This is the first part of a 3-part
analysis on the Union Budget 2018-19, in which I propose to go into the basic strategy
behind the budget, and look at its pluses and the minuses pointwise – in two
parts;. The third part will be the background, history and Macro-Economic
Framework analysis, which has been my standard approach in studying the budget.
And my first impression of this budget,
was listening to it / reading about it, was “interesting”, but requires deeper analysis. My second impression,
after talking to various people, reading extensive opinions, and going through
the entire set of budget documents : “Excellent
Budget”
THE
UPPER AND MIDDLE CLASSES
A lot of my friends are disappointed
in the budget; all of them are highly educated, and are from the top 10% of the
population – exceptions prove the rule, so please excuse me. To them, I can
only state: India is about the rest of the 90% as much as it is about us, privileged
top of the heap. We, the people with
jobs, earnings and income, education, are actually the exception rather than
the norm in our country where millions still are below the poverty line. And
cities – I have said it before, and I will say it again : the cities of India deserve nothing, absolutely nothing. We have
too many places that deserve a higher priority. We are one nation; and we, the
urban elite, need to sacrifice just a bit for our brethren; we are, after all,
one large family, so to speak.
THE
RIGHT FOCUS AREAS
I have said it before on my blog, in
a plain melancholy lament: that we need a much higher focus on Rural Areas,
Agriculture, Health and Education. In light of that, I have to admit that the
direction being set by this budget is most promising, with its rural focus,
purported emphasis on MSMEs and Health-Education. One can state that the Government’s
hand has been forced by the overall Macro-Economic Situation, and the coming
elections; but that does nothing to negate the fact of the direction being
taken by this budget and its overall stategy and choices. That said, direction is one thing, implementation another; given the
ground realities.
CAVEAT
This Government’s implementation
record does not inspire confidence, for starters. Next, this also requires
working alongwith the states; and most importantly, it requires the strategy
being backed up with numbers in terms of funds allocated. Lastly, it requires
the tactical execution on-ground, and proper follow-up, without which all strategies
remain just that : strategies. With this standard disclaimer, let me now
proceed into the specifics of what I liked and didn’t like.
AGRICUTURE
AND RURAL ECONOMY
The fun starts with Section II on
Page 3 with the section on Agriculture and the Rural Economy; the first 10
points are just self-praise, to be ignored for the large part. The key points in this segment are 13-15 dealing
with MSPs, and 16-22 covering GrAMs, e-NAM, Cluster Farming, Farmer Producer
Organisations, Village Producer Organisations etc. The decision to increase the MSP to 1.5 times cost, as well as the extension of the same to al crops – {this
later point missed by most people} – is a welcome one. Earlier, this was
not the case till a few years ago, and was a long-standing demand. The caveat in this is the cost is not
specified – there are many levels of cost in Farming, ranging from A2, A2+FL
and C2 as per the CACP {Commission For Agricultural Costs and Prices}. I
myself have used the C2-R Cost parameter for calculating profit from farming in
my series on this topic. Similarly exciting are the rest of the provisions
identified; the budget talks of roads,
farming clusters around crops etc – this is a promising idea, on the lines
of the Industrial Clusters. We will of course have to wait for more details on
this specific point.
The Finance Minister calls this
decision historic; I wholeheartedly concur. Both the decisions – there are 2 –
are indeed historic. One I have given above; the second is the decision to
extend the MSP to all crops. In fact, the
entire section on Agriculture has much reason for us to rejoice : it is
absolutely unique; the skepticism
emanating from ground realities notwithstanding, which I shall go into later. The
concept of clusters, FPOs are welcome; as is the stress on GrAMS and the
upgrading of rural haats to GrAMs, and linking to e-NAMs. But the point missed by
100% of all articles in the Media that I have read is : Exempted from regulations of APMC {Page-5, Point 17} which promises to be a game changer and which clearly
mentions facility to sell directly to consumers and bulk purchasers. This is a
step in the right direction, as 50% of our population is directly dependent on
Agriculture. This will facilitate the chance of higher price realization of
farmers for their produce through higher MSPs and through direct to consumer
sales at GrAMS and the e-NAM.
None of this is easy to do; in later
articles this month, I shall detail the
hindrances that some of these steps might face. This does not mean we criticize
– let us, at the very least, appreciate the newness of the thought and the
ideation behind these points. There are many other small points – like the one on
lessee cultivators’ access to credit
{Point 33 Page 7}, for example. There are also some issues - at least one that I could spot, name irrigation not
getting the support it needs; but overall, this budget has proven to be
near-magical for the Agricultural Sector, and holds promise. Even more so, as
it repeatedly acknowledges the difficulties that lie in the path, as in the
notation on MSPs in Point 14, specifying the need for setting up of a mechanism
to ensure farmers get the MSP. Let us all hope that all of these above are realized
– the benefit to the millions in the farming sector will be realised if so.
HEALTH,
EDUCATION AND SOCIAL PROTECTION
The next Section is on Health, Education and Social Protection.
This section makes a series of observations,
and plans, but once you get into the specifics, a few flash points emerge, on
the second or third reading. For example, points 50 talks of Tribal Schools and the Eklavya Model Residential
School with a plan for a school covering every block with more than 50% SC/ST
Population. Point 51 talks of a detailed plan for revitalizing higher
education. Both of these plans are till 2022, the higher education point
mentions a clear plan involving the setting up of an Higher Education Financing
Agency which will have a corpus of 1,00,000 Cr. In both these, the specifics
are missing, and one is let guessing as to the implementation. Let us wait and
see.
Much
has been made of Health in this budget; the numbers don’t add up. As we shall
see in the last part of this series. There
is a defined set of points in the budget speech that looks into this aspect, and
gives the details of a National Health Policy and the National Health
Protection Scheme. Yet, sadly, as we shall see in the numbers part of this mini-series,
this has not been backed by numbers in terms of fund allocation. Point 59 lamely
mentions adequate funds will be provided
for this. For the rest of this section,
there is a series of plans – some of them, like the Clean Ganga or the Crop
Insurance Scheme, not having performed. It remains to be seen how the
implementation will be. In summation, in Health and Education this budget
continues to disappoint just like the majority of other budgets in our history.
SUMMARY
– FOR NOW
The next part I will take up in this
analysis is the segment on MSMEs, points 71 – 82, Infrastructure and Financial
Development, Points 83-114 and Building Institutions & Improving Public
Service Delivery, Points 115-137. These will be taken up in the next part of
this article, to be published tomorrow, where we shall also look into the
specific allocations and funds to various schemes and heads as detailed in the
Budget Documents, Budget at a Glance -> Expenditure and Reciepts details,
which provide further fascinating insights into this exercise. For now, let me just say that this is an
excellent budget, despite its weaknesses, one which I have identified above.
Rural India is 70% of India approximately. I further acknowledge the real world
difficulties that exist, which will be enumerated later. But as a strategy,
this belated shift to the right areas is welcome – now let us see if we can
sustain this interest!
BIBLIOGRAPHY:
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