Budget: No Thrift, Go Splurge

Feb 1, 2020
New Delhi: ‘Go Splurge’ is the central message of the Union Budget 2020-21 which is otherwise missing on reforms, lacking in vision and bereft of a narrative for creating a $5 trillion economy for India.

The Income Tax rejig in the Budget announced by Finance Minister Nirmala Sitharaman, where there is a choice between saving on insurance policies or lower tax rates, is sending the message of ‘Go Splurge’, moving away from a thrift economy which India used to be with household savings of over 35 per cent which has now come down to 22 per cent.

All the insurance and mutual fund stocks were hammered on Saturday after the Budget announcement, as the government has given an option between lower tax rates or exemptions on investments. Stock markets also nosedived following the Budget announcement for lack of any stimulus.

While Sitharaman coined terms like ‘Aspirational India’, ‘Economic Development’, ‘New Economy’, ‘Caring Society’ and ‘Financial Sector’ to divide the major allocations across ministries, the Budget outlays are only marginally higher than last year, showing the stress on the government’s balance sheet.

Aspirational India, which includes agriculture, rural development, wellness, water, sanitation and education, has an outlay of Rs 4.82 lakh crore as against Rs 4.67 lakh crore last year.

Caring Society, which includes women and child development, social welfare, culture and environment, has an allocation of Rs 62,626 crore as against Rs 59,036 crore last year.

In a record speech lasting over 2 hours and 40 minutes, Sitharaman, while making a lot of noises around social welfare programmes, did not provide any answer on the availability of funds.

Even those professed programmes are lacking in funds as health and education outlays were only marginally up year-on-year, while rural spends were down compared to last year.

The All India Kisan Sangharsh Coordination Committee (AIKSCC) pointed out that the total Budget allocations for agriculture, irrigation and rural development was Rs 2.68 lakh crore in 2019-20, which has been nominally increased to Rs 2.83 lakh crore. In real terms, taking inflation into account, this amounts to zero increase, AIKSCC said.

AIKSCC pointed out that the allocation for the biggest rural employment programme, MGNREGS, has been slashed from Rs 71,001 crore (Revised Estimate 2019-20) to Rs 61,500 crore in 2020-21, a cut of Rs.9,500 crore when the total demand from states amounted to nearly Rs 1 lakh crore.

The flagship PM-KISAN programme was supposed to benefit 12 crore farmers, but even the meagre annual support of Rs 6000 reached only 6.12 crore farmers. Tenant farmers and landless agricultural workers are not even included in the scheme, it said.

Meanwhile, agri input costs have risen by 33-100 per cent in the past five years and cost of living has more than doubled.

Budget documents reveal that there is a huge gap between announcements and actual expenditure. In 2018-19, it was promised that 22,000 rural haats will be upgraded to Grameen Agriculture Markets (GrAM). But after two years, the implementation has not begun and only 0.5 per cent funds have been spent.

AIKSCC said that in 2018-19, the Finance Minister promised that MSP will reach every single farmer and the PM-AASHA scheme was instituted. In 2019-20, only Rs 1,500 crore was allocated and only Rs 321 crore was spent. The allocation has now been slashed to Rs 500 crore.

During the past two years, in most of the crops, farmers did not get the MSP declared by the government. This was the time for market intervention and price support, but the government completely failed.

In another glaring example, in 2017-18, the Budget speech announced “Dairy Infrastructure Development Fund” of Rs 10,881 crore to be spent within three years. Actual expenditure so far has been only Rs 440 crore, AIKSCC said.

The outlays for health have also been disappointing. Sitharaman ended up announcing Rs 69,000 crore for health, barely Rs 5170 crore higher than the last budgetary allocation in July 2019.

At a time when the world is facing the prospect of challenges in the health sector, the Budget allocation for the healthcare sector in fiscal 2020-21 appears disappointing.

The education sector doesn’t have much to talk about as far as allocations in the latest Budget document are concerned.

Compared to the last Budget when funds to the tune of Rs 95,000 crore were allocated to the education sector, Sitharaman on Saturday allocated Rs 99,300 crore in her second Budget presentation.

Stressing extensively on the government’s plans for the education sector, Sitharaman said, “Our government proposes to provide about Rs 99,300 crore for the education sector in 2020-21 and about Rs 3,000 crore for skill development.”

Compared to the present Budget, in her maiden Budget presentation on July 5, 2019, Sitharaman had earmarked a mere Rs 4,455 crore more than the previous budgetary allocation.

Even on transport infrastructure, the spends have been marginally higher at Rs 1.69 lakh crore as against Rs 1.57 lakh crore last year.IANS