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February 20, 2001

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Arvind Lavakare

Beyond the Budget

According to The Hindu of February 13, 2001, Venkaiah Naidu, Union minister for rural development, addressed a press conference in Bombay the previous day, when he made the following points:

  • There remains 'enormous' amount of money unspent from his ministry's budget of Rs 122 billion, including Rs 25 billion for rural road connectivity.
  • The Rajasthan chief minister recently met Venkaiah Naidu and sought Rs 2 billion for the state's water schemes even as Rs 2.05 billion remained unspent in his state
  • Maharashtra asked for an additional Rs 1.4 billion when it still had to spend one billion rupees before the financial year closes in March-end.
  • Conclusion: Though all the states had ratified in 1993 the two Constitutional Amendments of the previous year transferring 29 subjects including primary health, animal husbandry and informal education to panchayati raj institutions, they had, seven years later, been indifferent to the concept that rural development can be strengthened by devolution of powers to local bodies. Instead, the states want the Centre to devolve powers only up to the state capital from where political patronage can be practised.

    The above is a rare indictment of the concept of federal autonomy about which, last July, Farooq Abdullah made such a song and dance across the country and some other state chief ministers joined him on the floor, courtesy the media.

    Ah, the media! None of the three English language morningers of India's commercial capital bothered to carry even a para on Venkaiah Naidu's press briefing. Not on February 13 or the day after! Even a major financial daily was guilty of this omission. They were all otherwise pre-occupied in lambasting the Shiv Sena's na´ve opposition to Valentine's Day, carrying accusations against the alleged discrimination in Gujarat relief operations by the Sangh Parivar, and with such other city, celluloid or global celebrity matters that are perceived to be fancied by the chic elite of modern society.

    Clearly, the chief reporters/news editors of these newspapers had full autonomy to deal with 'secular' and other worldly affairs, with nary a care or clue about the intricacies of bringing about socio-economic development at India's grass root level --unless, of course, a white-skinned foreigner spoke about it.

    With Budget Day approaching, however, one famous female columnist of a national weekly did demonstrate care for the subject. In a tear-jerking vein, she pleaded for an Indian finance minister who would address his Budget speech, without an Urdu verse, entirely to the average Indian's dream of having a home in a town or village having sanitary conditions, a school to send his children to, a hospital that does not requiring walking miles for, and decent public transport.

    While her care was laudable all right, the lady, alas, seems to have little clue of what details actually exist in the Government of India's Expenditure Budget, Volume 2, that is but one accompaniment of the finance minister's printed Budget Speech. It is the latter with its tax proposals that gets exhaustive attention in our media through comments of obliging experts from business and industry with some ignorant commoners in the city thrown in as a "human interest" element. Even professional economists comment on the annual Budget without that Volume 2 in their hands or minds.

    However, it is that document of nearly 300 pages every year that is the key to truly understand how the nation intends to spend its current and new revenues on the various briefly described schemes of each of its 44 ministries excluding the railways.

    It is that document that illuminates the Union-federal link in crucial areas such as education, rural employment and water supply.

    The first false notion prevalent among commoners --- and some columnists --- is that progress in those crucial areas is the exclusive responsibility of the Union government, that what the Union government's Budget proposes to spend on those areas is the gross amount that the country as a whole proposes to spend on them.

    That notion is utterly contrary to India's financial and legislative federal set-up. It ignores the reality that our 28 different states have their own exclusive sources of revenue which are supplemented by handsome help from the Union as determined by a Constitutionally established Finance Commission. (Ref: Our financial federalism is an elaborate mosaic)

    A few examples from the Expenditure Budget 2000-2001 Volume 2 will illustrate how, in several areas affecting the average man's dream painted by our female columnist, Delhi is only an helping hand to the states.

    Take the Special Programme for Rural Development started from April 1, 1999, with the objective, in short, of bringing every assisted family above the poverty line. The Government of India's Budget provision for it for the year ending this March is Rs 14.39 billion --- provided the states chip in with 25 per cent of that as their share, making a total of nearly Rs 18 billion for the country as a whole for one year.

    Since there were 25 states and 10 Union territories when this budget was made last year, each of those geographical entities could have aimed at an average of a little over half a billion rupees a year exclusively for rural development under this special programme. Nearly Rs 42 million a month for each entity isn't paltry, is it?

    How much of that has Maharashtra or Madhya Pradesh laid claim to? It would be most revealing to find out.

    The answer would, of course, depend on the relevant state's administrative dynamism and commitment to alleviation of rural property as expected by the Union government's scheme summarised on page 186 of that Volume 2 document.

    That page says: 'The programme envisages micro-enterprises by following the cluster approach. The key activities have to be selected with the approval of the Panchayat Samitis at the block level and Zilla Parishad at the district level. The project reports are prepared for each key activity with active involvement of banks...to ensure timely sanction of loans and adequacy in bank financing.' The billion-dollar question then is whether the states (now numbering 28) and 10 Union territories have the panchayats and the zilla parishads in place, and whether they have inducted those bodies with the competence as well as dedication to undertake all the homework essential for availing of the available Union Budget funds.

    Considering that the CMs of our states are invariably entangled in vote-bank politics and self-preservation rather than in getting down to the nitty-gritty of dynamic administration, the results from the Government of India's special programme of development can only be imagined. And would our columnists then blame the Union finance minister for embellishing his Budget speech with an Urdu couplet or two? Or would they rather prefer the Union to simply gift away those Rs 14.39 billion to the states and let them launder the booty to wherever they desired and however they desired?

    Take the programme of providing comprehensive primary health care centres at the grass-root level. The Budget provision for 2000-2001 is Rs 5.66 billion. Here too, the programme funds are only contributory: the states must chip in with 40 per cent and the village panchayats with 20 per cent. Thus, if the states are lackadaisical, primary health centres --- aimed at creating a sub-centre for every rural population of 5000 -- will truly remain a dream.

    Lastly, there's the subject of education. The Operation Black Board Scheme in the Union Budget provides four billion rupees for the year ending this March. This scheme is meant for providing 100 per cent assistance for teaching-learning equipment and for salaries of teachers during the Plan period. It says clearly though that 'Construction of school buildings is the state's responsibility'. In effect, the state can't demand salaries for primary teachers and black boards et al for the classrooms unless the Union is satisfied that there's a primary school building for those teachers to teach in.

    Under the circumstances, the Union Budget is at best a road map for the country with several speed-breakers and pot holes to be negotiated by the states --- Delhi's partners in nation-building at the lower levels. No Union finance minister has the magic wand to fulfil, all by himself, the dream of an average Indian in the metro or the town or the village.

    That is precisely why Reserve Bank of India said what it did in its January 2000 report titled State Finances -- A Study of Budgets, 1999-2000. That comprehensive study exposes the structural weakness of state finances and yet asserts that 'It is accepted that the state governments will continue to play a crucial role in enhancing social infrastructure through investments in education, health, sanitation, etc. To ensure that a critical level of investment is made in these sectors, it is necessary to rely on effective recovery mechanisms in these sectors'. What the prudish RBI didn't say is that the CMs should stop playing the fiddle and start getting their hands dirty with work, hard work, all the year round.

    The conclusion is inevitable. All the hype and hate words that accompany a Union Budget do not truly x-ray the national scenario.

    The time has therefore come for a unique post-mortem of every Union Budget. We need a post-mortem that will show how and why financial targets of many common people's programmes became skewed or... succeeded! It is not a difficult task. It's just a question of desire and determination put together. All it needs is care, conscience and conviction to muster a team of lucid analysts, including female columnists; their job would be to steam and pepper the cold annual Budget figures with the states' performance stored in Union government files.

    If those analysts do just that, they can give the nation another annual document called 'Beyond the Budget' soon after the Budget with the Urdu verse. And, who knows, reading the 'Beyond' book might be more exciting than reciting those memorised couplets of Ghalib or Iqbal.

    Tailpiece: A wag is convinced that Mamata Banerjee's stout resistance to increasing passenger fares in the Railways Budget was not at all with an eye to the coming Bengal assembly election, but only because she had no clue about how to utilise the resultant rise in revenue. To wit, there's The Economic Times report of February 16, 2001 that although the Planning Commission allocated Rs 110 billion last year for the railways, the Cry-Baby's ministry could not spend more than Rs 10 billion of that outlay.

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