Tuesday, February 20, 2018 05:03 AM

Union Budget 2018: Big claims and Paltry Allocations

The Union Budget 2018-19, presented by the Finance Minister of the Narendra Modi Govt, turns out to be deceptive one, meticulously articulated to misguide and confuse the people. 

Since this is the final full budget of this government before the elections of 2019, it is based on high rhetoric and overestimated projections of growth revenue.

The Budget remained liberal about extending concession to business houses. On the plea of supporting Micro, Small and Medium Scale Enterprises (MSMEs) the Budget extended the reduced corporate tax rate of 25% to companies having Rs 250 crore annual turnover. Is the turnover the right measure of identifying an MSME or the ‘capital deployed’ should categorise the MSME more honestly ?  Will it really benefit the genuine MSMEs or allow the big players to corner the benefit ?  However through such deceptive manner the burden on corporate houses has been reduced further by Rs 7000 crore while giving no relief to suffering millions reeling under post GST indirect tax burden. This along with other pro-corporate policy drives  continued to remain the pattern of budget exercise of the Modi Govt in successive years of its governance pushing the entire country in the midst of extreme and obscene income inequality of one percent people cornering 73% of the national wealth. And yet the Govt will continue to call itself pro-poor.

While speaking lavishly about improving health, education and social welfare services toward universalisation, it remained totally negative in considering the long standing demands of about a  crore workers working in its flagship scheme of NHM, Mid-day-Meal(MDM) and ICDS (Anganwadi) and other related central govt schemes of extending them at least the right to statutory minimum wages and attendant social security benefits. In fact the allocation under National Health Mission (NHM) has been reduced and on ICDS and MDM there are marginal increase that too for other expenditures.

On employment generation also, the claim made in the budget speech is also not true. In fact, even as per official estimate, the net employment generation has turned negative in absolute term if job-losses owing to closure of factories/establishments during the period is taken into account. The claim of  creation of 70 lakh jobs in the formal sector said to be based on the increase in number of EPFO data  as touted by a so called “independent study” upheld by the Finance Minister is another hoax to confuse and misguide the people and a cruel joke on the several lakhs of unemployed.

 All concessions being given to business houses by the Govt including bearing the burden of employers contribution in EPF, allowing liberal income tax rebate to employers on account of wages paid to the newly employed workers etc is actually an arrangement of organized pilferage from the national exchequer  by the employers’ class in complicity with the custodians of the said exchequer, without creating any  employment whatsoever.  Added to this has been the recent move of abolishing all posts in central govt establishment deliberately kept vacant for last five years, killing lakhs of employment positions.

The Budget speech has gone extremely lavish in pronouncing commitments for development of agriculture and rural development along with launching so many schemes, whereas budgetary allocation for 2018-19 both on account of Agriculture and Allied Services and Rural Development marked a marginal increase of Rs 9793 crore in nominal term meaning actually a decline both in real terms and also as a percentage of GDP and total budgetary allocations. The Budget gave a shockingly surprising news that the Govt has already implemented the Minimum Support Price (MSP) at the rate of one and half times of production cost for majority of the Rabi Crops and now the Govt is committed to extend the same to Kharif  crops in the current year also which is totally untrue. Even Govt’s deposition before the Apex Court in this matter is reportedly negative.

Similarly, the budgetary statement about putting in place under its flagship programme of National Health protection Scheme to provide for secondary and tertiary care hospitalization at the rate of Rs 5 lakh per family per year to 10 crore poor and vulnerable families, if weighed in terms of actual budgetary allocations, turns out be another hoax. The budgetary allocation on this account is merely Rs 1600 core which can cover hardly 10 lakh families (and not 10 crore). And such discrepancy exposes the dubious intent.  

Budget speech lavishly spoke about developing self reliance in defence production and what is being actually done is setting the process of destruction of the existing indigenous manufacturing capabilities  in  the Ordnance factories, the defence PSUs and country’s shipyards by way of mass scale outsourcing in favour of private sector, both foreign and domestic  turning around half of the Ordnance Factories redundant and starving the Defence PSUs and Shipyards of work-orders. On the same way, under the camouflage of expanding Railway network, the project of total privatization of Railways is being pursued in full swing.  Are these in any manner serving national interests or sabotaging the same in favour of foreign  players ?

The Govt has been moving fast in selling out the national assets through wholesale privatization. In the current year the target for disinvestment /privatization is kept at Rs 80000 crore to keep on the pace of its ‘destroy India’ programme  under the camouflage of “Make in India”.

Coming right after the introduction of GST, the government refuses to acknowledge the ground reality and overestimates the GDP growth at a nominal rate of 11.5% and a real growth rate of 7-7.5%. Even by these overestimated standards, the size of the total budgetary spending by the government has come down. This in itself shows that the present regime is not serious about  implementing any of its ‘grand pronouncements’. In line with this, the size of the Gender budget has also contracted, despite the Finance Minister’s statement that ‘agriculture and rural sector’ and ‘women’s employment and health’ were some of the main priorities of this year’s budget.

The government has shown total insensitivity towards the needs of women. The total Gender Budget has declined from 0.69% of the revised GDP for 2017-18 to 0.65 percent of the projected GDP for 2018-19. There has also been a decline from 5.2 percent to 4.9 percent in terms of the proportion of the Gender Budget to the total budgetary expenditure between 2017-18 (revised estimates) and the proposed budget for 2018-2019. As far as the allocations for the Ministry of Women and Child Development are concerned, it has been increased from 0.95% of the total expenditure in the revised estimates of 2017-18 to 1.0 percent of the total projected expenditure for 2018-19. The implications for women are particularly alarming. This is nothing but an insult to the poor women workers and farmers of the country.

The finance minister has made tall claims about benefiting the farmers because of the pressures created by the massive farmers’ mobilisations. However, these pronouncements are not backed by requisite allocations. The total budget for agriculture and farmers’ welfare has only increased by 0.05 percent of the total expenditure in the last year. Though the budget speech focused on the plight of the woman farmers, the gender specific allocation for women farmers is only 3.92 percent of the entire gender budget (that is an increase of a paltry 0.63 percent in one year). The real agenda of the government is however revealed in the 22000 Gramin Haats that it proposes to set up so that ‘farmers can directly sell to the buyers’. The budget also projects that this will be facilitated through farmers’ producer firms and women’s self-help groups. This huge challenge is to be met by an overall paltry increase of 1400 Cr in the National Rural Livelihood Mission of which the women’s share is 50 percent. It is clear that this is merely an initial sum being put forward by the government in order to facilitate corporate investments in agriculture. Hence instead of helping the farmers to overcome the agrarian crisis, this budget seeks to link women with Global Agricultural Value Chains which may lead to further exploitation.

Secondly, the Finance Minister has claimed that this budget will increase employment, especially for women. Even the Economic Survey 2017-18 has posited that there has been a drastic decrease in women’s employment in the last few years. In order to boost employment, the government is banking on skill development, increase in self-employment, support to medium and small enterprises, and the use of MNREGA for building infrastructure. Once again none of these claims are backed by adequate allocations. The allocation for MNREGA remains the same as the Revised estimate of 2017-18 at Rs. 55000 Cr. The gender budget in MNREGA remains stagnant at Rs. 18333.33 Crores. Further, the allocations for medium and small scale enterprises (MSME) has only gone up by Rs 85 Cr in the entire budget whereas the allocation for Skill Development and Livelihood generation has in fact decreased by Rs. 33 Crore in the last year. The tax break announced for MSME is limited to enterprises with an annual turnover of Rs. 100 Crore. This effectively rules out 90 percent of the small scale enterprises where women make up a large part of the work force.

The other big ticket claim in the budget is the government’s announcement that it will move towards universal health care. However, its vision for universal health care has no space for investments in primary health care that forms the foundation for public health. The Budget concentrates on secondary and tertiary health care with a focus on insurance which is largely in the private sector. This will only benefit big companies instead of the poor patients. There has been a small increase of Rs. 1249 Cr in the total budget for health and family welfare. The allocation for the National Health Mission has come down by Rs. 671.95 Crore and the Gender Budget for health has come down by Rs, 157.77 Crore. It is clear that the Government wants the corporate sector to invest in health and it is not willing to put forward the money necessary for improving primary health infrastructure. The long standing demand of ASHA workers for salaries for their work is totally unaddressed.

Food Security is a basic right of all citizens. The food subsidy to the Food Corporation of India has gone up by 20.7 percent which is just about enough to meet it’s rising establishment costs. However, the allocations for procurement of food under the National Food Security Act has declined by Rs. 7000 Cr and the Sugar Subsidy has come down by Rs. 100 Cr. Hence, the apparent increase in food subsidy is not substantive in nature. At the same time the crucial Mid Day Meal Scheme has only seen an abysmal increase of 500 Cr, and the ICDS scheme has seen an increase of just about Rs. 1090 Cr which again is not a substantive increase. The government has also allocated a paltry Rs. 3.34 Cr for the much hyped Ujjwala Yojana.

As far as education is concerned, the proportion of expenditure in this sector has come down from 2.1% to 2.0% of the total expenditure. The expenditure on Sarva Shiksha Abhiyan has decreased from 47.9 % to 46.3% of the education expenditure in the last one year. Further, there is virtually no allocation for the Ekalavya Vidyalayas and there is no mention of any increase in education infrastructure. In this context it is also important to note that the allocations for educational schemes for the girl child have decreased by Rs. 64.1 Cr. There has been a paltry increase of Rs. 80 Cr in the flagship Beti Badhao Beti Padhao Scheme.

Though the government claims to be pro-women, there is virtually no mention of measures to address the rising violence against women. The Nirbhaya Fund remains at Rs. 500 Cr. The government plans to expand the Swachh Bharat Abhiyan, but the actual allocation for the Abhiyan has decreased by Rs, 1655. 17 Cr. Further, even after the hype, only a paltry Rs. 3400 Cr was spent on the Abhiyan last year. This means that open defecation free villages will remain a long term dream.

Finally, the finance minister claims that he has lessened the burden of the ‘honest salaried middle class’. He has also abolished the educational cess, but introduced a new social welfare cess of 10%. There is a net increase of cess by 8% on all salaried classes. So even though the standard deduction under income tax may have gone up, the net tax burden may remain the same or go up. Further this is of no particular consequence for women workers most of whom are in the informal sector.

National Commission of Farmers has recommended MSP at least 50 percent above the cost of production (C2) the Finance Minister now claims that they have already implemented the recommendations for the Rabi season and claims that for the next Kharif MSP will be given at the rate of 150 percent above cost of production. This is a blatant misrepresentation of facts as shown by the table below for the latest MSP announced for Rabi, 2018-19. Even if we take the Finance Minister’s announcement at face value there are no allocations for meeting the expenses and for ensuring payment of deficit in price to farmers in the event of them receiving prices below MSP.

 

Rabi 2018-19 Projected Cost of Production C2, C2+50 and MSP Announced

Crop

C2 (Cost of Production)

C2+50%

 

MSP

Announced

Wheat

1256

1884

1735

Barley

1190

1785

1410

Gram

3526

5289

4400

Lentil

3727

5590.5

4250

Rapeseed and Mustard

3086

4629

4000

Safflower

3979

5968.5

4100

Also it is to be noted that the C2 calculations itself are disputed and farmers’ organisations have been calling for correct cost calculations. The weighted average cost of production taken into consideration by the Commission on Agricultural Costs and Prices also disregards the State Government cost calculations. Over and above that the MSP announced for most crops is only notional as there is no procurement mechanism in most parts of the country. So without having a procurement mechanism in place there is no assurance of the announced MSP accruing to farmers. Nothing has been done in this direction.

Secondly, the BJP led Government has betrayed the farming community and rural poor by refusing to announce any policy for liberation from indebtedness for the peasantry. It then goes on to claim that agricultural credit has been increased by 10 percent by Rs.1 lakh crore to Rs.11 lakh crore although it is not a budgetary provision.  This would be disbursed through all three institutions of agricultural credit: commercial banks, credit cooperatives and Regional Rural Banks. This is a simple and mechanical 10 per cent increase without: (a) any attention to a far higher increase in the cost (including wage) pressures in agriculture (b) any directed efforts to make fresh agricultural loans to the non-loanee farmers and bringing them into the ambit of formal finance (c) correcting for the institutional imbalance in agricultural credit with a near-collapse of the cooperative system in most parts of India following demonetisation (d) addressing the regional and borrower-level disparity in the distribution of agricultural credit. Even as per the latest data for 2016, about one-fourth of the agricultural credit is given by urban branches India. Only about 41 per cent of the agricultural credit is given to small and marginal farmers (represented by loans of up to Rs. 2 lakh), while about 14 per cent of agricultural credit carries a loan size of more than Rs. 1 crore going to institutions and corporates engaged in agricultural production.  The Finance Minister speaks about lessee farmers’ inability to avail crop loans but has not made any concrete suggestion to overcome the problem.

Thirdly, the agricultural workers and rural poor who have seen falling incomes and increasing migration have nothing in the Budget. No increase in MGNREGA allocation has been made. Rs.55,000 crore allotted is equal to the revised estimate for 2017-18. Even by conservative estimates more than Rs.80,000 crores will be required for proper implementation of the programme. This callous attitude is despite the fact that over 56 percent of wages were pending and more than 15 percent of the wage seekers did not find any work in 2016-17. As of 25th January, eight states had a net negative balance of Rs.1,555 crores in terms of MGNREGA funds, i.e, they spent more than they received from Centre. In 2016-17 while there were 89 million job seekers only 76 million found work. States have been witnessing drastic cut in allocations and the average work days under MGNREGA have been abysmally below what is stipulated in the Act. Without addressing these issues the Budget talks of providing maximum livelihood opportunities in rural areas and talks of creating employment of 321 crore person days, although there are no concrete proposals to generate employment.

The Budgetary proposals for agriculture are aimed to help the corporate agribusinesses and have no vision for promoting farmers’ welfare. 

 The Union Budget 2018-19 comes as a big disappointment to the disabled community in the country. It seems as though the disabled do not figure in the Finance Minister’s “fast growth economy” trajectory.

The passage of the Rights of Persons with Disabilities Act 2016 (RPD Act) had ushered in great hopes and expectations among the disabled community who continue to be on the margins. However, the miserly outlays for the various positive provisions contained in the Act point to the utter lack of sincerity on the part of the government to implement its provisions.

The total outlay for the department for the empowerment of persons with disabilities shows a marginal increase of 215 crores as compared to last year. The allocation towards Schemes for the Implementation of the Persons with Disabilities Act (SIPDA) is a mere Rs. 300 crores. This includes provision for the much touted “Accessible India” campaign under which the target set is for making 600 public buildings accessible, 600 official websites accessible and making transport systems accessible among others. It is another matter that the campaign excludes from its ambit the vast majority of the rural areas.

 As for railways, the last few budgets have seen grand announcements being made of rail transport and stations being made accessible for all including the disabled. Given the number of unfortunate incidents reported in the media it was expected that the government would respond adequately.  While there is no mention about the progress in the implementation of the announcement made last year of providing lifts and escalators in 500 railway stations, this year the Finance Minister has announced that escalators would be provided at 600 stations having a footfall of 25000 and above. Lifts which can be used by the disabled do not find mention in his speech. Also missing mention is about fulfilling the commitment made in the 2016-17 budget to provide accessible toilets at all railway stations.

Further, no new scheme has been announced or any substantial increase in allocation for existing schemes been made despite the mandate of the RPD Act. There has been no upward revision in the amount of disability pension and it remains stagnant at Rs. 300/- for the past many years.

While the Finance Minister lauded the outcomes of various insurance schemes, and also announced the launching of the National Health Protection Scheme, ironically the central government has not been releasing money for the Swavlamban Health Insurance Scheme launched in 2015 for persons with disabilities through the New India Assurance Company Limited. The insurance company has now stopped collecting premium from beneficiaries. It is also disturbing that even while talking of health care the Finance Minister maintained complete silence on Mental Health. This despite the enactment of the Mental Health Care Act in 2017.

The allocation for schedule caste welfare is just 56000 crores as against 52000 crore in  last year's budget. Modi government had removed SCSP (SC Sub Plan) in previous budget itself. Even it failed to implement Narendra Jadhav Committee recommendation as it should be 4.5% allocation for SC welfare in total budget. But in this budget it is 2.3% only. Lot of funds are being diverted or lapse without spending is the present scenario. This budget has not given any assurance to spend these funds for the development and welfare of scheduled caste. 

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