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Agitating farmers and jobless migrants: Roadmap to nowhere

Lack of understanding of the spirit of the Indian economy in a situation of resource crunch and the attempt to suppress


Sentinel Digital DeskBy : Sentinel Digital Desk

  |  4 Feb 2021 6:15 AM GMT

Udayan Hazarika

(The writer can be reached at

Lack of understanding of the spirit of the Indian economy in a situation of resource crunch and the attempt to suppress facts about the crucial contemporary issues are the two pillars of the Budget 2021-22. The Budget was prepared on the slippery surface of defending government policies brought into circulation right from the hasty declaration of lockdown at the initial stage of the pandemic to the policy initiatives taken till the third quarter of the FY 21. The Union Finance Minister seems to be directionless in a situation where 36 per cent of the required resources for FY 22 are proposed from borrowing and 24 per cent from sources which have remained unpredictable under the backdrop of pandemic situation [Non debt capital receipt (5%), Non tax revenue (6%) and corporation tax (13%)]. A 36 per cent borrowing is equivalent to Rs 18.49 lakh crore which comprises about 08.3 per cent of the estimated GDP of FY-22. This also means that skipping of the ceiling limit set by the FRBM Act again in terms of both fiscal and revenue deficit. This volume of borrowing coupled with the borrowing in the current year (2021) would force government to cut down its spending in the mid-way of FY 22. However, strange is the fact that in the Budget speech of the FM has not given a slightest hint about the grave situation under which this budget is prepared. In such a situation no sensible government could promise an extra ordinary budget – i.e. a budget "never before".

The current year is a significant year in the history of receipt position of the country. This year, the capital receipt has exceeded the revenue receipt by about Rs 3.4 lakh crore which is unprecedented. As against the budgetary provision of borrowing to the tune Rs 7.96 lakh crore, (this gives a fiscal deficit equivalent to the 3.5 per cent of the GDP), the total borrowing was made to the tune of Rs 18.49 lakh crore which is more than double the budgetary estimates. This would lead to an estimated fiscal deficit to the tune of 9.5 per cent of the GDP in FY-21- a level which is unsustainable. The most unfortunate is the fact that this borrowing is proposed to be spent mainly on the revenue account which will generate on the one hand, huge inflationary pressure on the economy and on the other hand inflict large volume of interest burden on the common people.

On the expenditure front, interest payment shall be the prime agenda of the Government in view of the fact that huge amount of fund has already been borrowed in the current year and the probable borrowings to be made in the next year. That is why the FM is forced to make highest allocation for interest payment which is to the tune of 20 per cent of the total expenditure having the absolute value of Rs 08.09 lakh crore. But in the Budget speech the FM has not given a slightest hint about it. Total estimated revenue expenditure comes to Rs 29.3 lakh crore as against the receipt of Rs 17.9 lakh crore giving rise to a huge revenue deficit of Rs 11.4 lakh crore comprising 5.2 per cent of the GDP. Allocation on account of subsidies has been raised from the level of 6.0 per cent of the current year to 8.0 per cent. But in absolute terms, all subsidies from fertiliser to petroleum have been reduced. Fertiliser subsidy has been reduced by almost 41 per cent from the last year's level while food subsidy has been reduced by about 43 per cent from the last year's level. Proportion of defence spending kept at last year's level of 8.0 per cent but in absolute terms there has been a marginal rise in this context which is Rs 3266 crore. In agricultural sector also there has been a marginal rise in allocation from Rs 1.45 lakh crore of the current year to Rs 1.48 lakh crore. Capital expenditure although is estimated higher that the current year from Rs 4.39 lakh crore to Rs 5.54 lakh crore yet the from the actual expenditure made in the current year which is less than 75 per cent of the estimated amount, it can be said that the whole amount will not be required.

The Finance Minister in her Budget speech has divided the budget proposal under six heads. In the third head i.e. inclusive development for aspirational India, she declared that she will discuss Agriculture and Allied sectors, farmers' welfare and rural India. The first sentence that she uttered in this paragraph is that "Our Government is committed to the welfare of farmers"- which however doesn't appear to be based on real situation where thousands of farmers are still agitating on roads leaving their works in the paddy fields behind – which happen to be their sole earning source.

To defend the government on this count the Finance Minister made a frantic attempt to show that procurement is not only going on but also increasing and farmers are getting increased payments. To substantiate her claim she mentions the total amount paid to the farmers in the year 2010-11 and that of the amount paid in 2019-2020 which have a gulf of difference. But the fact is that such an increase is inevitable as i) the MSP goes on increasing year-to-year basis along with ii) the numbers of farmers benefited. There is nothing new in it but the FM preferred not to indicate the reasons of such increase. This apart, what is most surprising is the fact that the FM has preferred not to mention anything about the three new enactments made by the Parliament and put in force by the Government. This could have been a good platform for the Government to convince the Parliament about the advantages of the enactments over the earlier laws with facts and figures. The Budget thus has preferred to keep silent on this crucial issue.

Total amount budgeted in respect of Centrally-Sponsored schemes under Agriculture is Rs 1.05 lakh crore which is less than 2.0 per cent above the current year's provision. There has in fact been fall in the provision in respect of some crucial schemes like interest subsidy for short-term credit to farmers, market intervention and price support schemes, PM – AASHA, distribution of pulses to States and UTs when compared with the amount budgeted originally in the current year.

Another crucial issue left unattended is of migrant labouerers. The FM has raised the issue at para 110-112 of the Budget Speech. She informed the House that the Government is introducing one-nation one-card policy and that a site will be launched to collect information about the migrant labourers. There was nothing in the Budget for this category of jobless migrants. In the current year, the initial provision for MGNREGA was enhanced to Rs 1.12 lakh crore from Rs 0.62 lakh crore specifically targeting this category of migrant labourers. But the provision has been drastically cut in the Budget 22 by about 0.39 lakh crore. Only Rs 0.73 lakh crore has been budgeted requiring the government to drastically revise in by third quarter. In most of the centrally-sponsored schemes Government made provision only marginally higher than the initial budget provision of the current year. This proves that government remained clueless about the utilization of fund allocated additionally as a result of the pandemic. This forced the government to wait for the arrival of the data and get ready for another exercise for making revised budgetary provision by taking supplementary demands.

From the above, it follows that the budget presented on the 1st of February 2021 can be said to be an inconclusive budget. The government remained undecided about the provisions allocated in each sphere of activities. Allocations made in certain sectors will not be available for want of resources. Enhancing government spending in Indian context cannot save the economy. Government spending so far promotes only a meagre proportion (09% to 11%) of the GDP. The thrust should be on private consumption (56% to 60%) for which purchasing power should lie with working and middle class who are ultimate consumers of the economy.

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