Budget 2009: After Masima, Jethu's Bari

In the railway budget of 2009, Masima had her say. In Budget 2009, Jethu (Shri Pranab Mukherjee) had his say (If I was twenty years younger I would have addressed him as Dadu) while sipping water in between. The first message that has to be read between the lines is that the Indian National Congress (INC) as also Trinamool Congress are aiming at the state elections of West Bengal in 2011. There is also a medium term target of Uttar Pradesh in 2012. The Left Front, Bahujan Samaj and Samajbadi better watch out.

The budget is also a way of saying thank you to all those who voted the United Progressive Alliannce back to power. The increased expenditure under the National Rural Employment Guarantee Scheme (NREGS) and National Rural Health Mission (NRHM) is on expected lines. The National Rural Livelihood Mission (NRLM) that would restructure the existing Swarnajayati Gram Swarojgar Yojana (SGSY) and integrating with Self-help groups and other initiative are welfare programmes that show promise.

What worries most is the increasing expenditure without commensurat receipts leading to an increase in fiscal deficit. Jethu is not too much bothered about this becaue of the global financial crisis. He will wait for the fruit to ripe.

Politically, the immediate concern would be Maharashtra elections later in the year. With delayed monsoons, will the Vidarbha task force, debt waiver and urban storm water drains help. Only time will tell.

Congress Comeback and Expectations

The election news in India is that the Congress will come back to power with some outside support. It looks like that this will also be a stable government.

With the monsoon going to set in early, the party has to give greater priority to Agriculture from the beginning. This is where more than half of the people and nearly three-fourths of rural people still depend upon there livelihood. If this is going to be a second term for Dr Manmohan Singh and he wants Mr Rahul Gandhi to be in the cabinet and I think that the latter should take up agriculture. In this sector, the opposition also needs to be involved in a major way. If planned well this has the capacity to address the larger financial crisis. The blueprint of the District Agricultural Plan has a lot of potential but then its implementation at the ground level is tardy.

Two positive and people friendly developments of the last government were the Right to Information (RTI) and the Nationation Rural Employment Guarantee Act (NREGA). This has definited translated into votes. These have to be carried forward with more vigour, make NREGA more inclusive (as already indicated by the Right to Food group) and also bring in a comprehensive Swarnajayanti Gram Swarojgar Yojana (SGSY) so that this self-employment programme complements the NREGAs wage employment.

Before I forget, they should initiate immediate steps to free Dr. Binayak Sen. He has been in jail for more than two years now. Then only, Jai Ho!

Where is the 'Aam Aadmi'?

‘Business as usual is no longer an option’ has become a catchword with the current financial crisis, but was initially mooted by the International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD) that presented its synthesis report in April 2008. Despite being a signatory to it, despite the acknowledgement of the larger agrarian crisis that the country has been facing and despite the similarity in purpose envisaged in the ‘inclusive growth’ slogan of the Eleventh Five Year Plan and IAASTD’s emphasis on ‘the reduction of hunger and poverty, the improvement of rural livelihoods and human health, and facilitating equitable, socially, environmentally and economically sustainable development,’ one does not find much mention of it either in the current interim budget of 2009-10 or other recent relevant policy documents.

The initiatives and achievement under agriculture, keeping the welfare of the ‘Aam Aadmi’ in mind, increased the plan allocation for agriculture by 300 per cent between 2003-04 and 2008-09 and launched the Krishi Vikas Yojana in 2007-08 to increase growth rate of agriculture and allied sectors to four per cent during the Eleventh Plan period. A good initiative that requires bottom-up planning from village to taluka to District Agricultural Plans and aggregating to form State and National Plans. Its implementation is tardy and an imposition of a target from the top makes the approach self-defeating.

Keeping 2003-04 as base, the government announced a package of doubling agricultural credit in three years and actually achieved a three-fold increase of credit by 2007-08. The fact that the Government had to come up with the Agricultural Debt Waiver and Debt Relief Scheme in June 2008 is itself perhaps indicative that the ground work to make agriculture remunerative was not done which also means that appropriate project appraisals were not done by the banks while doubling/tripling of credit. The debt waiver is a book-keeping exercise. It does reduce the mental burden of the farmer and makes him eligible for fresh loans, but not a single rupee from this Rs.65,300 crore would lead to investments that is required to spruce up the agrarian economy.

On the one hand, the long overdue increase in the Minimum Support Prices (MSPs) in recent years is a bit of relief that would help improve the returns to agriculture. On the other hand, the Targeted Public Distribution System (TPDS) will ensure food security to those below poverty line. While talking of poverty, the Government should have updated the consumption-expenditure with appropriate nutritional measures, dealt on multi-dimensionality of poverty and on identification to avoid exclusion of the poor, of course, some of these go beyond the budget. Another matter of concern that remains is the huge subsidy bill on fertilizers, which largely goes to the industry and only indirectly to the farmers. There has been no increase in the fund allocated under Rural Infrastructure Development Fund (RIDF) when compared with the previous year.

Education, health and some other social sector initiatives are indicated. The question that one is haunted is, as indicated in the United Progressive Alliances (UPAs) Common Minimum Programme (CMP), whether the promise of doubling of public expenditure as a proportion of the Gross Domestic Product (GDP) achieved. A silence on this indicates that the answer is no.

Some of the notable initiatives in recent years have been the Right to Information and the National Rural Employment Guarantee Scheme (NREGS). Though there are hiccups, the efforts are indeed laudable. The need of the hour is to complement the wage-employment scheme with an equally comprehensive self-employment scheme. This requires revamping of the Sampoorna Gram Swarozgar Yojana (SGSY) through institutional innovation to help organize the poor, financial innovation to make required credit accessible and administrative innovation to improve facilitation. This is also very essential under the current financial crisis because it would encourage a large number of smaller players. Such an effort will also have its multiplier effects not only in stimulating the economy but more importantly in improving the livelihood of the poor and also help us in easing the load on agriculture.

The finance minister rightly quotes Professor Amartya Sen while emphasizing on the need for security during this down turn. But, note that this has nothing to do with increasing defense related expenditure. Rather, such protective security should also address the poor returns to farmers which on a per-capita per day basis is even lower then a liter of bottled water. Notwithstanding the increase in the revenue and fiscal deficits, one is left with the question, where is the ‘Aam Aadmi’?

A similar version has been published in the Financial Express, with the title Debt waiver is a book keeping exercise.