The Indian budget appears to be fiscally prudent, but it is primarily election-driven and offers little to correct the harm done to the growth momentum and employment by an ill-judged demonetisation move. This year, for the first time, the railways budget has been included in the general budget, and the loss is apparent as there is little for capacity building. And it is hard to get details on the budgetary provisions for railways. Also, like many other shocking firsts, the economic survey is out of print; and it was read by only a few including chief economic adviser to the Indian government Arvind Subramanian. It was appreciable that he informed us how the economic survey recognised stagnation in the export growth rate and how demonetisation caused hardships to those engaged in the informal economy.

As most loyal ‘sarkari economists’ are busy doing research on subjects ranging from the Puranas to goat farming, there is little chance they will return anytime soon to pursue their core business in economics and policymaking. Parliament and the citizens witnessed a literary budget where prose ran the show more than numbers. The most worrying part of the budget is the manufactured numbers. As per the latest report of the Centre for Budget and Governance Accountability: “In the context of the Union Budget 2017-18, it needs to be noted that due to the merging of the Plan and Non-Plan expenditures, figures for certain components of resources transferred to states are not available for the previous years. On the one hand, non-comparability of budget data for a time series analysis becomes an issue in such a process, on the other, it also does not help in transparency and simplification of budgetary data.”

Questionable data

Many times in recent years, the revised estimates and the actuals did deviate from the budgetary estimates, but never like this year has the government openly attempted to feed its own revenue and expenditure data with data of only nine months, excluding the terrible three months since demonetisation. There is no reason not to believe that both direct and indirect tax data are questionable. In the wake of the 14th Finance Commission recommendations, the Union budget allocations for social sectors need to be seen in synchronicity with the State budgets. Sadly, the huge regional disparity in social sector spending did not bother the government much to raise spending on social sectors through centrally sponsored schemes. Regarding most social sector programmes, allocations have been retained at the same levels as last year, and only a handful of programmes have witnessed a greater outlay in 2017-18.

Among the programmes which gained the most out of the budget, the allocation for Pradhan Mantri Awas Yojana has gone up from Rs20,936 crore to Rs29,043 crore; Pradhan Mantri Krishi Sinchai Yojana has been stepped up to Rs7,377 crore from Rs5,189 crore; Swachh Bharat Mission saw a rise to Rs16,248 crore from Rs12,800 crore; National Health Mission has been allocated Rs27,131 crore as against Rs22,598 crore in the revised estimates; Pradhan Mantri Swasthaya Suraksha Yojana made a giant leap to Rs3,975 crore from Rs1,953 crore; National Nutrition Mission saw a jump from Rs175 crore to Rs1,500 crore and Maternity Benefit Programme increased from Rs634 crore to Rs2,700 crore. Regarding education, the show remained feeble with a 9 percent outlay increase to Rs79,686 crore. 

Lack of clarity

As this budget aimed to show the government’s commitment to rural India, it has departed from Indian Prime Minister Modi’s statement describing the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) as a ‘living monument to the United Progressive Alliance’s (UPA) failure’. Not only is it surviving along with another UPA programme Aadhaar, it is actually thriving. This year’s outlay was set at Rs48,000 crore, up from the previous year’s Rs47,499 crore. The allocation for the Department of Rural Development has been increasing over the years, and the trend continued this year too. As per the estimate of the Centre for Budget and Governance Accountability (CBGA), the allocation for the Ministry of Agriculture and Farmer’s Welfare has increased substantially from Rs35,092 crore in 2015-16 to Rs51,026 crore in 2017-18.

The gender budget was waiting for an overhaul, but it only got a slight push from last year’s Rs90,770 crore to Rs1,13,327 crore. With the merger of Plan and Non-Plan heads of expenditure, there is a lack of clarity regarding parameters for assessing allocations for Dalits and Adivasis. Regarding social security, outlays have dropped for all major programmes including Aam Aadmi Bima Yojana. While defence and infrastructure have received the compulsory increase in outlay, there is lack of clarity regarding the allocation of funds for specific purposes. With regard to bringing transparency in political funding, it would be naïve to expect a change until the number of donors is restricted. Otherwise, capping cash donations will not make much sense as accountants in our part of the world know their work well.

Concerns for Nepal

For Nepal, the budget is important in areas like railways, energy and infrastructure. Last year, aid to Nepal was cut by 40 percent. Sadly, there is no proper looking back on this as there is only a 17 percent increase this year. Also, there are no provisions to boost India-Nepal joint projects including Upper Karnali. India should engage Nepal in harnessing border trade through major destinations in the states of Bihar and Uttar Pradesh with a larger outlay for infrastructure. However, the success of these schemes rests on the implementation capability of the stakeholders more than on budgetary announcements.

Budget 2017 should be remembered as being a fire fighting budget, designed to win the public over demonetisation, remonetisation and the approaching state elections. It came with the aim of bringing a major shift in budgetary processes, but without a rational aim to attain the ‘greater common good’, thus nothing appears promising. It was just a low key budget!

Thakur is a New Delhi-based journalist