rediff.com Budget 2000: Dilip Thakore on Budget


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March 3, 2000

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The Rediff Budget Jury/Dilip Thakore

A business-as-usual Budget

BUDGET
2000

The fairest verdict on Budget 2000 is that it is a business-as-usual Budget. It cruelly raised the price of foodgrains for people Below the Poverty Line or BPL (who have to pay for the chronic inefficiency of the Food Corporation of India). It ignores the critical issue of mass privatisation of the nation’s haemorrahaging public sector enterprises and deployment of the proceeds thereof into restoring the nation’s collapsed education and healthcare sectors.

For a Budget which is inevitably replete with technical and accounting jargon to become intelligible to the layman, it is useful to look at its impact upon the basic needs of the citizenry -- food, clothing, shelter, healthcare, education, law and order and investment in public goods, that is infrastructure.

In his marathon Budget speech, Sinha devoted 14 chunky paragraphs to the government’s plans for the development of agriculture because of his “ firm belief that sustained and broad-based growth of agriculture is essential for alleviating poverty, generating incomes and employment, assuring food security and sustaining a buoyant domestic market for industry and services.”

In his opinion, this desideratum will be achieved through a larger credit flow -- a massive Rs 515 billion in 2000-2001 -- from commercial, regional, rural and cooperative banks; increasing the allocation to the Rural Infrastructure Development Fund managed by NABARD, raising the micro-finanace budget of NABARD and SIDBI and cooperative banks, recapitalising regional rural banks etc.

Indeed, the finance minister exhibits a touching faith in the ability of these institutions to deliver speedy, hassle-free and effective credit to farmers so half a billion fields may bloom.

Yet one wonders: is it sufficient to keep throwing money at development problems without insisting on expenditure accountability? Reporting to Parliament and the nation about the government’s rural micro-finance scheme, Sinha said, “ I had asked NABARD and SIDBI to cover 50,000 self-help groups to develop micro enterprises. NABARD itself is likely (sic) to link 50,000 such groups to banks during the current year. NABARD and SIDBI will cover an additional 100,000 groups during 2000-2001.”

Just a minute, Finance Minister, haven’t you forgotten something? Shouldn’t you tell us how many of the 50,000 self-help groups have become operational? How many jobs, assets, infrastructure projects, if any, these self-help groups have created? I am ready to bet that given the speed at which the nationalised banks transact business, not even 5,000 such groups are operational.

It’s the same story in the housing sector. “ For the coming financial year a goal of providing 2.5 million dwelling units in rural areas has been fixed ... under the Indira Awas Yojana, it is proposed to provide 1.2 million houses for people Below the Poverty Line,” said the finance minister, making a generous provision of Rs 15.01 billion for the latter scheme.

But the Indira Awas Yojana has been in operation for almost a decade. Shouldn’t Sinha tell us how many rural houses have been constructed under this scheme thus far and how many last year? I am prepared to bet not even 120,000 houses. If so, isn’t a target of 1.2 million homes an unattainable pie in the sky for a government bureaucracy which has a global reputation for sloth, inertia and venality?

The story is no different in other sectors of the economy. The department of family welfare received an allocation of Rs 29.20 billion in 1999-2000 which will rise to Rs 35.20 billion in 2000-2001. But the Budget speech is silent on how many new primary health centres were constructed, how many births were prevented and to what extent infant mortality has been reduced last year.

And it is a matter of public knowledge that despite repeatedly generous allocations, the nation’s incremental birth rate is over two per cent annually. So where is all this money gone? Could it be towards the salaries, perks and tea/coffee of officials of the department?

To preserve law and order, the finance minister has made a massive provision. But unlike most citizens, he perceives an external threat which has prompted him to raise the defence budget by an unprecedented 28.5 per cent to Rs 580 billion (and don’t expect a break-up -- national security).

Even at the risk of sounding unpatriotic, it needs to be said that large and rising defence budgets are an admission of a failure of diplomacy. In which case, there is a good argument for slashing the budget of the Ministry of External Affairs and canalising these savings into the Ministry of Home Affairs to preserve domestic law and order which most citizens perceive to be a greater threat than external aggression.

Perhaps, it is somewhat unfair to blame inha for not making a departure from the well-established budgetary practice of talking money, money and money without accounting to the public about the results of the huge amounts spent previously. There is a structural deficiency in the entire budgetary process cleverly imposed upon this unfortunate nation by a self-perpetuating bureaucracy hell-bent upon taxing and spending without responsibility.

Consequently, the entire Budget presentation exercise has been transformed into a massive ritual of fraud and deception.

The plain truth is that despite the Union government and its 10 million strong bureaucracy proposing to raise a massive Rs1.462 trillion (100,000=1 lakh; 10 lakhs=1 million; 1,000 million=1 billion; 1,000 billion=1trillion) by way of taxes imposed upon the long-suffering citizenry, it still requires an additional Rs1.112 trillion or an additional Re 0.75 paise per rupee raised, in order to deliver the pathetically minimal government and development which has become its hallmark.

That’s the way to look at the fiscal deficit -- not to say that it is 5.1 per cent of GDP which is another way to obfuscate the magnitude of government inefficiency.

And with all this taxing and spending -- mainly to sustain itself -- the nation’s big government has nothing worthwhile to show by way of achievement. Little wonder that the Budget is awash with monetary statistics which demonstrate the Union government’s incremental spending power, pie-in-the-sky promises and little else.

Journalist Dilip Thakore is a former editor of Business India and Business World magazines.

Dilip Thakore

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