection Scheme, have been reduced. Perhaps the government has become complacent about its achievement in important social sectors.
While the budget speech covered the need for taxation reforms, the urgent need for administrative and budgetary process reforms was missed. Without such reforms, bottlenecks in the states would continue to restrain budget utilisation in social sectors. The government should initiate reforms in the budgetary processes, take measures for improving decentralised planning at the district level, and help state governments address systemic weaknesses.
Finally, the government should note that India can't be recognised as an Asian power by merely hosting the Commonwealth Games when it has very low levels of human development indicators.
(The writer is with the Centre for Budget & Governance Accountability, New Delhi.)