Not enough cash for those who need it the most

The budget reflects the finance minister’s need to juggle the UPA’s social inclusion agenda with economic growth in a climate of global doom.

Any budget that tries to balance social and economic equity with a robust economic growth path has its work cut out. In a climate of global doom and fiscal stimulus packages, the task could become almost impossible. Quoting from Kautilya and Gandhi to highlight his balancing act between economic stimulus and social inclusion, Pranab Mukherjee presented the Union budget for the remaining months of this fiscal year.

There were few surprises, except perhaps for those who had expected the first UPA-II budget to be a ‘social sector’ exercise. There were certainly no announcements on large increases in funding to health and education, and there were only minor references to funding for programmes for children, women and minorities.

The announcements in this budget on social spending were essentially a continuation of the government’s inclusive growth agenda and some of the major spending announcements had already been made in the interim budget earlier this year.

Further, much of the government’s social agenda has already been outlined by the President in her address to the Parliament a month ago — including the introduction of universal access to secondary school education, the shift in focus to female literacy, the introduction of a unique identity card, and of course the controversial food security bill aiming to provide cheap rice and wheat for the poor.

Despite the constraints that do exist on this year’s budget, it bears repeating that India needs to spend far more on many of its social sectors. Public spending on education and health was only 3 per cent and 1.4 per cent of GDP last year according to the most recent Economic Survey.

These percentages are far lower than similar spending by several other countries, and the fact that our health spending is grossly inadequate is borne out by India’s poor health indicators vis-a-vis countries like Malaysia and Sri Lanka.

And despite the UPA’s commitment to these areas, public expenditure as a proportion of GDP has increased very little in the past five years: education was 2.74 per cent and health was 1.24 per cent in 2003-04.

It is thus disappointing to see from an analysis of the combined interim and actual budget for 2009-10 that health has not received the boost it needs to bring the country’s health indicators out of the doldrums, despite large injections to the National Rural Health Mission and the health insurance scheme this year.

Despite the introduction of universal access to secondary schools in the country, school education received a miss in this budget. The focus instead seemed to be on higher education — essentially as a fulfilment of the government’s strategy to introduce a university in each state. Funding for higher education focused on setting up central universities, IITs and NITs in uncovered states, and on the expansion of vocational courses.

Sectors like rural development received a boost in this budget through a vastly increased funding of 144 per cent for the rural employment guarantee scheme and 45 per cent for rural infrastructure, especially for roads and housing.

The National Housing Bank received an increase in its resource base for refinancing rural housing. Further, villages with more than half their populations identified as scheduled castes will come under a new scheme for integrated development to be piloted in 1,000 villages.

Rather than allocate very large amounts to the social sectors, this budget contained scattered announcements of schemes that presage a broader inclusive agenda to come. Fortunately, many of these carry their own deadlines. Important among these is the goal of poverty eradication by 2015 through a restructured, universal National Rural Livelihood Mission.

In a welcome move, the rural employment scheme will be converged with other rural programmes such as those relating to agriculture, forests, water resources, land resources, rural roads, to increase its scope and expand employment for the skilled also.

Women as entrepreneurs will benefit from the proposed expansion in the number of self-help groups (SHGs) to enrol at least half of all rural women and through an increase in the corpus for funding for women’s banking needs (Rashtriya Mahila Kosh) over the next few years. The budget also echoes the President’s statement about restructuring the Literacy Mission to focus on women with the goal of halving female illiteracy in three years, especially among minority, SC, ST and other marginalised women.

It is only fair to the finance minister to say that there was no way this could have been a ‘dream budget’, given the current economic scenario, both globally and domestically. Further, with only eight months left till the end of this fiscal year, the time-period for implementing grander schemes is truncated and it is possible that the government is keeping the larger announcements for the next budget.

The best that can be said about the social intent of this budget is that it has not deviated from the government’s agenda; unfortunately, until February 2010, it can ultimately only be viewed as another interim budget for the country.