The Poor Badly Needed a Good Budget this Year.
Well, They Didn’t Get It.

Jaitley said he was making a record allocation to NREGA but the increase is a modest one in real terms and is even more suspect if one considers the backlog from previous year, particularly of delayed wages

No Rural idyll. Photo by Flickr/Deepak Rao, CC 2.0.

No Rural idyll. Photo by Flickr/Deepak Rao, CC 2.0.

While various lobbyists did what they could to keep the finance ministry well informed about their demands, one is not so sure whether the needs of the poorest and most needy sections were articulated strongly enough or whether these received adequate attention. While the poor certainly need justice in every budget, this year there are some special reasons why the need for a fair deal to the poor is greater than before.

First, there is the obvious reality of nearly half of the total number of districts in the country being either affected by drought or still recovering from other calamities. Secondly there is a definite need to make up at least now for the serious shortfall of funds from which schemes and programmes meant for the poor have suffered in the recent past.

In 2014, soon after assuming power, the NDA government had been careful not to reduce any allocations with a significant impact on the poor. It is not that the  allocations made in the interim budget by the outgoing UPA government were adequate but at least these were not curtailed further in the first budget presented by the NDA government.

However, after just a few months there were several disturbing reports in the media about big cuts being made in certain areas which were likely to have a very adverse impact on the poor. This was confirmed after some time when official data revealed the actual expenditure in several crucial areas to be much less than the original budget allocations.

Then came the budget for 2015-16 and immediately there was uproar over the huge cuts in several schemes and programmes of high relevance to the poor. However, the government hastened to explain that there were no cuts as enough additional resources were being transferred to the state governments to implement important schemes. However, the actual experience of this financial year has shown that the state governments could not make up for the cuts made in the Union budget. Thus, there is a very strong case for increasing the allocations for schemes meant for the poor to make up for previous shortfalls.

This is the background against which the Union Budget for 2016-17 should be examined.

In his budget speech, the finance minister certainly took adequate care to repeatedly assert his government’s commitment to poor and vulnerable people and more particularly to farmers, but what is important is to ask whether this strong assertion is supported by actual significant increases in allocations for programmes and schemes for poor and vulnerable sections.

To be sure, there are a few hopeful signs here and there, but taken together these do not add up to much. The reason is that within the limits of existing financial resources, low taxation base and the self-imposed requirements of fiscal discipline, there is only so much that can be done to keep up with the rhetoric of deep commitment to vulnerable sections. The truth is that despite all the hype that is now an annual feature of budget day, for several years now the space for any remarkable initiatives to help the poor has been a very limited one.

To give an obvious example, the allocations for rural employment guarantee have generally been much less than what is necessary to ensure satisfactory implementation of this important legislation – whose high potential has therefore not been realised yet. This year was just the right time to correct this mistake. Due to widespread drought conditions, this would have been the right time to scale up the programme – especially since adequate experience of its implementation has also been gained. One good thing that has actually happened in recent months is that somehow the NDA government has overcome its initial hostility towards the rural employment guarantee law, or NREGA. Gone are the days when the badmouthing of NREGA by Prime Minister Modi had sent discouraging signals down the line, and as a result the performance indicators of this important programme had declined just when it was badly needed. Lately, the rural development ministry had done well to start propagating this programme as one of its most important initiatives .

This trend has been maintained in the budget as finance minister Arun Jaitley took care to specifically point out that this year he is proposing the highest ever allocation for NREGA, Rs 38,500 crore. This may well be so, but the increase is only a very modest one in real terms and appears to be even more suspect if one keeps in mind the backlog from previous year, particularly of delayed wage payments. What is more, additional allocations for special drought relief works have not been announced and so it appears that NREGA has to double up for drought relief too. Keeping in view all this and the very widespread drought conditions, the allocation for NREGA in this budget is not at as impressive as was made out by Jaitley.

This is just one example which reveals that the rhetoric of high commitment to poor and vulnerable sections is not really matched by actual allocations, even if a few promising beginnings may have been made here and there.