Budget 2018-19 is the last in office budget of the Modi government. They seem all set to show that their nature was or was not capitalistic but surely is turning to be a welfarist one! The opposition comes with its own brunch of criticism and call Modi government’s budget an election game. After all who does not want a fat vote bank?! So the criticism cannot rule supreme on our analytical minds.
Total receipts of Rs.24,42,213 lakh crore and Mr. Jatley and his briefcase all set to impress upon the Madam Lady Speaker and 125 crore Indians in general. Leaving alone the 25% of the budget for infrastructure and proposed 1.38 lakh crore for the health care of poor Indians a lot has been devoted to the farmers of India. From increasing the minimum support price to making accessible markets available to them and right to increasing credit facilities for them is all they are getting and all they could get in the best case of favour for them. So the expectations rise that the farmer community returns home with a good hope for 2018-19.
Aiming to overtake Obama-Care, Modi government in the current budget aims to reach the poorest section of the Indian population with a holistic health insurance up to 5 lakh a year for an average family. Statistics show that this scheme aims to cover almost 50% of Indian population. But we need not cover our eyes with over optimism. Obama-Care was a financial disaster in practice for the US government at that time. Things in India are never smooth, never simple and who knows if at all some shard of benefit will reach somebody at all or none. Who knows if every poor Indian will want to taste a check-up at a tertiary and super-speciality hospital and send the bill to the government? This is going to be one of an unanticipated result by the end of 2018. Available research on the Rashtriya Swasthya Bima Yojana (RSBY) that, as of now provides annual coverage of Rs 30,000 to poor families brings to fore the system of leakages and moral hazard in such policies. The extension of a service is no substitute for its implementation. Again here it remains to be seen as to how such ambitious policy will be put in place and if at all it will be put in place or not.
Special care to Medium, Small and Micro Enterprises along with the increase in custom duties and a huge plan to invest in infrastructure is a holistic positive sign. This opens opportunities for the domestic producers to begin, grow, develop and rise. In this manner leakages will be avoided and the economy is expected to get a big boost and a steady push along the path of sustained developments. This in fact is the need of the hour. India anyways faces the problem of vacuum in the secondary sector in the presence of a lagging primary and demand driven tertiary sector.
25% of the budget devoted to infrastructural developments! Quite a bold step. Not only that, this much high level investment as the pre-requisite to developmental indices will have a very long lasting impact on the growth of domestic economy. Plan is to invest heavily in the creation of well connected networks of roads, airports, railways, ports and inland waterways. This on the one hand will increase development and on the other will induce economies of scale and bring down the costs. A bravo step indeed! Employment generation is believed to be an externality of this approach. Is this a departure from ‘Pakodanomics’. Well remains to be seen! Hindsight makes one to believe that such policies needed to be floated atleast in the second budget of the government. May be its too late to be announced and too little time is available for this dispensation to get it to the people so that the fruits of the same are harvested in the next general elections. Unless, the plan is to create sops instead of assets from these budgetary provisions this intervention seems to have been made late.
Each successive government of India shows it’s faithfulness and belief in Article 21A and always aim in its extensions. Modi government in it’s current budget comes up with Eklavya Model Residential Schools for the Tribals, with a clear aim to provide them education and knowledge in their own environment. Along with this 1 lakh crore is being devoted to research and other tertiary level educations. The budget plans on many high end scholarships to the meritorious students especially for research purposes. This again is a consideration towards the Research and Development endeavours, on the global index though India is on a good rank but then in the competitive world a rising nation essentially has to excel in this field. However technological upgradation of educational institutions in general and of higher education seems to have been underrated. This indeed is a big miss.
Fiscal deficit remains more or less undressed. This is a long run problem for the economy and a mount of fiscal deficit is like a parasite with tough roots to eradicate. This is one of the major disappointments budget 2018-19 comes with. Certainly a common man does not find a big deal in it but an economics analyst knows the brunt it is capable of creating in the long run; if kept perpetually unanswered. With the current government not being in a position to push to contain this monster around the magical figure of 3 % of the GDP over four budgets speaks volumes about the fiscal prudence of the economy and the underlying macroeconomic stability.
The salaried and middle class certainly feels isolated and disappointed. The exemptions here and dis-favours elsewhere keep the salaried class more or less neutral. The middle class find no grounds for them in the budget. The government should have been aware that India is as much a constituent of middle-class as much it is of farmers. This makes the budget loop-sided, incomplete and inconsistent. With institutional prudence not in place for addressing the farmer woes and little time to put into practice what has come out of the FM’s bag for them this issue seems to be a political gamble for the BJP government. It remains to be seen as to what amount of the provisos in the budget addressing the farmers actually sees light at the end of the dark tunnel of procedures, administrative authorizations and budgetary provisions.
Though the budget in speech pronounces that it aims at making 2018-19 a business friendly environment in India it completely forgot to access and address the skill development programs. This is the biggest pin-point of fault. Models-Models everywhere yet a blind eye! Global scenario is the witness to the magic of skill development and a business friendly environment in the absence of holistic skill development programmes is a misery and failure. FM says in the context of the health coverage that the demographic dividend of India calls for healthy Indians! Yes Sir, it does. But a healthy Indian who is skill-less will just eat more food and utilize his energies in feuds and fights. This is a clearly visible policy failure and a dim scenario given the demographic dividend of India. Even the mantra of ‘Modi-care’ which is hailed as the world’s largest health care program has not been provided the financial resource in the budget document or the annexure (s) to it. It remains to be seen as to where from the funds for this ambitious scheme are going to be brought around from. Implementation of major initiatives requires healthy institutions and policy need tro be backed up with vision. Unfortunately in this 1.26 billion people economy neither institutions nor policy vision has emerged over the last 70 years.
The issue of regional balance seems to be a forgotten story all along the last four budgets. Yes cluster based district level approach has formed a part of the budget speech. Identification of comparative advantages at the district level and developing the same was indeed referred to in the budget speech but a vision and policy/institution based follow up of the same is still elusive. “There is a need to develop cluster based model in a scientific manner for identified agriculture produces in our districts in the same manner as we have developed model for industrial sector declared the FM”. This approach of decentralised development based on regional advantages, competencies and aspirations in our view is much more important for a sustained era of development in a holistic manner. Core competencies at the lowest levels with a vertical and horizontal networking across sectors can go a long way in addressing the issue of regional imbalance. But again this simple understanding and lessons that the Mexican experience would tell us have not yet found takers in Indian policy planning.
The budget as a holistic picture is a mix of ambitious steps and some failed visions. Developing institutions and consolidating on the earlier flagship programs would have been a better alternative to initiating new interventions at a mass level. Yet this budget seems to be a good one given the multiplicity of aspirations prevalent in the Indian Subcontinent. India learns by evolution and budget itself is one such fundamental aspect. Of late it has evolved as a field to experiment with the economic scenarios of a growth oriented highly populated developing nation. This budget has taken this experimentation to the next higher level, where it has put itself into a time constraint within an environment of institutional inefficiency.
(The authors are associated with Department of Economics University of Kashmir)
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