Drawing-room ennui

The average family’s main concerns are education, jobs and income for its children. Yet the HRD ministry gets only 4% of the total budgetary expenditure of Rs 16 trillion.

We are treated to two blockbuster TV shows in late February. On the last Monday morning of the month, we watch the Oscars and the last day brings us the Union Budget. This year, the outcomes of both these spectacles were widely predicted well in advance, but we watched them live anyway. We knew the Oscar winners, and found the show dull.

We knew what finance minister P. Chidambaram was likely to say and sat through 100 minutes of his speech with waning interest. Benjamin Franklin long ago pointed out the inevitability of death and taxes. We are resigned to that and look to the Budget only to see whether our lot would be any worse March onwards.
Budget 2013 did not impose additional burdens on most people. Those in the lowest income tax bracket of Rs 2 lakh to Rs 5 lakh a year will enjoy a small relief of Rs 2,000 a year. Fuel prices would keep increasing, but that is an accepted eventuality. We can all indulge in a bit of schadenfreude because the super rich earning more than Rs 1 crore a year would pay a 10 per cent surcharge on their income tax, all 42,800 of them. They will also pay higher duties on their imported cars and yes, even yachts, as Mr Chidambaram assured us.
But does that ease the pinch of prices rising almost daily? The pre-Budget Economic Survey had mentioned inflation, especially food inflation, as a major cause of concern. The survey also pointed out what the aam aurat has been pained to do regularly: cut her discretionary consumption to ensure sufficient food on the family table. Prices of all things have increased at near double-digit rates over the last eight years, but those of food have risen even faster. Compared to other goods, food has become 40 per cent more expensive over this period. Naturally, households have had to recast their expenditure drastically.
The mounting budgetary deficit is the main cause of inflation. The gap between the supply and demand of food items, especially pulses, oils, vegetables, milk, meat and eggs has been increasing and has added to the inflationary pressure. Logic demands that steps be taken to control the deficit and boost the production of these commodities.
Mr Chidambaram did not cross the “red line” of 5.3 per cent of the gross domestic product (GDP) as the budgetary deficit this year through a severe control of government expenditure initiated September last. But despite the government’s claims of bringing down the increase in the wholesale price index to below seven per cent, food prices have not shown any appreciable deceleration.
The question of inadequate supply needed to be addressed through greater and urgent emphasis on research and development. The Budget allocates Rs 3,400 crore for this. That amounts to less than one-quarter of one per cent of the value of agricultural production. How is that supposed to make an impact on increasing supplies and bringing down prices? Businesses are routinely advised to set aside one per cent of their turnover for research and development.
Mr Chidambaram rightly assumed that he had to address women in particular. He proposed a women’s bank in public sector, promising a share capital of Rs 1,000 crore. He addressed the security issues by proposing a Nirbhaya Fund. He added funds for women’s development, integrated child development, better nutrition, and so on. It is a safe bet that most of these token allocations would not be fully used and come next Budget season, the finance ministry would have unspent money to meet that year’s deficit target.
The average family’s main concerns are opportunities, education, skill development, jobs and income for its children. Mr Chidambaram himself eloquently confirmed this. Yet the human resources development ministry gets only four per cent of the total budgetary expenditure of Rs 16 trillion. The nominal increase of 17 per cent HRD allocation over previous year might sound impressive, but the entitlement-and-relief oriented programmes of the ministry of rural development get a whopping increase of 47 per cent! And there is a provision of Rs 10,000 crore for the Food Security Bill, in addition to the regular food subsidy. Notwithstanding Mr Chidambaram’s image as a no-nonsense tough reformer, the Budget truly reflects the priorities of the United Progressive Alliance heading towards a difficult election: perceived vote bank talismans trump essentials of long-term transformation.
Mr Chidambaram was very persuasive when he said that there was a compelling moral case for growth to bring about equity. That equity for the household is not having to worry about the price of onions or milk and being able to send children to schools which provide affordable education leading to a decent job. The Budget may address the concerns of the next election, but does little to look to the next generation or the one thereafter. Is that enough even to warrant the optimism of the Economic Survey and
Mr Chidambaram that the “worst is over” and India would clock a growth of six-plus per cent next year?

The writer taught at IIM Ahmedabad and helped set up the Institute of Rural Management, Anand. He writes on economic and policy issues.

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