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Better late, than never
By Devinder Sharma

Pranab Mukherjee has made a beginning to improve the conditions of the deprived and marginalised sections but the policies need much higher allocations to make any positive transformation in the lives of the poor.


Tracking budgets is not easy. While the finer points in any budget get drowned in the chorus that rises to appreciate the Finance Minister only when more sops are doled out to the industry in the name of strengthening economic growth, I have begun to realise that a budget for aam aadmi comes only when elections are around the corner.

It wouldn’t therefore be a bad idea to have the budget presentation only for two years prior to ensuing elections.

You can accuse me of being anti-growth, but the fact remains that unless the government pumps in money to pull the poor from the clutches of poverty, following the indirect route to pump in money to the industry hoping some of it will trickle down to the poor remains a faulty assumption. I have always said that if the government launches a direct assault on poverty, the GDP grows. But not vice-versa.

Well, it has taken several years for the government to realise that farmers need short-term crop loans at a lower rate of interest. The National Farmer Commission had made this recommendation four years back. Pranab Mukherjee has lowered the effective interest rate for farmers who pay back in time to 4 per cent. In addition, the total quantum of agricultural credit has been enhanced by Rs 1 lakh crore, from Rs 3.75 lakh crore in 2010-11 to Rs 4.75 lakh crore in 2011-02. These are welcome moves.

The fact remains that unless the government pumps in money to pull the poor from the clutches of poverty, following the indirect route to pump in money to the industry hoping some of it will trickle down to the poor remains a faulty assumption.

With 5 States going for elections, Pranab Mukherjee has reasons to remember the aam aadmi. Although the economists, along with the economic writers, call such concessions as ‘populist’ measures, I think these concessions for the poor and marginalised are in reality true economic measures that spur growth. A special relief package of Rs 3,000 crore to the debt-ridden weavers for instance has come about only because the UP elections are around the corner. Rahul Gandhi had led a team of weavers from UP to meet Manmohan Singh a week prior to the presentation of the budget. Whatever is the reason, weavers are in crisis and the debt-waiver will benefit 3 lakh weavers working with 15,000 handloom cooperative societies.

A few months back, Health Minister Gulam Nabi Azad was gheraoed by angry ASHA workers when he visited Jaipur. They were protesting against the paltry wages – Rs 950 per month -- they were getting for delivering basic health services and awareness programmes to rural population. These low wages had been in continuation for several years now, and no one took care. Thanks to the coming elections, Finance Minister has now doubled their monthly salary, a move that will directly benefit 22 lakh aanganwadi workers. He has also extended the benefit of health insurance that was given to NREGA workers last year, to unorganised labour in several areas.

At the same time, Pranab Mukherjee has provided Rs 30 crore for integrated development in each of the tribal districts in the naxalite-affected areas. This is a delayed recognition of the exclusion that almost all budgets have maintained all these years. With a little more vision, the Finance Minister could have launched several sustainable agricultural, health and education initiatives in the red corridor to revitalise the rural economy. If only he knew that agriculture is the first line of defence against Maoism, I am sure he would have thought on those lines.

In 2010-11, Finance Minister had provided Rs 5.02 lakh crore by way of tax exemptions to the industry. This is nothing but a subsidy for the rich. Since 2005-06, the total subsidy being showered on the industry and business sector amounts to a whopping Rs 16.45 lakh crore.

In the name of inclusive growth, it is only the industry and trade that has always walked away with the cake. In fact, in many ways the budget is simply an annual maalamal exercise for the rich and the business community. Take the tax concessions that are doled out to the industry every year and clubbed in the category of ‘revenue foregone’. In 2010-11, Finance Minister had provided Rs 5.02 lakh crore by way of tax exemptions to the industry. This is nothing but a subsidy for the rich. Since 2005-06, the total subsidy being showered on the industry and business sector amounts to a whopping Rs 16.45 lakh crore.

In Budget 2011, Pranab Mukherjee has cleverly hidden the annual subsidy dole given to the industry, but has in addition to Rs 5.02 lakh crore given last year provided another Rs 1,38,921 crore as corporate and personal tax exemptions this year. Since the economic stimulus that was being given to the industry for tiding over the recession has still not been withdrawn, we can safely compute the total subsidy to the industry at over Rs 6.5 lakh crore. Considering that the annual budget is an exercise involving Rs 12 lakh cores, the massive subsidisation of the business and industry has never been questioned.

On the other hand, subsidy of fertilisers, food and fuel has been reduced by Rs 20,000 crore this year, over the revised estimates of last year. This is exactly what Noam Chomsky meant when he said we live in times of ‘tough love’ – love for the rich and tough for the poor.

Finance Minister could have easily made a drastic cut in the ‘revenue foregone’ category and thereby made more resources available for making cheaper food and fuel available to the masses, for rebuilding the shattered economy of the naxalite-affected regions, and also for programmes he spelled out for promoting millet cultivation, fodder development, and for sustainable agriculture. These are excellent initiatives, but the budgetary allocation is too low to make any significant impact. More so in case of fodder cultivation, which has remained neglected through the period when a lot of emphasis was given on increasing milk production.

The views expressed above are personal and do not necessarily reflect the views of d-sector editorial team.

Devinder Sharma  |  hunger55@gmail.com

Devinder Sharma is an award-winning journalist, writer, and researcher globally recognised for his analysis on food, agriculture and trade policy. 

Write to the Author  |  Write to d-sector  |  Editor's Note

 Other Articles by Devinder Sharma in
Socio-Economic Development  > Indian Economy > National Policies and Programmes

Fooling the farmer
Wednesday, November 30, 2011

The proposal to allow multinational retail giants to enter India is pushed on the pretext of its possible benefits for the poor farmers. What many do not know is that big retail has only aggravated problems for the farmers everywhere they established their chain of mega stores.

Bailing out the richest
Friday, March 12, 2010

Forbes magazine says India has almost twice the number of billionaires than last year. Strangely these richest of the rich gained when the world economy was badly hit by the meltdown. Was it despite or due to the economic recession?
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Corruption Watch

The bad news is that corruption has not only sustained but has grown in size and stature in the country. With scams being a regular feature, seventy per cent respondents in a survey have rightfully opined that corruption has continued to increase in India. One in every two interviewed admit having paid a bribe for availing public services during last one year. Transparency International's latest survey reveals that the political parties top the chart for the most corrupt public institutions, followed by police force and legislatures. No wonder, India continues to make new records on the global corruption arena!

The shocking revelation is that the health and education sectors haven't remained untouched by this phenomenon. With 5th and 6th positions respectively for these sectors on the public perception chart on corruption, corruption has crept insidiously into these sectors of hope for the masses. With bureaucracy being fourth in the list of corrupt institutions in the country, corruption seems to have been non-formally institutionalized with little hope if public services would ever be effective in the country. With economic growth having literally institutionalized corruption, are we now expecting corrupt to be socially responsible - a different CSR.

Poor. Who?

Not giving 'aid' to India is one thing but calling it 'rich' is quite another. If one in three of the world's malnourished children live in India, what does average daily income of $3 indicate? It perhaps means that there is a relative decline in poverty - people are 'less poor' than what they used to be in the past. But having crossed the World Bank arbitrary threshold of $2 a day does not absolve the 'developed' countries of their obligation to part with 0.7 per cent of their Gross National Income in development aid. Should this three-decade old figure not be revised?  

An interesting debate in UK's House of Commons delved on future of development assistance by the British Government. While prioritizing limited resources has been a concern, there has been no denying the fact that development aid must be guided towards tangible gains over a short period of time to start with. There are difficult choices for elected governments to make - should they invest in long-term primary education or in short-term university scholarships? Which of these will bring gains and trigger long-term transformation in the society. As politicians continue to be divided on the matter, poverty persists!!   

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