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ShareThe finance minister said a single Budget can't solve all the problems nor was the instrument to do so. Though his Budget couldn't offer solutions, it revealed, in unmistakable terms, the real priorities of UPA-II and its superfluous approach towards the real problems of the people.
For example, the treatment meted out to agriculture in the Budget. Pranab announced an increased target for credit flow of Rs 3,25,000 crore during 2009-10 against Rs 2,87,000 crore last fiscal. But what has the Budget to do with bank credit? It is the institutions, including commercial banks and cooperatives, which deploy credit from their resources, mostly public deposits. If the government does have a role, it is to increase the credit absorption capacity of agriculture and farmers, meaning make it a viable activity for millions of Indian farmers. This requires cheap availability of inputs, agricultural extension, marketing, etc. Bankers' confidence in the repayment capacity of borrowers, in this case, farmers, encourages them to lend for the activity. In the absence of this environment, higher spending on agri infrastructure, targets and achievements go their own way; sometimes, they match by accident. Although aggregate figures tally, small and marginal farmers never get their due share.
Another 'relief' proposed is a 1% concessional interest for farmers who pay their dues regularly. This presupposes that farmers wilfully evade dues even if they have the capacity to repay. This is nonsense. Farmers, in general, don't repay for reasons beyond their control, like crop failure, non remunerative prices, etc. So, not giving relief to the so-called defaulters amounts to increasing their troubles.
Oblivious of real problems
Another factor that reveals the government's obliviousness to the real problem is its plan to appoint a taskforce to identify the woes of farmers who took loans from private moneylenders. Studies have already shown that borrowing from private sources because institutional credit didn't meet their needs was one of main causes of farmers' suicides. Similarly, the government is unable to understand that farmers who hold a little over 2 hectares need support as the land productivity isn't high enough to make them big farmers. Most of the farmers who committed suicides in Vidharbha had lands this size. So the government decision to extend the repayment of 75% of their dues up to December to make them eligible for 25% concession is meaningless.
Recurrent targets
The approach in other areas such as unemployment, health and education, is hollow, too. The Budget sets a target of 1.2 crore jobs a year. Similar targets are being set since 1990. The only difference is that it was 1 crore jobs a year in the early 1990s. Pranab has raised the target by 20 lakh, indicating that the earlier targets hadn't been met. The problem has worsened, calling for higher targets, possibly due to growth in population and the strategy of job-less growth followed. Now, growth is down to 6.7% and the focus is on stepping it up. The eye is on growth alone; the target set is 9%. This means it will be growth without social justice. So there will be growth in wealth but it won't percolate down to the masses because they're not being made partners in the process.
This continued approach, of aiming at job-less growth, shows the government's excessive concern about fiscal deficit. It doesn't want the fiscal deficit to go beyond a limit as it is worried about a 'high deficit' -- more than 6% of GDP. It wants to contain the deficit and bring in FRBM-II. So the government is not willing to step up its spending beyond a point, though it spoke of another stimulus package.
No spending means no additional governmental investment. But simple logic says there won't be any growth in output and employment unless investments are made.
Impractical approach
Turning to education, health and social security, the approach isn't practical nor worked around ground realities. For example, to help the poor in the area of higher education, it talked of interest subsidy on loans. But there are a large number of dropouts at different levels and people find it difficult to reach higher levels due to poverty. Unless the issue of poverty is addressed, the approach of loans, interest concessions and scholarships won't make an impact.
Nothing tangible is done to improve the conditions at schools. People, however poor, prefer private schools due to the poor quality of instructions at government schools. There are instances of some single student schools (not single-teacher schools) functioning in the country even in poor areas.
One of the reasons students drop out could be unwillingness to go to schools, not poverty alone. Unscientific method of teaching and brutal treatment create a fear psychosis among them. The government has done precious little to check this menace though there have been many instances of children even being beaten to death at schools. This needs attention.
Similarly, medical infrastructure is inadequate and quality is poor at government hospitals. Instead of putting infrastructure in place, the insurance approach is being followed. The Budget hasn't shown any change in this approach either.
As for pensions, the benefits, if any, are given in the form of tax concessions to fund managers, not pensioners. The FM announced the approach will be EET (exempt, exempt and tax) under the new pension scheme. This means whatever little is refunded to participants in the scheme will be taxed. While the scheme is impractical and useless in that it is linked to the contributions of the individuals and the whims of the stock market, this tax treatment worsens the situation.
The Budget has listed many other things like Pradhan Mantri Adarsh Gram Yojna, a pilot project to spend Rs 10 lakh each on 1,000 villages with over 50% scheduled caste population, food security, national livelihood mission, women literacy, etc. But a closer look at all of them reveals they won't make a dent on poverty in India.
This is because of the overall strategy of the government is distancing itself from reducing poverty -- an inalienable duty of a welfare state. Its focus is commercial viability of the institutions in the name of growth.
