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Going beyond the budget

Saturday, 12 July 2014 - 6:00am IST Updated: Friday, 11 July 2014 - 11:43pm IST | Place: Mumbai | Agency: dna

Good governance, and not mere policies on paper, will meet our socio-economic challenges

When it comes to the budget, as a statement of intent from the government, it is a good idea to keep your fingers crossed — because a budget is founded on several variables which can cast a shadow over it and affect its eventual outcome.

One way to look at the budget would be to see it as an effort to put more money in the hands of people, to give them a good life and boost consumption; to back industry and, here too, create conditions to put more money, this time in the hands of business, through profit so that the creators of wealth can invest and create some more wealth; and prepare a buffer of sorts against emergencies so that precious gains are not lost. And then there is infrastructure development to continue with the overall plans for improving people’s quality of life. The ecosystem in which India’s Union Budget is presented, needs to be a fair mix of populism on the one hand and hard-nosed financial prudence along with a push towards economic reforms on the other.

But, for a budget to be successful, the key element is good governance, a term that has gained currency since Narendra Modi began his Lok Sabha campaign against the backdrop of the UPA’s unravelling over corruption, poor accountability and weak government. In voting for Modi, Indians believed they were voting for good governance. That promise of good governance is certain to be fully tested now that Arun Jaitley has presented his budget. Modi and Jaitley can also expect to be taken up on the Prime Minister’s word that the poor have the first right to the national treasury. In short, the budget will be marked on how the BJP’s good governance facilitates the aam aadmi’s access to roti-kapda-makaan or food-clothing-shelter.

Simple as it looks, this is a tall order. For budget promises to be met a combination of good governance, level headedness and a hefty dose of luck is needed. Refer to the string of budget presentations over the decades that had been done in for being too ambitious to the point of being naive — but this didn’t persuade the finance ministers to be less so the next time around. Since the beginning of India’s budget exercises, the focus has been on improving agricultural productivity, zooming in on power output, housing, employment generation and industry. Yet the challenges remain, both in scale and delivery.

Before coming up to the present, it would be instructive to see the challenges in terms of governance for two finance ministers faced with external crises. On February 28, 1963 then finance minister Morarji Desai spoke on some of the needs for the common man — agricultural output, power generation and housing. This was in the shadow of the Chinese aggression of 1962 and the challenge for him as he totalled expenses of over Rs1,800 crore, (substantially more than the sum total of his previous four budgets) was to meet the challenge thrown up by the Chinese aggression, while not giving up the development agenda.

This, he admitted, called for “privation” on the part of people. The implication was straightforward: delivering on promises for development in those times required good governance because he would have to justify the “privation” required of Indians by doing what he had promised. 

On to another crisis, 1999-2000, when India faced sanctions following the Pokhran tests. Finance minister Yashwant Sinha drew attention to the East Asian financial crisis and the slowdown of global growth rates as the environment in which he had to deliver on his budget promises. This is how he described the road ahead. “The challenges before us, both international and domestic, remain grave. The fiscal and revenue deficits of both Centre and States are still too...,” he said. But, he was candid that it was not about fiscal management but good governance on delivering for the aam aadmi when he said, “...despite our continuing concern year after year, we have made only a limited impact on the problems of poverty and unemployment. The various schemes of the government in this area lack focus and convergence. The delivery systems need to be cost effective and community-based.” As indictments of poor governance go, this was as brutal as it could get by a finance minister.

Closer to our times, the UPA government’s flagship plan MGNREGA which had the potential to deliver on all three, that is food-clothing-shelter, for the rural poor has been done in by leakages, the result of poor oversight and bad governance leading to doubts over the way it was implemented. This, even though MGNREGA had helped in improving nutrition levels in areas where it succeeded apart from giving jobs.

There are already some questions on this year’s budget proposals which will test the good governance benchmarks of the Modi government. The finance minister speaks about the PPP model for various social sector programmes but this will involve putting the building blocks on the ground before someone begins to put in the money. There is a proposal for setting up AIIMS in all states  — a popular move — but there is no ostensible plan for expanding the healthcare infrastructure countrywide. The proposal for 24x7 power supply for all does not say how is to be achieved.

These are challenging times. India has to fight inflation and poor growth rate. There is grim news from abroad of ever-shrinking global growth — as the recently-released OECD report suggests — and the negative impact of climate change on economies across the world. The government has to find ways to narrow the gap between India and Bharat, the glaring difference shown in the Sensex touching 26,000 points even as food prices go through the roof.

Modi did well in Gujarat to create a system of accountability at ground level by visiting a district every month. This is where good governance comes in. The PM has his reputation at stake. The real test will be to see whether he will be able to do it for 130 crore Indians to match what he has on record for 6 crore Gujaratis.

The writer is a political commentator

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