Friday, July 17, 2009

Indian Union Budget 2009-10 Does Not Have A Pro Poor Orientation

The Finance Minister Mr. Pranab Mukherjee has presented the full budget for the year 2009-10 on 6th July 2009. Although, an interim budget was presented in February-2009 itself, the Government preferred to re-present a full budget after the General Elections 2009. The present budget has to be seen in the background of two major developments in recent times. Most prominently, this Union Budget 2009-10 is to be viewed as the first policy outline of the ruling coalition to tackle the ongoing world economic crisis (termed in several quarters as the greatest global economic recession in the history of mankind) to which, contrary to the tall claims of the ruling party, India is hardly immune. This Union Budget 2009-10 is also to be considered as the first policy formulation of the ruling coalition after getting the decisive political mandate of the people in the General Elections 2009 for its performance in keeping the economic meltdown away from critical sectors like banking and for providing substantial relief to the masses in distress through its programmes like NREGS; Again, for substantial reasons, these are achievements for which not the present ruling coalition but its previous partners (notably the Left Parties) are to be credited.

The Budget 2009-10 also holds a lot of significance for its relevance in assessing the intentions of the present government in keeping its own promises it has made during the general elections held recently. Unfortunately, the mainstream sections of the media, academics and even the civil society have hailed the Union Budget by saying that the increase in expenditure would enable the system to fight global recession. A recent policy brief prepared by Bhubaneswar based Network for Social Accountability (NSA) shows that the present budget not consistent with its claim on pro-people orientation. The present budget, more often than not, is actually catering to the aspirations of the business class and the rich than the common masses. The main highlights of the response on the Union Budget prepared by the Network for Social Accountability (which can be availed on its website in the policy brief section), are as under.

In 2009-10 BE, there is 24 % increase in defence allocation compared to a mere 6 % increase in rural employment, 23.3 % decline in Agriculture and Allied Activities and 14 % decline on major subsidies. 14 % of total budget goes towards defence expenditure compared to 8 % in central assistance to State and UT Plans. Tax-GDP ratio declined from 12 % in 2008-09 to 11 % in 2009-10. State share in central taxes as % of GDP declined from 3 % to 2.8 % over last two years.

An estimated Rs. 4,18,095 crore revenue is foregone in the central tax system in 2008-09 which is more than 3 times the total subsidies given by the government. Over last five years of UPA rule, the total tax revenue foregone is more than the whole budget for 2009-10. Tax revenue foregone is twice the total amount allocated towards central plans over last five years of UPA rule.

Allocations for Agriculture and Allied Activities as percentage of total budget allocation declined from 15.5 percent of total government expenditure in 2008-09 RE to 10.5 percent in 2009-10 BE.
Further, it has been estimated that around 91 percent allocations for Agriculture and Allied Activities go towards other purposes than direct promotion of agriculture in the country.

Public expenditure on education has actually declined from around 3.23 percent of GDP in 2000-2001 to 2.88 percent during the UPA rule. As a proportion of total government expenditure, it has declined from around 11.1 % in 2000-2001 to around 9.98 % during first UPA rule.

The share of Private schools in total schools providing elementary education during UPA rule is on increase. It has increased from 13 percent in 2004 to 19 percent in 2008. Share of elementary education in total allocations for education as a whole had increased from a mere 41 percent in 2000-01 to 71 percent in 2007-08. Then it declined drastically to 59 percent in 2008-09 RE and 48 percent in 2009-10 BE.

It is apprehended in many quarters that the recent shift in government focus towards higher education is basically for the purpose of creating a suitable atmosphere for making higher education more salable as the government has been planning to allow FDI in higher education in a massive scale. Irony is, in order to privatize higher education in India and to make the sector lucrative for foreign investors; the government is using education cess as an instrument for financing the basic ground works for such privatization.

If we calculate the amount the central government has actually allocated for elementary education in India after accounting for the amount it has collected through elementary education cess and external assistance, then in the budget 2009-10, the allocations in elementary education has declined by around 14 percent from Rs. 9991 crore in 2007-08 to Rs. 8590 crore in 2009-10.

In an interesting analysis of the per capita expenditure on health services, the response of NSA suggests that on an average an Indian spends around Rs. 5.80 per day out of pocket for availing health services in 2009-10.

In contrast to the official claim that the prices are under control, it has been estimated that the gap between WPI all commodities and WPI –Drugs and Medicines widened further, indicating a proportionately higher prices for medicine prices compared to other prices during the UPA rule.

In the present budget the government has allocated less money towards women specific purposes with only 19.47 % of the total departmental budget. Analysis of the gender budget statements for last four years reveal that the share of allocations towards gender budgeting in these departments has declined in plan head from around 32 % in 2008-09 RE to 31.3 % in 2009-10 BE. However, in the non plan head, the allocation is abysmally low at only 2.5 % of the total non plan allocation of these departments.

The total allocation for SCs and STs as mentioned in Statement 21 of the Expenditure Budget Vol-1 of the Union Budget, declined from around 3.4 % in 2007-08 RE to around 3.1 % in 2009-10 BE. In case of non plan expenditure, it is just 0.3 % in 2009-10.

The amount denied to SCST as proportion of the ideal amount only under plan head is as high as 56 % in 2009-10 BE which has increased over last couple of years.

As proportion of total central transfers to states (excluding the amount of state share in taxes) the amount that bypass the state governance system account for around 36 % in 2009-10 compared to around 17.5 % in 2005-06.

Like the manifesto of the ruling party, the present budget also shows adoption of a middle path. “Balance—or the middle path--has always been the hall-mark of the policies of the Indian National Congress”. When more than 90 percent of our rural population live below Rs. 38 per day, and spend less than Rs. 12 a day on food items, compared to a fortune of around Rs. 7.5 lakh crore (around 12 percent of the annual GDP of the country) held by only four richest Indians, what constitutes a middle path is a serious issue for debate. The Manifesto of the Congress Party gives credit to this choosing of the middle path for keeping India away from the global meltdown in the wake of economic crisis. It takes pride in choosing a middle path between the public sector and the private sector by bringing in the concept of private-public partnership and acting as a facilitator of large scale grab of land and other economic resources for setting up SEZs and other forms of loot of common property of the masses. In a situation of polarization of interests of the haves and the have-nots, exploiters and the exploited, industrialists and the displaced masses, what does choosing middle path means? Have the achievements claimed to be the hallmark of success of the present party in power during last general elections been a result of this middle path? Is the government planning to fulfill its promises made in its manifesto through its middle path theory only? These are the questions that the time to come will only be able to answer.

By Siba Sankar Mohanty,is a Director with Network for Social Accountability (NSA) Bhubaneswar.


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1 comment:

Union Budget 2009-10 said...

Union Budget 2009-10 details