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Nothing but a political Budget

July 19, 2019 09:00 IST

Note that the Budget speech's focus on rural India is part of a carefully constructed political narrative of how the Modi government wants to be seen as batting for Bharat, and not for either urban India or the rich, points out A K Bhattacharya.

Photograph: Ajay Verma / Reuters

Finance Minister Nirmala Sitharaman two Fridays ago made rural India the centrepiece of her first Budget's political narrative.

"At the centre of everything we do, we keep gaon, garib, aur kisan", she said in her 2019-20 Budget speech, implying that not India, but Bharat constituting the villagers, farmers and the poor would be her primary concern.

Do her Budget numbers try to address that concern by significantly increasing the financial allocation for schemes meant for rural India?

 

Take rural development as an example.

Rural development is a sector that concerns farmers, villages and the poor.

But the Budget for 2019-20 increases the allocation for this sector by just 4 per cent to Rs 1.41 trillion.

This is far less than the 13 per cent increase in the Budget's total expenditure this year.

The largest expenditure head under rural development is the Mahatma Gandhi National Rural Employment Guarantee Programme (MGNREGP).

But the allocation for MGNREGP in 2019-20 is only Rs 60,000 crore, a decline from Rs 61,084 crore spent last year.

How about the newly created ministry of Jal Shakti, which includes the departments of water resources, river development, Ganga rejuvenation, drinking water and sanitation?

Two longish paragraphs in her Budget speech were devoted to the Jal Shakti ministry and how the piped water supply scheme was going to be its central mission apart from managing the country's water resources and rejuvenating the Ganga.

But the Budget allocation for the newly created ministry of Jal Shakti for the current year at Rs 28,262 crore represents only a 2 per cent increase over what was spent under these departments in 2018-19.

If Jal Shakti was such a big mission, why weren't more resources allocated to it?

This trend may appear to have changed for agriculture and allied activities.

The total financial allocation for this sector is proposed to be increased by a whopping 75 per cent to Rs 1.5 trillion in 2019-20.

But this increase is largely due to the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) and the pension scheme for farmers.

Of the Rs 64,916 crore increase in one year, as much as Rs 55,000 crore is due to the PM-Kisan scheme and Rs 900 crore is on account of farmers' pension.

In other words, the increase in other agricultural schemes and projects including the ones on much-needed research and development is only about Rs 9,000 crore.

This indicates the government's belief that the farmers' needs would be met largely through the income transfer and pension schemes.

Last year, the government spent about Rs 20,000 crore on PM-Kisan and this would go up to Rs 75,000 crore in the current year.

There is an under-provisioning here.

With the government decision to expand the coverage of PM-Kisan to include all farmers, the financial requirement would be higher at Rs 87,000 crore.

Will just Rs 900 crore for the farmers' pension scheme be enough?

Note that the Budget speech's focus on rural India is part of a carefully constructed political narrative of how the Modi government wants to be seen as batting for Bharat, and not for either urban India or the rich.

Never mind that the meagre increases in the financial allocations for rural development or water do not back those assertions about the Budget's commitment to rural India.

What matters more for nurturing the Modi government's pro-Bharat image is the Budget's move to increase taxes on the rich and pander to the Swadeshi lobby's wishes for raising the tariff walls to protect domestic industry.

And that is what distinguishes this Budget.

It is a smartly crafted document that, amidst the din of a pro-Bharat policy package, further opens up the Indian economy to foreign capital and prepares the ground for more reforms including privatisation and a greater private sector role in infrastructure like the railways.

Even as the discussion on the Budget is centred on its pro-Bharat commitment, albeit without a significant increase in financial allocation, higher taxation on the rich and raising Customs duty on imports of over three dozen goods in an apparent bid to create a level playing field for domestic industry, the Budget has unveiled a series of initiatives that will allow the government to borrow from external markets, relax norms for foreign direct investment and foreign portfolio investors and bring down the government equity stake in public sector units to below 51 per cent.

Presenting this Budget as pro-Bharat appears to be a political tactic employed by the Bharatiya Janata Party-led government.

The reality is somewhat different.

It is a Budget that favours entry of foreign capital in new areas, privatisation and of course a new simplified labour code.

The veneer of the Budget being pro-Bharat seems to be a deliberate act at pre-empting any political pushback to such opening up.

A K Bhattacharya
Source: source
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