Budget 2017: Cause for feeling short-changed4 min read . Updated: 02 Feb 2017, 12:48 AM IST
Four areas in particular left us feeling short-changed; measures to tackle demonetization, rural poverty/employment, relief to farmers and railways
If there was a rationale for advancing the budget, then it was not forthcoming in the finance minister’s self-proclaimed historic speech.
Vague statements were offered with regard to it helping avoid a vote-on-account and enable the passing of a single appropriation bill. However, this concern has never significantly inconvenienced any government in the past and, hence, seemed overstated. As the presentation progressed, with one tepid announcement after another, this reason began to seem increasingly feeble.
Four areas in particular left us feeling short-changed; measures to tackle demonetization, rural poverty/employment, relief to farmers and railways.
The hon’ble finance minister took every possible opportunity to hail the government’s demonetization agenda—whether it be an unsupported claim of a reduction in lending rates, the numbers of those installing the BHIM app or in the potential increase in the amount of tax to be collected.
No acknowledgement was made of the economic destruction caused. A massive public works programme or substantial tax cuts across slabs would have been welcome to counter the fall in demand due to demonetization. Instead, we got superficial and inconsequential tax cuts which are unlikely to revitalize sagging aggregate demand. Given that everyone hoped for measures to ameliorate the loss of jobs and the slowdown in manufacturing across sectors, the absence of any support is a singular disappointment. Furthermore, with the problem of non-performing assets (NPAs) likely to worsen as a result of demonetization, the concession made in the form of a bank recapitalization fund seemed grossly inadequate. This should have been laudable, except that the amount (Rs10,000 crore) set aside suggested that the government is severely underestimating the large number of NPAs on the books of state-run banks. Coupled with the paucity of data coming out of the Reserve Bank of India (RBI), it is anyone’s guess by what percentage it falls short.
The media will celebrate the marked increase in outlays for rural expenditure. Mission Antyodaya was announced to bring 10 million individuals out of poverty for which a “focused micro plan for sustainable livelihood" was to be prepared. This was followed by an increase in the amount allotted to MGNREGA. While we are honoured at the recent embrace of what the prime minister once shamed as a monument to failures of past governments, this increase represented—as Mr. Rahul Gandhi observed—a fundamental misunderstanding of how the scheme works.
It is not how much the government allocates but how much has been effectively utilized. An increase in budget is not necessarily equivalent to the desired increase in wages. Demonetization, wage delays and very ad-hoc and uncertain fund release across the country has crushed the scheme and disheartened the support base for whom it exists. Also, for a budget dedicated to the poor, no mention was made with regard to the implementation of the Food Security Act, in force since 2014. Existing farm loans were not touched upon except to announce farmers’ incomes will be doubled in five years. Distress in rural areas caused by drought was also drowned out in a sea of announcements relating to digital soil cards. No roadmap or credible plan accompanied this announcement. A “seamless flow of credit" to farmers was promised along with a fund of ₹ 10 trillion. Though welcome, the answer to existing and accumulating debt cannot simply be more debt. Farmers who had rationalised the inconvenience of demonetization in the hope that the budget would provide some succour were disappointed, to put it mildly.
ALSO READ: Union Budget 2017: Key highlights and themes
The budget was historic, albeit in a limited sense, insofar as it merged the rail budget which had been presented separately since 1924. A renewed thrust on cleanliness and the use of bio-toilets were announced along with the upgradation of 250 stations across the country. Two things were conspicuous by their absence. First, no announcements were made on rail fares (except with regard to a removal of service tax on bookings made online) and second, there was no mention of the much-touted bullet train programme.
The first is of concern because it leaves the door open for future tariff increases through seemingly innocuous circulars avoiding public glare. This makes sense since the source of funding for the ventures announced was kept deliberately vague. As a result, we got a railway budget focused almost solely on cosmetic improvements.
Lastly, the move to limit political donations in cash could have been a strong one, had it been accompanied by an amendment to the Right to Information Act bringing political parties within its purview. There seems to be a running trend with this government to reduce governance to slogans and acronyms. In that endeavour, this budget is certainly a triumph.
Salman Khurshid is a senior advocate of the Supreme Court and a former cabinet minister.
Muhammad A. Khan, national media panellist of the Congress and an advocate, contributed to this article.