No-budging budget

Beneath the gloss of populist governmental rhetoric, this year's budget is a dead loss

By Rahul Srivastava, Koshy Cherail
Published: Saturday 15 April 1995

-- (Credit: PTI)THE Union budget 1995-96 is a study in warring inclinations. Despite claims of spearheading a "vibrant" and cash-flooded economy, finance minister Manmohan Singh has preferred to keep his purse strings tight as a corset. Expected to consolidate the ongoing reform process, the budget tried to please everyone -- a proposition that robbed it entirely of both depth and adventure.

From the railway budget onwards, it was clearly a holding operation, with the pragmatic and potentially unpopular economist and the unctuous populist politician in the respected finance minister trying to produce a single composite image of genius and responsibility. The pre-budget please-all, wishy-washy mindset won on points.

To keep the growing murmurs of normal budget-eve grousing within bounds, 6 departments for "poverty alleviation" were hurriedly created. Another sop was Manmohan Singh's promise in his budget speech that rural development and urban affairs would become "the largest growth sectors" in the coming years.

Speaking to Down To Earth, Singh said, "Despite criticism, the key element of the budget is its anti-poverty agenda. The 1995-96 budget is targeted towards those outside the market as well as those in it." He hiked the outlay for rural development ministry to Rs 7,718 crore for the next financial year, compared to about Rs 3,100 crore 4 years ago.

The critics are unimpressed. Noted economic writer Prem Shankar Jha says, "The budget is devoid of political daring. There are some steps in the right direction: investors in infrastructure have been given incentives, import duty and excise structures have been simplified. But all this might fail to energise the economy."

The industry, which claims that over the past year it has bent to governmental pressure for environment-friendly and sustainable production, grouses that the budget has no incentives for these very objectives. M N Murty, an expert in environment and pollution control studies and green equipment, Institute of Economic Growth, Delhi, says, "Tax concessions given to industry for pollution control are zero. The existing incentives will only benefit large industries."

K P Nyati, head of the environment management division of the Confederation of Indian Industry, says, "There is hardly any incentive in the budget for efficient technologies."

The budget has no green intents, despite recommendations by the Parliamentary committee on the environment in February this year that punitive measures like heavy taxes on pollution and cess on sewer discharges be enforced. "Allocations to pollution control activities have gone unutilised as many of the programmes planned earlier were not implemented," says Murty.

The allocation for the prevention and control of pollution in the 1994-95 budget was Rs 128 crore. The ministry of environment and forests spent just Rs 78 crore, prompting the finance minister to insult it by increasing the outlay by a marginal Rs 10 crore -- which actually amounts to a reduction if 11 per cent inflation is taken into account. International pressure has ensured marginal funding increases for biodiversity and wildlife. Despite a crippling fodder crisis throughout 1994-95, Manmohan Singh slashed allocation to fuelwood and fodder projects.

Funds for several mass benefit programmes, which were the mainstay of the government in the rural energy sector, have been curtailed. Funds for the biogas programme have been reduced to about Rs 50 crore from 67 crore last year. Solar energy has dropped by 20 per cent over the outlay last year to Rs 50 crore. The outlay for the improved chullah programme has been slashed by almost Rs 6 crore from Rs 20.85 crore last year. The finance minister clearly hopes that these cuts will shift the some of the burden of development from the government to rural private entrepreneurs.

The finance minister chose to allot a backseat to various departments under the ministry of science and technology. Except allocating Rs 3.2 crore to establish a centre for dna fingerprinting in Hyderabad, no new science project was announced, thereby consolidating the government's stand that science and technology outfits would have to fill up their own tills.

The outlay for the Department of Science and Technology was hiked by Rs 22 crore, compared to Rs 396 crore last year, amounting to a reduction in real terms. According to senior department officials, not only does this scuttle new programmes, it also means a cut for those already underway and even those at their peak.

Juggling priorities

Outlay (in crores) for 1994-95 1995-96
Rural development 7025 7718
National AIDs Controle Organisation 83 80
Pollution Controle 128 138
Science & technology 396 418
Biogas programme 50 67
Solar energy 62.5 50
Improved chullah programme 20.85 14.80
Jawaher Rozgar Yojana 145 145

The government seemed to be in a mood to fish for compliments for having flushed the social sector with funds. The package includes a revamped Jawahar Rozgar Yojana, stepping up funds for child welfare programmes and extending the cover of a streamlined public distribution system with a view to taking care of virtually half the country's population.

The finance minister's optimism stems from the fact that compared to a 3 million rise in employment in 1992, 6 million people benefited from the growth figures registered last year. Ironically, the Rs 145-crore Prime Minister's Rozgar Yojana, which was launched amidst much fanfare last year, has not been incremented. Jha holds it was more important to change labour laws and provide adequate cover to those retrenched as a result of the structural changes in the economy.

Blinded perhaps by hubris, Singh failed to do justice to essential services like health. The allocation for the National Aids Control Organisation has been cut by Rs 3 crore from Rs 83 crore last year. Neither is there a provision for the National Plague Control Programme. The total hike in allocation for the ministry of health and family welfare was barely of the order of 6 per cent.

The fiscal jugglery and the featureless vapidity of the budget, are quite transparent. Says Jha, "The social expenditure increases are nothing new or different. These will only make an incremental difference in the plight of the poor."

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