Various sections of society — farmers, labourers, businessmen, corporates, government employees, and so on — await the Budget presentation every year. This puts a lot of pressure on the Finance Minister, so Arun Jaitley’s choice to present a stable Union Budget, when experts expected fireworks in the wake of demonetisation and the Assembly Elections, should be seen as an exercise of prudent policymaking rather than a failure.
However, in its attempt to appear pro-poor, the Budget failed to provide immediate relief to a large chunk of the population after the Government’s demonetisation move on November 8. The so-called largest-ever allocation of ₹48,000 crore to MGNREGA is only slightly higher than last year’s expense of ₹47,500 crore. Additions to the NABARD fund for irrigation schemes and dairy development, and the push given to the e-NAM market are commendable structural reforms. But these announcements are long-term policy initiatives; a lack of immediate strong medicine to counter the effects of demonetisation (in the form of cheaper seeds, fertilisers and farming equipment, and so on) has failed to address the cloud of uncertainty looming over 60 per cent of India.
Social sector
The Budget also failed to address the social services sector adequately. While addition to post-graduate medical seats, setting up of a National Testing Agency and Innovation Fund provide some encouragement to the secondary education space, nothing, in particular, makes up for the lost momentum in primary education. There are no measures for training teachers, checking dropout rates or the quality of education in primary schools.
The healthcare sector saw a reduction in the IMR and MMR (infant and maternal mortality) rates as per the Economic Survey , but no other concrete steps were taken. The only move hailed by health experts is the conversion of 1.5 lakh health sub-centres into health wellness centres. The announcement on the two new AIIMS facilities was much needed, but plans to eliminate diseases like kala-azar by 2017, leprosy by 2018 and tuberculosis by 2025 lacked planning. All-in-all, mother and child healthcare received the least attention compared to some of the previous Budgets.
On the other hand, the increase in infrastructure expenditure, ease for financial institutions and reduction in tax rates for MSMEs has definitely kept the spirits of the business community high, as is evident from the stock market reaction. The focus on a multi-modal transport system post-amalgamation of the Railway and General budgets is a step in the right direction. The abolition of FIPB was also a good move and doubling the lending target under PM Mudra Yojna will increase bank assets now that banks are flush with cash after demonetisation. It is note-worthy that the Government has focused on setting up a Computer Emergency Response Team for the financial sector (CERT-Fin) in the wake of banking failures and security compromises.
Digital India
In a push to the Digital India mission, a ban on all cash transactions above ₹3 lakh, setting up more PoS machines, and Aadhar Pay were announced. Withdrawal of tariffs on digital transactions, a push to the BHIM app and setting up a payments regulator are also good initiatives.
The Budget has wisely built on the theme TAC (Transform, Energise and Clean) and tries to stabilise the economic and political environment. While business, infrastructure and financial services received a good push, allocations to agriculture and MSME sectors fell short.
The Government’s prudence in controlling the fiscal situation while praiseworthy, needs to be analysed because of the extraordinary circumstances the world and the country finds itself in.
(Nitesh Goyal is a first-year MBA student at Indian Institute of Management Bangalore)