Budget 2018: Fantabulous Schemes With Not A Paisa Earmarked
NEW DELHI: The
Union Budget for 2018-19 sets a new record for cynical dissimulation. To be
sure there is a certain amount of "window dressing" in all budgets, but the
announcement of fantabulous schemes with scarcely a paisa earmarked for them,
as has happened this year, is quite unprecedented in the annals of
budget-making in India.
Consider for instance the much-hyped "World's Largest Healthcare Programme" announced in this budget, which is supposed to provide insurance cover for up
to Rs.5 lakhs per family to 10 crore families constituting 40 percent of
India's population. The total sum allocated for this programme is a paltry
Rs.2000 crores, which is only Rs.672 crores more than the amount earmarked for
its precursor (which provided insurance cover for upto Rs. 1 lakh per family)
in last year's budget (and that sum too was not fully spent).
Commentators have rightly noted that the insurance route to providing
healthcare is totally counter-productive: it simply enriches private hospitals
and insurance companies. The only sensible way for the government to provide
healthcare is through public facilities, such as under the National Health
Service in several European countries. Ironically, the U.S. which spends a
larger proportion of the federal budget on healthcare than Europe, has an
abysmal healthcare system compared to the latter because it follows the
insurance rather than the NHS route.
But let us for a moment set aside this issue. Even for an insurance scheme, the
amount the government has budgeted is trivial compared to requirements. When
the Rashtriya Swasthya Bima Yojana (RSBY), the original version of this
programme was launched, the maximum annual benefit for a family was Rs.30000.
But the insurance premium paid per family in most states was around Rs.500, i.e.
one-sixtieth of the maximum benefit.
On this reckoning, and assuming the same level of participation as in the
original RSBY, the premium for a maximum benefit of Rs.5 lakhs should be
Rs.8300; and for 10 crore families, the total premium should be Rs.83000
crores. Assuming that there is a 60:40 sharing of this premium between the
centre and the states (and ignoring the fact that for the North- East the ratio
is actually 90:10), and that all state governments agree to such a ratio and
come on board, rather than going their own individual ways, the central
budget's provision for this scheme should have been Rs.50,000 crores.
The fact that only Rs.2000 crores have been provided instead of Rs.50000
crores, suggests that the
central government expects the enrollment under this scheme to be extremely
meagre. It assumes in other words that the scheme will be a
non-starter anyway and hence will need very little funding; and yet it hopes to
derive considerable mileage from it for showing solicitousness towards the
It is of course being argued that the provision of Rs.2000 crores is only for
the first year, when the programme would not have taken off anyway because of
the lead time required for it. But the fact that the government is simply
dissembling is obvious from the figures mentioned by officials of both the
Health Ministry and of the Niti Ayog. They reckon the annual insurance premium
for this programme to be only around Rs.11-1200 per family, i.e. just over
twice the amount paid when the maximum benefit was Rs.30000.
This is so ludicrous a figure that they either have no idea what they are
talking about, or are already proceeding on the assumption that the scheme will
be a dud one, even while tom-tomming it as the "World's Largest Healthcare
The other talking point about the budget has been its supposedly
pro-agriculture bias. The main promises here have been: an increase in the
institutional credit to agriculture from Rs.10 lakh crores last year to Rs.11
lakh croress in the coming year, and a minimum support price for the kharif
crop that is 50 percent above the cost of production.
Now, neither of these are matters involving the budget. The increase in credit
to agriculture is a matter for the banks to decide. The government cannot micromanage
bank lending, other than through setting "priority sector" norms, which the
banks supposedly have been meeting anyway. But, as the case of "priority
sector" lending suggests, what constitutes agricultural credit is defined so
widely that even if Rs.11 lakh crores do go to "agriculture" this year, not
much of it would actually get to the peasantry.
As for the minimum support price, simply announcing such a price that happens
to be 1.5 times the cost of production means nothing, unless the peasants are
actually paid that price through government procurement. Ironically, even
though there have been protests against farm-price crash all over the country
recently, and potato farmers in U.P. have been dumping their crop in front of
Yogi Adityanath's residence, Jaitley claimed that the peasants in the rabi
season were already given an MSP that was 50 percent above the cost of
production; this only underscores the vacuity of the budget's MSP promise for
the kharif season.
This vacuity is compounded by the Modi government's concept of "cost of
production". There are two quite distinct concepts here: one refers to the
actual paid-out costs (in cash or kind) plus the cost of family labour; the
other refers to this concept plus imputed
rent on own land and imputed rental on own fixed capital.
The Modi government's promised MSP is with respect to the former concept, while
the M.S. Swaminathan Committee which had recommended an MSP 50 percent above
the "cost of production" had the latter concept in mind. Since the latter cost
in the case of paddy (a kharif crop) can be as high as 50 percent above the
former, the Modi government's MSP can still even fall short of the latter cost.
And even if it does happen to exceed the latter, this MSP may still not cover
the interest foregone in buying fixed capital, and the transport cost.
Besides, if the peasants have to be paid a higher price but its impact is not
to be felt by the poor consumers, then there has to be an expansion in
government subsidy and in the scope of the public distribution system. There is
no evidence that the government has even thought about issue, even as it
blithely talks about doubling the farmers' income, or giving them a price 50
percent above cost of production. Clearly, these are just throwaway remarks
which signify nothing.
In any case however this MSP promise has nothing to do with the budget. In the
budget, compared to the revised estimate for last year, there is only a 7
percent increase in nominal terms in the allocation for the Department of
Agriculture, Cooperation and Farmers' Welfare, which means a decline in allocation relative to
the GDP. The "pro-farmer bias" in short is just hype.
When in addition we consider the fact that the provision for MGNREGS has been
kept unchanged in absolute terms at Rs.55000 crores which does not even take
into account the wage arrears, let alone the rise in prices; and that the
allocation for ICDS has been slated to increase by only 7 percent compared to
last year's budget (i.e. to fall relative to GDP), it is clear that social
sector expenditure, as in previous NDA budgets, will continue to languish.
In fact the strategy of the current budget is simple: make immense noise about "helping the poor", "helping the peasants", "helping the women" and so on; do
not give an extra paisa from the budget towards these ends, but promise the
moon from off-budget sources; and carry out an expenditure squeeze to reduce
the fiscal deficit in the face of subdued receipts caused by the switch to GST.
This squeeze on expenditure is clear from the fact that the total spending is
to go up by only 10 percent in nominal terms compared to last year's budget,
which is even below the assumed nominal GDP increase. The share of central
government expenditure in GDP in other words is budgeted to fall. Such a
contractionary budget in the midst of a slowing down of GDP growth may appear
odd; but that is what the neo-liberal regime which the NDA government
assiduously upholds demands of it; and it has dutifully obeyed.
The one area where it has strayed a little is in re-imposing the long-term
capital gains tax; and already the stock-market has shown its displeasure at
such temerity in no uncertain terms, as indeed it had done when Pranab
Mukherjee as Finance Minister had tried to plug the "Mauritius route" for
corporate tax evasion. No doubt, the present government will backtrack on this
move, as its predecessor had done then. A government under the neo-liberal
regime after all has the freedom to victimize minority communities, but not to tax