Will the new Union Budget 2016-17 reflect the Government's new economic philosophy?
Dr Susmita Priyadarshini
In the recently concluded Economic Times Global Business Summit, Prime Minister rendra Modi revealed an economic philosophy in which the Government empowers the people to use their own intelligence, creativity and entrepreneurship to create jobs and incomes and pull themselves out of poverty and prosperity. According to this philosophy, the Government will be an ebler and the people will be the change agents. This is realized after 68 years of state initiated development. Throughout all these years the Government played both the role of a provider and the change agent. Through the Budget and Five Year Plans the government tried to provide several services and basic amenities to the poor and needy but has failed miserably to ensure fundamental entitlement to them. Change remained limited to certain sectors; rather the Government widened the rural urban inequality and regiol imbalance through its planned development process. But the Government cannot give up its role of a provider. Through this role the Government must be able to create an ebling environment for all where the poor will not be sidelined. Following Modi, the RBI Governor Raghuram Rajan has recently unveiled a series of measures to make it easier for startups to raise foreign capital and do business in India. Of course, in recent years, we see a change in the mindset of the middle class .Until a few years ago, middle class parents wanted to see their children as engineers and doctors. Now the educated middle class is creating jobs by starting ventures and using technology. But the most important fact is they are filling up the gaps existing in some government policies. It indicates that the middle class is ready to reap the benefits of the Startup Mission. But the rural India will be benefitted from this mission only if the startup comes to the agriculture sector. The question now is : how will the Government try to create an ebling environment for the poor so that they too get the chance to use their creativity as well as increase productivity. Fince Minister Jaitley in an interview with the Times now editor-in-chief Arb Goswami said that India needed a strong and powerful corporate sector and an equally strong and powerful agricultural sector. Will the budget be able to give justice to both? How can people be empowered? An ebling environment for farmers means an environment in which farmers know their soil, have the best quality inputs, and can experiment with production and avail the opportunity as well as create the opportunity of enhancing productivity. Besides, tency reform is required to recognise the tents as cultivators so that they can avail the institutiol credit and insurance. Tency is informal in India and tent farmers are mostly dependent on money lenders. But the tents are the people who have to bear all the risks associated with farming and therefore they have to commit suicide in case of crop failure. Tency reform through legislation will increase the profitability of agriculture which will encourage investment in agriculture. In the first half of the current fincial year farm sector output grew only by 2%. From the point of view of food security, there is the need to retain rural youths in agriculture. For this, agriculture must be made profitable and the budget should include certain proposals. If given the opportunity our rural youths can replicate the success stories of startup in the farming sector. Second green revolution requires reform in land, farming and seeds. Prime Minister rendra Modi admits that some subsidies are necessary to protect the poor and needy and give them a fair chance to succeed. He therefore hinted that he is not for elimiting subsidies but for ratiolizing and targeting them. The ibility of MGNREGA to dent poverty lies in its implementation including delay in releasing funds. The Rural Development Ministry has identified 152 blocks across the country where the startup Village Entrepreneurship Programme is all set to take off extending the startup movement in the country much beyond select matters. It will really be good if the Ministry can create an ecosystem for rural population to be able to start their own enterprises for livelihood. There is immense need for skilling in rural areas. A welcome initiative has already been started to tackle the problem of unemployment. The Labour Ministry has tied up with more than half a dozen companies in the country for its recently launched career portal, the tiol Career Service. Barely half of the working population aged 15 and above is employed in India. In order to give all the people the opportunity to use their creativity and intelligence the budget must include measures to address the problem of inequality. Inequality has several manifestations and severe consequences in India. According to a report released by Credit Suisse in October, 2015 the richest 1% Indians owned 53% of the country’s wealth, while the share of the top 10% was 76.30%. That means 90% of Indians own less than a quarter of the country’s wealth. This condition of inequality is, in fact deteriorating. According to Credit Suisse, in 2000, the share of the richest 1% in tiol wealth was 36.8o% and that of the 10% was 65.9%. It confirmed the findings of the 6th round of the NSSO in 2011-12.The monthly expenditure of the poorest 10% of the rural population rose by 11.3% in 2011-12 compared to the last survey in 2009-10 while that of the richest grew by 38% over the same period. What is more important for India is the inequality of opportunity. This manifests itself in various forms defined by various factors like caste and religion. The 2015 HDR presenting information for 2014 placed India at 130th in ranking of 188 countries. The 2015 HDR estimated that the loss in overall human development due to inequality was 28%.It shows how the Government has failed to confer the benefits of income it earned to all. In order to create an ebling environment all the minorities should be made equal partners in India’s progress. But the recent incidents of the University of Hyderabad and IIT -Madras have compelled us to think otherwise. During his recent visit to India Thomas Piketty, the author of the best - seller “Capital in the Twenty - first century” said that the elite would have to start paying more taxes to meet its huge challenges of inequalities. For this tax - to GDP ratio which is at present between 10 to 11% must be increased to 30%. Income inequality can be addressed through wealth and succession tax. Will the Government dare to tax the rich and extend the tax base? Will the Government tax the rich farmers on agricultural income? The Union Agriculture Minister himself admitted the inequality existing in the agriculture sector, “ our small farmers have not been able to reap benefits of India’s growth , technological advancement and overall development as they lack bargaining strength and possess limited awareness about market condition”. Due to lack of enough marketable surplus and cash they cannot take the advantage of future market to protect themselves from seasol price variation. The poor in India has a story of long years of deprivation. For most of them, safe drinking water and health care are also like stars of the distant sky. Public health budget in India is still less than 1 %. Will it be increased this time? There is the need to increase the delivery system in health and education. As the Government has promised to ratiolize the subsidy, it can take an important decision in this respect. Rs. 25,000 crore saved through shifting food subsidy to Direct Benefit Transfer can be fruitfully utilized to import pulses and distribute it at a low price to its thousands of poor. This will be a great step forward to reduce protein deficiency. From the perspective of maintaining good health, implication of falling protein intake is far more serious than the declining calorie intake in urban diets. The problem has its roots in our agriculture and food security policies which encourage neither to increase production nor to increase consumption of pulses. One question still remains: Will the Government give up its old habit of using public money to buy voters instead of using those for bring permanent changes to the lives of the poor? Are the state Governments ready to give up this bad habit? Recently the Supreme Court has refused to give it’s nod to Assam Chief Minister Tarun Gogoi’s multi crore welfare - an electoral gimmick, on the ground that Government should identify the beneficiaries first. The benefits were allegedly garnered by members of people close to parties instead of reaching the beneficiaries. Since taking charge the central Government has been expressing its love for private investors. But private investment cannot be at the cost of the poor. Some issues are deliberately kept alive (by all the political parties) in our country so that poll gimmicks can be announced to lure voters. So, some problems have little chance of being solved. Permanent solutions of those can be expected if the people themselves become the change agent. The significance of this philosophy of an ebler lies here!
(Dr. Susmita Priyadarshini is the Assistant Professor, of Economics, DCB Girls’ College, Jorhat, Assam and can be reached on Ph: 9957004225)