Economy

After Demonetisation, the Union Budget Must Cater to the Most Vulnerable

The Centre needs to make up for the losses it has caused to those who already live in precarious, marginalised conditions.

Farmers were unable to sell there produce for a good price because of the lack of cash after demonetisation. Representative image credit: Asian Development Bank/Flickr CC BY-NC-ND 2.0

Farmers were unable to sell there produce for a good price because of the lack of cash after demonetisation. Representative image credit: Asian Development Bank/Flickr CC BY-NC-ND 2.0

In any country with widespread deprivation, poverty and inequalities, the Union Budget every year has a special responsibility to be more sensitive to the needs of weaker sections. This year, however, there are very special and compelling additional reasons as to why the Budget should show special concern for the needs of vulnerable groups.

Demonetisation has thrown into turmoil the already precarious livelihoods of workers, farmers, artisans and other vulnerable groups, and the promised relief at the end of the 50 days has eluded most of them. Hence the Union Budget becomes all the more important, as the much awaited source of overdue relief for vulnerable groups.

Within its limits, the Union Budget must seek to do what it can to stabilise economic conditions adequately and restore the lost livelihoods and incomes of the poor, while also compensating them at least partially for the losses suffered already as a result of the ill-conceived, poorly planned and shoddily implemented notebandi.

Disrupted survival mechanisms

As vice president Hamid Ansari reminded us recently, India is a country of extreme inequalities, where the top 1% have cornered almost 60% of the country’s wealth while the bottom 30% have only 1.4% of the wealth. It is this bottom one third of the population, consisting of landless rural households or small and marginal farmers plus the labourer and precariously self-employed living in the slums and footpaths of cities, who are worst affected by systemic inequalities. Their total numbers add to over 400 million.

Various Union and state governments have promised them much and delivered little. Land redistribution has been almost forgotten by recent governments – they don’t even talk about it anymore. Even when some potentially good ideas have been taken forward, as in the case of the rural employment guarantee, these have been denied the necessary resources.

In this precarious situation, the poor have courageously and carefully worked out their own survival strategies. They retain their roots in their villages and some members of the extended family go to urban areas or wherever employment is available. Certainly there is exploitation and cheating of these highly vulnerable and desperate workers, but nevertheless it is their own survival strategies rather than government programmes which have helped them survive in very difficult situations, including increasingly adverse weather situations and disasters. It is these very survival strategies of the poorest sections which were thrown into turmoil by demonetisation. As several industrial units closed down, others retrenched workers at least temporarily, while yet others could not or did not pay in valid currency, as various supply chains broke down due to the cash crunch, many work assignments and purchases were postponed, workers who had migrated to cities (or other places of employment, including more developed rural areas) to earn could not sustain themselves and started returning to villages.

They returned at a time of low employment availability in villages, when farmers themselves were in a crisis. Following demonetisation, they could not get proper payments from selling their crops and they could not access their own savings or government credit for satisfactory planting of their winter crop. Farmers as well as workers and artisans incurred more debts than before for meeting essential needs.

Just when the need for the government’s welfare-oriented programmes was increasing, the performance of some of the most important programmes declined, partly due to notebandi-related factors. More workers failed to get MNREGA work, less women and children had access to Integrated Child Development Scheme nutrition and the elderly and persons with disabilities faced more delays and difficulties in getting their pensions. While the government said again and again that the difficulties will go away in a few days, these have been lingering on and appear to be much more persistent than the government will care to admit.

Budget responsibilities

It is in this dismal situation that the budget has been prepared for presentation on February 1. The Budget must therefore make the maximum effort to bring relief to the farmers, workers, artisans, self-employed and small entrepreneurs who have suffered the most from the many-sided ill effects of demonetisation.

This can be done by helping to create conditions of stability in which these vulnerable sections are enabled or helped to return to their previous levels of income and employment. Second, as they have already incurred debts in times of exceptional difficulties inflicted on them suddenly, they should be provided various kinds of help and relief.

This can take the form of some well thought out debt relief for farmers and small entrepreneurs, and free food rations from public distribution system shops for a few months for other most vulnerable sections. Similarly, in the case of all pensions given to the poor, extra pensions for two or three months can be provided to partially compensate these poor people for the distress and difficulties caused to them. Mechanisms for providing such help certainly exist, although of course care will have to be taken to ensure proper implementation and avoid corruption.

Third, the allocations for various social sectors need to be stepped up significantly with special emphasis on public health, free or subsidised and easily availabile essential low-cost generic medicines, improvement of government schools and significant upgrading of maternity and nutrition programmes. Significant broad-basing of pensions and increase of pensions for all elderly people in need is long overdue anyway. MNREGA has to be implemented in a much better way and for this a significant increase in allocation is badly needed.

Beyond such relief measures, however, for any sustainable reduction of poverty the economy has to move in the direction of a much more equality-based path of development and the Union Budget should also take at least some significant initiatives in this broader and longer-term context.

Bharat Dogra is a freelance journalist who has been involved with several social movements and initiatives.