A populist pre-poll Budget

BK Chaturvedi
Former Cabinet Secretary and member, Planning Commission

When the Finance Minister rose to deliver his Budget speech, the fiscal pundits had already forecast a budgetary exercise aimed at garnering votes and trying to improve the electoral prospects of the government. True to form, this was the focus. In the process, many important issues were ignored. A broad measure of fiscal prudence is the fiscal deficit. This continues to be high at 3.5 per cent in the current year and been estimated at 3.3 per cent the next year as against 3.0 per cent planned earlier. 

There is a strong focus in the Budget on farmers. It has reiterated the resolve to double farmers' income by 2022. It has announced an increase of MSP to 1.5 times of the cost of  kharif crop production. It also talks of Rs 14.34 lakh crore of support to agriculture and rural sectors. Nearly 80 per cent of it is short-term credit for farming.  The allocation of rural housing is new and aimed at nearly 2 crore houses in two years. Funds have also been given for phase III of the rural road programme under the PMGSY and for constructing nearly two crore toilets. It has talked of developing nearly 22,000 agriculture produce markets connected with the electronic marketing system, E-Nam. The Budget has mentioned 8 crore LPG connections for women in the rural areas. It has announced government support of 12 per cent for women in their EPF contribution. 

A very major initiative in the Budget is in the field of healthcare. It has spoken of benefits of Rs 5 lakh healthcare to 10 crore families. This is a very positive step, but we will need to expand the hospital infrastructure and provide doctors for people to get this benefit. Implementation will be a major issue in several areas. The MSP policy will require a very strong support of states to organise purchases.  The commitment to double the farmers' income by 2022 is clearly unworkable. In the agriculture sector, countries have not grown beyond 4 per cent per annum, on an average. Doubling of farmers' income implies a 12 per cent per annum increase. Similarly, implementation in some of these areas, like 2 crore toilets in a year, which is double the current pace, will be very challenging.

Surprisingly, there is very little reference in the Budget to the issues of power sector and their resolution. There is a reference to Rs 16,000 crore investment for getting 4 crore domestic connections. While this will be implemented by states, it will not improve the health of the sector for which measures were required. The power plants are today running at less than 65 per cent PLF, which has reduced their profitability sharply. There are large assets in the gas-based power plants which are lying idle in the absence of gas from domestic sources. This is increasing the NPAs. The reference to air connectivity is positive, but it's a part of an already ongoing initiative in which tier 2 towns are being connected. Similarly, talk of 1 billion passengers is more aspirational and lacks any data or plan to support it. On roads, while the progress in national highway construction is good, no specific measure has been announced which would further increase the rate of implementation, say faster land acquisition or any new technology which could help the process. For the Railways, there is again an announcement about redevelopment of stations. But there is no mention of what happened to the earlier such commitments. On the policy side, large funds of the Railways needed to be devoted to the early completion of the east-west corridor, and safety measures. There is no indication that this is being done.

All in all, a populist Budget, but with some good initiatives.