Although it appears fiscally prudent, the budget is primarily election-driven that offers little to hedge the harm happened to growth momentum and employment by ill-judged move of demonetisation. It proved an opportunity foregone when it comes to reviving the export and giving impetus to the service sector hit hard by the international disturbing occurrences like Brexit and the looming large shadow of ‘de-globalisation’ with West’s falling political-economic capacity for openness.
Many times in recent years, the revised estimates as well as the ‘actuals’ did deviate from the budgetary estimates – but never like this year the government has openly attempted to feed its own revenue and expenditure data with only nine months’ timeframe, excluding the terrible three months since demonetisation.
This year, for the first time, the Railways Budget is part of the General Budget – and the loss is apparent, as there is little to be found out for ‘capacity building’. And most awkwardly, the details are hard to get on budgetary provisions for Railways. Also like many other shocking instances of 1st, the Economic Survey is an ‘out of print material’ this time which was only read by few including the CEA Arvind Subramanian. But it was appreciable that the CEA informed us how Economic Survey recognised stagnation in the growth rates of India’s export and demonetisation caused hardships for those engaged in the informal economy.
As most of the loyal Sarkari Economists of this regime are busy with their research ranging from Puranas to Goat-farming, there is little chance they will return back anytime soon to pursue their core business in economics and policy-making. Rather this time, the Parliament and the Citizens witnessed a ‘literary budget’, where the ‘prose’ ran the show more than the ‘numbers’, with relying upon some key catch-terms in a bid to make non-striking acts, a bit striking: Mahatma Gandhi, farmer, poor, rural etc.
The most worrying part of the budget is the ‘manufactured numbers’: As per the latest report of Centre for Budget and Governance Accountability (CBGA), “In the context of the Union Budget 2017-18, it needs to be noted that due to the merging of the Plan and Non-plan expenditures, figures for certain components of resources transferred to states are not available for the previous years. On one hand, non-comparability of budget data for a time series analysis becomes an issues in such a process, on the other, it also does not help in transparency and simplification of budgetary data.”
Many times in recent years, the revised estimates as well as the ‘actuals’ did deviate from the budgetary estimates – but never like this year the government has openly attempted to feed its own revenue and expenditure data with only nine months’ timeframe, excluding the terrible three months since demonetisation. As calculated in wrong way, there is no reason to not believe that both direct and indirect tax data are questionable.
In the wake of Fourteenth Finance Commission recommendations, the Union budget allocations for social sectors need to be seen in synchronicity with the State budgets. Sadly the huge regional disparity in social sector spending didn’t bother government much to raise spending on social sectors through centrally sponsored schemes. On bulk of social sector programmes, the allocations have been retained at similar levels as last year – and only a handful programmes have witnessed a greater outlay in 2017-18 (budget estimate) as compared to 2016-17 (revised estimate).
While the defense and infrastructure has received the compulsive increase in outlay but there is lack of clarity in allocations of funds for specific purposes.
Among the programmes which gained most out of budget: The allocation for PrdhanMantriAwasYojana has gone up from Rs.20,936 crore to Rs.29,043 crore; Pradhan MantriKrishiSinchaiYojana has been stepped up to Rs.7,377 crore from Rs.5,189 crore; Swachh Bharat Mission Saw a rise to Rs.16,248 crore from Rs,12,800 crore; National Health Mission has been allocated Rs. 27,131 crore as against Rs.22,598 crore in the revised estimates; Pradhan MantriSwasthayaSurakshaYojana made a giant leap to Rs.3,975 crore from Rs.1,953 crore; National Nutrition Mission saw a jump from Rs.175 crore to Rs.1500 crore and Maternity Benefit Programme increased from Rs.634 crore to Rs.2,700 crore.
On education, the show remained feeble with 9% outlay increase to Rs.79,686crore. Not much done for primary/universal schooling – and the finance minister ArunJaitley’s budget speech gave miss to ‘Right to Education’. On education, the increased outlay is mostly meant for IITs – and in setting up of new institutes, including AIIMS. Apparently, there is stress on ‘skill creation’ but without solving the ills of social disparity and exclusion, borne out through lack of basic education. ‘SabkaSaath, SabkaVikash’ will unlikely to come with poor handling of human resources.
As this budget was aimed to show government’s commitment for rural India, the budget departed from Modi’s admonished statement where he called MGNREGA ‘living monument of UPA’s failure’. Not only it’s surviving along with UPA’s another programmeAadhaar, it’s rather thriving – and this year’s outlay was set at Rs.48,000crore from previous year’s Rs.47,499 crore. For Department of Rural Development (DoRD), allocation has been increasing over the years – and the convention didn’t reverse this year as well.
As per CBGA’s estimate, the allocation for the Ministry of Agriculture and Farmer’s Welfare has increased substantially from Rs.35,092 crore in 2015-16 (actual) to Rs.51,026 crore in 2017-18 (BE). However, the increase of such allocation in the current budget, reveals only Rs.3,053crore. As a percentage share of Ministry’s total allocation from both total Uniion Budget and GDP show a decline in the current budget compared to the allocations in 2016-17 (BE). When these shares in the current budget are compared to the allocations made in 2016-17 (BE), they show a clear stagnation. The question remains, where is gain?
Following a consistent growth trend since 2012, the outlay on nutrition related schemes increased from Rs.2,00,071crore to Rs.2,98,316 crore in new fiscal year. Gender Budget was waiting for an overhaul but it got slight push-up from last year’s Rs.90,770crore (BE) to Rs.1,13,327 crore (BE). On children, there was new specific announcements were made. With the merger of Plan and Non-plan heads of expenditure, there is lack of clarity regarding parameters for assessing allocations for Dalits and Adivasis. On social security, the new provisions are alarming, with lower outlays for all the major programmes, including Aam Aadmi BimaYojana.
While the defense and infrastructure has received the compulsive increase in outlay but there is lack of clarity in allocations of funds for specific purposes. As stated earlier, the ‘details’ are elusive with this year’s budget. Post demonetisation, the low personal tax and reduced tax for SMEs are unlikely to generate too much goodwill – and surcharge on income above Rs50 lakh proves the contradictory positioning of government. On bringing transparency in political funding, it is too naïve to expect a change until the numbers of donors are restricted. Otherwise, capping of cash donation wouldn’t make much sense, as the accountants know their work well in our part of the world.
Overall, this budget is slogan-driven and not for setting up a much needed grand-narrative for Indian economy. Budget 2017 should be remembered for being a firefighting budget, designed to win the public over demonetisation, remonetisation and the state elections round the corner. It came with an aim to bring major shifts in budgetary processes but without rational aim to attain ‘greater common good’, thus nothing upfront appears promising after decoding the budget made. It was just a low key budget!