A round-up of The Wire’s coverage of this year’s Union Budget. We examine everything from the historical and economic context of the budget to the nitty gritty of how the government will implement its promises.
Every Union Budget comes at a difficult time — a time where the government in power is looking to put out fires that have nothing to do with the economy — and every budget usually reflects that. While the meat of each budget largely remains the same, as it grapples with the tension between public spending and fiscal consolidation, the rest is up for grabs: direct and indirect taxes are tinkered with, deductions are given and taken away, while sectoral allocations are a function of political appeasement.
The Wire’s budget coverage plunges into this and more, examining exogenous factors, political motivations and the winners and losers of this year’s Budget.
First off the bat, we have Sanjaya Baru who, in a hard-hitting piece, places the budget within the context of the last three years of the Modi government, identifying why the tightrope that finance minister Arun Jaitley was forced to walk was so slippery this year. Baru explains why the choice between public investment and prudent fiscal management was not easy as it seems and analyses why Jaitley and Modi have chosen a middle path. He closes his argument with these stinging sentences: “It should now be clear that on economic policy and foreign policy there is no major difference between Modi and his predecessors. At the end of the day, the difference between the BJP and its critics is essentially on social and cultural issues.”
The Wire’s Founding Editor M. K. Venu picks up where Baru left off, examining the political messaging of this year’s budget. Are Modi and Jaitley trying to compensate for their neglect of the agriculture sector? And even if they are, will the economics behind the budget and global headwinds allow them to implement it? The details on how this budget will be financed and carried out will determine its success.
The average monthly income of a farmer is a little over Rs. 1,500, begins Devinder Sharma in his incisive and must-read piece on the budget’s pro-agriculture stance. Sharma punches hole after hole in the government’s promise to double farmer income by 2022. The central challenge to Indian agriculture is not productivity, he says, but in ensuring that farmers receive a guaranteed monthly income.
The million dollar question: do the numbers in the budget add up? Saumitra Chaudhuri, a former Planning Commission member, has the details on this. In a much-needed explainer, he points how higher non-tax revenue collections from last year has proved to be the last-minute saviour and now serves as a foundation for much of Jaitley’s arithmetic. Whether this will save our finance minister’s optimistic subsidy calculations remains to be seen.
Big-bang or a whimper? Ajay Bagga takes the view that this year’s budget primarily consists of incremental changes, a work-in-progress so as to speak. Examining the government’s fiscal consolidation plan, the changes in taxes and subsidies and the recovery of India Inc’s NPAs, Bagga takes an optimistic view of the Budget. He believes that “ Modi needs to fashion himself as a decent man doing his best” and temper the “big and bold” expectations that many expect of him.
‘How could the budget ignore something so crucial…?’ is an annual lament. Nobody does it better than Vivan Sharan though, who in a sharp piece highlights how the budget does fails to address India’s slowdown in exports while doing little to intervene in service industries such as tourism which are in desperate need of government attention.
What does the budget mean for India’s poorest? We have three excellent pieces for you on this. The first two should be ideally read together: Bharat Dogra documents beautifully the transition between the budgets of the UPA and the NDA, pointing out how last year’s budget saw a number of cuts to programmes that are highly relevant to the poor. Dogra soberly comes to the conclusion that while pro-poor rhetoric is at an all-time high, the money that is actually allocated simply doesn’t back it up.
In a complementary piece, The Wire’s Sangeeta Barooah Pisharoty examines the budget’s backing of the MGNREGA programme; during his speech Jaitley claimed this year’s allocation for the employment guarantee initiative was the “highest ever spend on it”. The data demolishes this claim and with it the pro-poor image of the Budget. In a third and final piece on the budget and inequality, staff at The Wire round up the perspectives of a number of economists on whether there is a ‘Piketty effect’ – greater sensitivity to inequality… Their verdict? The budget does very, very little in this regard.
Taking a step back and looking at social sector spending, Kiran Bhatty has the definitive article of the day on what this year’s budget means for education, health and minorities welfare. Showing how funding has dipped in most cases, Bhatty comes to the sober conclusion that the social sector is being redefined with a focus on “skills, employment and entrepreneurship over education or basic health”.
Dipa Sinha picks up on what the budget means for health, analysing the problems of providing universal health insurance over universal healthcare. Not only will this primarily benefit for-profit, private insurance players, the implementation of this scheme seems very difficult. Backed up by data and tables, Sinha concludes that relying on health insurance is no substitute for greater investment in building solid healthcare institutions.
Yamini Aiyar has a complementary analysis that examines how expenditure on social sector programmes is now expected to be incurred at a state level and why this might not be such a great idea. More specifically, Aiyar looks the financing instruments behind social sector spending and how the budget treats them this year.
To cap off our analysis of the social sector, we have a visual treat from Jean Dreze and Reetika Khera: one chart and one graph that tell the whole story with regard to education and health funding. The chart tells you, in terms of keywords, how the budget speech betrays a chronic blindness to basic social needs. The graph, on the other hand, illustrates how while spending on the social sector has remained largely flat, funding of the defence sector has shot up over the last three years.
Interested in how the budget has treated the energy sector specifically? Sudha Mahalingam delves into the LPG cylinder mega-scheme, what the budget says about deep sea exploration and the implication of the new clean energy taxes. While certain aspects such as the LPG-giveaway are to be applauded, the fine-print on how clean energy funds will be used and how 100% electrification will be achieved are still awaited.
Featured image credit: Balu/Flickr, CC BY 2.0