The government relies on for-profit big business to deliver public goods despite their inability to deliver
Can we listen to the budget as an annual public statement by the government of its economic and social philosophy and intent? The centre abandoned five-year plans that earlier laid down a road map of where government policies are headed. The budget, then, is an important reality check of whether the government is literally putting its money where its mouth is.
The government claims that the Union budget 2016-17 is a budget for farmers and India’s poor. But what is its reality?
It makes the extravagant claim that it will double farmers’ incomes in five years. However, there is no word about how this will be accomplished. It expands allocations for irrigation, rural roads and crop insurance. Whereas any enhanced public spending on rural infrastructure is welcome, I would have preferred an explicit commitment to watershed development and micro-minor irrigation for small and marginal farmers. Reliance on for-profit insurance companies to protect farmers’ incomes in times of crop failure is a leaky, tiny umbrella for India’s beleaguered farmer; it presumes sound and updated land records, a sensitive and responsive private sector, and excludes large numbers of tenants and sharecroppers.
More pertinently, it does nothing to implement a key recommendation of the Farmers’ Commission headed by M.S. Swaminathan, and promised by the Bharatiya Janata Party in its manifesto—that it would guarantee to all farmers a minimum support price (MSP) equivalent to 50% above the cost of production. There is no farmer income protection of the kind many countries resort to in recognition of the fact that farming is no longer a viable profession without significant state support. There is no plan to raise farm productivity, especially of the enormous mass of small and marginal farmers, tenant and sharecroppers in rain-fed dryland cultivation.
Similarly, the budget makes claims of expanding healthcare coverage for India’s poor. Here again, the principal instrument it deploys is a new health insurance programme for poor households with health cover of up to ₹ 1 lakh a year. Once more, the state depends on for-profit insurance companies to assist poor households forced to pay for in-patient care. There are many studies of the enormous problems faced by poor and powerless households in accessing their health insurance dues, as well as incentives for unethical practices by private health providers in collaboration with insurance firms. But even more pertinently, it ignores the fact that the large bulk of out-of-pocket spending by poor households is on out-patient care, drugs and diagnostics.
Evidence from across the world indicates that the only reliable and inclusive way to expand health coverage is free, universal, public-funded and provisioned health services, especially at primary and secondary levels. But India’s public health allocations remain among the lowest in the world, and there is nothing that the budget does to change this. The National Health Mission, and even more so the Urban Health Mission, remain starved of funds.
As do school and higher education. Sarva Shiksha Abhiyan, for instance, the principal vehicle to implement the Right to Free and Compulsory Education Act, 2009 (RTE), saw drastic fund cuts in the last budget, and there are no corrections in the current budget. This when, as pointed out by the Centre for Budget and Governance Accountability, only 8% schools comply with RTE infrastructure norms, teacher training and teacher recruitment, and 8% schools still have a single teacher. The finance minister still announces mysteriously that the “quality of education" is the “next big step forward", as is universalization (although Census 2011 showed that 18% children are out of school). Even if it assumed that states will be able to contribute their required 40% share to top up Union government allocations, the resources required to provide pubic-funded quality education to all our children remain a cruel mirage, like most of the government’s promises for the poor. Public-funded higher education reflects a similar decline, ominous in the context of discouraging student dissent and debate in the best of the public institutions today.
I worry in particular about the manner in which even obligations to secure rights enshrined in rights-based laws are being ignored by the Union government. The failure to provision for RTE I have already shown. Equally, the government has not made provisions in its budget for the National Food Security Act, 2013 (NFSA). The Union budget food subsidy outlay has fallen by ₹ 4,584 crore from the revised estimates for the last year. I cannot understand how the government hopes to roll out a greatly expanded public distribution system under NFSA in the current year without concurrently expanded allocations. Integrated child development services and school meals, other universal guarantees under NFSA, continue to be severely under-provisioned. But perhaps the most dramatic neglect is of universal maternity benefits, another critical entitlement for poor women in unorganized work, for which no additional provisions have been made at all for the current year.
What then is the picture of the philosophy and intent of the government that emerges from its latest budget? It is certainly not a government that places a high premium on farmers and revival of agriculture from the hopeless abyss into which it has fallen. It is not a government for the poor, or one that believes the state must invest in provisioning free or affordable public goods such as heal-thcare, school and higher education.
Instead, this government principally relies on for-profit big business, not just to advance growth, but also to deliver public goods such as health and crop insurance. Despite consistent evidence of the inability of big business-led growth to deliver jobs, this remains also its principal instrument for job-creation, supplemented only by the band-aid of skill centres—as though this could correct the immense toll taken by a broken public education system and the absence of spending power in the hands of the country’s millions.
Harsh Mander is a former member of the National Advisory Council.