Far from being an election year special, this year’s Interim Budget is a marked shift from the UPA II’s stated ideal of growth with a human face. This Budget pays scant attention to social sector needs. Its primary objective and stated achievement is the reduction of the fiscal deficit to meet the requirements of the FRBM Act.
The Finance Minister’s commitments to meet the requirement of the FRBM Act have been ongoing. Despite the Union Minister for Rural Development calling these ‘savage cuts’, the finance ministry continued with its mission to please credit rating agencies abroad. Those of us who work in rural areas have heard reports from across the country about how the MGNREGA was drying up due to a paucity of funds.
One state government after the next has been petitioning the Union Government for funds to meet demand. The Union Government has used excuse after excuse to deny these funds, and the net result has been to critically undermine this ‘demand based’ legal entitlement.
Indira Awas, Rural Roads and the National Rural Livelihood Mission, all had their budget slashed. Barring an increase in expenditure on food subsidy, as mandated by the Right to Food law, all other social sectors continue to face a monetary drought. In fact, the marginal increases in some do not even keep pace withinflation and are therefore facing a reduction in real terms.
MGNREGA is a case in point. It is now clear that the finance ministry is committed to the affluent, and to the concerns of the corporate sector.
The budget cuts of 2013-14 only continued the trend of 2012-13 where fiscal consolidation was achieved through reducing social sector expenditure. It might have been imagined that an election year budget (even an interim one) might bring some relief for the poor and economically disadvantaged, or even apply to the wider notion of the common citizen. However, this budget prides itself on further reducing the fiscal deficit, not by increasing taxes but through keeping control over social expenditure.
The Interim Budget projects a reduction of the fiscal deficit from 4.8 per cent to 4.6 per cent of the GDP without attempting to increase tax revenue. India’s tax to GDP ratio remains unjustifiably low. People who work with India’s poor and disadvantaged would have no problem with the Fiscal Responsibility Budget Management Act if it were accompanied by an equally mandatory ‘Responsibility to Meet Basic Human Needs Act (RMBNA)’.
After all, isn’t the existence of democratic governments predicated on this commitment? It is only when that commitment is understood that governments will stop pandering to the corporate sector and begin to raise tax revenues to ensure resources are available for the basic responsibilities of government. The most shocking fiscal callousness is this government’s attitude to the destitute elderly.
UPA II in its whole term had no problem in keeping old age pensions at a miserly amount Rs 200 per month. Despite assurances in March this year by the Prime Minister to revamp the NSAP, universalise and increase this amount to Rs 500, through all of last year none the assurances were met.
In 2013 there was a 10 per cent hike in Dearness allowance for 50 lakh Central government employees and 30 lakh pensioners. The hike would amount to a total of Rs 19,000 crore. Budgets matter. For people at the lowest end it’s a difference between life and death.
At some point one has to wonder how financial mandarins can have no compunction about increasing their own entitlements while ignoring the basic human needs of the poorest and most destitute people in the country.