(Subrat Das, Director of Centre for Budget and Governance Accountability (CBGA) is in conversation with Binu Sebastian from VANI on Union Budget 2011-12)
1. Please tell us what were your expectations from Union Budget 2011-12?
Ans: Considering the tremendous significance of the Union Budget, I expected that it would address some of the pressing issues that our country is confronting at present.
First is the issue of food insecurity. It has reached at an alarming proportion wherein the poor and marginalized sections of the population have been affected strongly due to the persistent rise in prices of food articles. Further, there is a growing consensus among the experts now about the need to strengthen and expand the coverage of the Public Distribution System (PDS) for ensuring food security.
Secondly, I was looking forward to some concrete measures in the budget to effectively address the issue of general price rise. We should keep in mind that the problem of price rise has gone beyond food articles, although it has been driven largely by rising prices of food articles. Essentially, this needs to be tackled with a two-pronged approach wherein adequate relief measures are put in place while also addressing the causes of the problem. The Union Budget has enormous potential to initiate concrete actions along these two lines.
Thirdly, going by the underlying philosophy of UPA where ideologies of “pro-poor approach’ and “inclusive development” are usually emphasized, I expected the budget to place higher thrust on the social sector. United Progressive Alliance (UPA) had paved way for some transformative legislations like Right to Free and Compulsory Education Act 2009. The draft bill on Health is also being discussed. I expected that such legislative measures would be adequately backed up by corresponding step up in the allocations.
Finally, I anticipated greater emphasis and responsiveness on the concerns related to the disadvantaged and weaker sections of our society like scheduled castes, scheduled tribes, children, and women.
2. What is your initial response to the union budget?
Ans: The UPA II, through its budget for 2011-12, does not exhibit any strong sense of urgency to tackle the most pressing issues of today- price rise and food insecurity. I feel that the UPA II is trying to evade these challenges. This is evident from the allocations earmarked in the budget. The allocation for Food Subsidy does not show any increase as compared the budget for 2010-11. The Food Subsidy in revised budget for 2010-11 is Rs. 60600 crore and in the budget for 2011-12 it is Rs. 60573 crore.
Further, the government has drastically reduced petroleum subsidy in the budget for 2011-12. Given that petroleum prices have been deregulated in the country and the international prices of crude oil are predicted to rise in the coming months, the drastic reduction in petroleum subsidy by the Union Government raises a serious concern. A rise in the prices of petroleum products can aggravate the rise in prices of other commodities, since petroleum products are used for the transportation of most kinds of commodities.
The present budget has also failed to address the main causative factors underlying food insecurity in the country. The budget has not done anything substantial to make agriculture more viable as an occupation for the farmers. It is disappointing to note that the budget has failed to initiate any major step to revive this sector. One exception to this could be the fact that access to credit for agriculture is expected to become easier in the next fiscal year, although the onus for implementing this would be on the banking sector.
I also feel that the allocation for social sectors should have been much higher if the government were serious enough to meet its stated objectives. For instance, the allocation for Sarva Shiksha Abhiyan has had an increase of just Rs. 2000 crore which is quite inadequate to meet the requirements of enforcing the Right to Education Act 2009.
3. What do you think is the overarching ideology running through the budget?
Ans: Reducing the fiscal deficit of the government seems to be the overriding tenor running through the budget. The Union Government is trying to bring down the magnitude of its borrowing in the fiscal year 2010-11 and also in 2011-12. In this regard, the Government is resorting to a check on the growth of public spending, as it is not being able to raise its revenue significantly. As compared to the country’s gross Domestic Product (GDP), the total size of the Union Budget is projected to fall from 15.4 percent in 2010-11 to 14 percent in 2011-12.
4. There have been comments from across the corners that this budget is essentially catering to the priorities of the private sector. What are your thoughts on these?
Ans: I feel it is unfair to say that the budget is completely a lop-sided one where only the views of the corporate sector have been taken into account. It does try to pay some attention to several sectors. However, one can say that it is more sensitive and responsive to the demands of the corporate sector. The Union Budgets over the last several years have not raised the tax rate for the private sector and nor have they withdrawn the tax exemptions extended to them. Of all these, the financial services sector seems to be benefiting more out of these freebies. Due to all these, one can opine that the budget is more inclined in favour of the corporate sector.
5. What do you think are the pressing needs of the country today and how best are they reflected in the budget?
Ans: To me, price rise, food insecurity, agriculture becoming increasingly unviable for farmers, enforcement of Right to Free and Compulsory Education Act, public provisioning for healthcare, and addressing the critical shortage of human resources in the social and economic sectors are some of the pressing needs that require urgent attention. The critical shortage of human resources is one of the reasons why desired result is not achieved in many of our public programmes.
The second part of your question as to how far they are reflected in the budget merits special attention. I feel that the budget has fallen way short of expectations. The problem of price rise seems to have been ignored in the budget as the present government tends to believe that if public spending is checked, it will automatically take care of inflation. This could be a flawed assumption. As far as public provisioning for food security is concerned, the government is at the best maintaining the status quo. Only incremental changes are made in this year in the allocations for education, health, and agriculture.
6. What message is being sent out by UPA II to the people of India by this budget?
Ans: ‘Growth comes first and then the concern for inclusive development’ seems to be the philosophy underlying this budget. Also, the latest budget does not make any effort to redesign the pattern of economic growth in the country. There is an implicit message in the budget that a sense of complacency has crept into UPA II. UPA I was more responsive to the challenges and opportunities for significant improvement in the social sectors. However, UPA II does not show any similar sense of urgency. For instance, in MGNREGA, despite the wages being linked to Consumer Price Index for agricultural labourers Rs. 40000 crore has been allocated for 2011-12, which is slightly less than the allocation of Rs. 40100 crore for 2010-11.
7. Do you think that the concerns of the voluntary sector are effectively addressed in the budget?
Ans: I would like to share with you that all is not that bad. There are some positives that we can carry. One of the significant developments has been that the present Finance Minister has institutionalized the practice of meeting the representatives of Voluntary Sector during the pre-budget consultations. This year, the finance minister even provided a separate appointment for the representatives of People’s Budget Initiative (PBI). On a different note, the present budget has increased the wages of anganwadi workers and helpers. There is also a positive development in relation to the budgetary processes pertaining to Scheduled Caste Sub Plan and Tribal Sub Plan. These are welcome signs from the side of union government. However, it is no doubt the case that we have miles to go.