Jaitley’s fifth budget: more of old wine or a new bottle?

Beyond a point, human beings and governments do not spend wisely. They do not have any incentive to do so really, especially if they are allowed to spend money earned by others and with no questions asked. No questions were asked when the Modi Government, in its very first budget, set aside a whopping Rs 3,000 crore for a statue. One suspects no question will be asked this year too if the Finance Minister allocates an equally substantial amount to promote sea planes to sort out coastal India’s transport woes!

Governments can and do sometimes behave like a young, 20-year-old gone berserk when asked to manage the wealth left behind by the late lamented head of the family. A lot of public money is spent under high-sounding schemes. But in the absence of real-time social audits on the ground, much of it, one suspects, is squandered. The Government, for example, set aside Rs 1,700 crore to enhance the skills of 10 million young Indians in 2016. Have those 10 million Indians benefitted and secured gainful employment?

Anecdotal evidence suggests that a large number of Skill Development Centres sprung up with many with links to the ruling dispensation. Media reports have exposed some such centres, which clearly functioned on paper and received government grants on the basis of inflated claims and dodgy paperwork. So, is there any reason to trust the Government to spend such amounts on similar schemes?

Similarly, in 2016, the Finance Minister announced a fund of Rs 20,000 crore for improving irrigation. Nobody is quite sure what has happened to the fund in the last two years but the evidence is that there has been a glut in production of vegetables and other crops which led to last year’s price crash. Was it due to new irrigation schemes? Or are those schemes, as earlier, remain on paper and as a BJP chief minister once famously said, that ponds in his state were being dug over existing ponds.

In 2003-04, the size of the Union Government’s budget was in the region of Rs four lakh crore. This year it is likely to be almost six times as much. But have successive governments spent this revenue wisely?

Visible signs of ‘development’ are to be found in expanding government infrastructure like an exponential growth in the number of central para-military force companies, the national highways, freight corridors, the government embracing new technology and big data and an increase in electricity generation, without corresponding expansion in the distribution networks.

But Parliament, which theoretically has to approve the budget and allow the Government to spend, has long abdicated the responsibility of putting the budgetary demands under the scanner. Most budgetary provisions are either not debated in Parliament at all, or are debated perfunctorily.

The statement of revenue and expenditure (budget) of the Union Government is this time scheduled to be debated for all of four days. If there is no disruption, the budget may get debated for approximately 10 hours in each House, during which time possibly 40 MPs or fewer in each House will get to speak. Most of them will take refuge in rhetoric and many will recite poetry, come up with clever one-liners and an even higher number will possibly repeat what other speakers have already said.

There is little suspense because every statement of revenue and expenditure these days reads more like the manifesto of political parties, full of platitudes and promises, signifying very little. The poor are too busy putting body and soul together to bother about the budget. And the single-point interest of the middle classes is to find out if the budget would allow them to pay less taxes so that they could upgrade to a newer model of car.

There is also less excitement because much of the budget is predictable. The Government will continue to spend the lion’s share on paying salary, interest and pension. There are growing indications that it is spending a lot more on itself, on publicity, on events and so on. After making allowances for all the heads including defence, around 10 per cent of the budget, experts say, will be available to the Finance Minister for new schemes.

While the UPA Government came up with farm loan waivers and the rural employment guarantee schemes (when the budget size was smaller), the Modi Government has announced in the past four years grand schemes and grand allocations, starting with Rs 3,000 crore for building a statue of Sardar Patel, which was to be built by L&T who outsourced much of the work to China. The allocations on building toilets, cleaning the Ganga, skilling India and so on do not seem to have changed much on the ground.

Expect more of such announcements, especially if the Prime Minister and his advisors have made up their mind to hold an early general election this November, along with some state assemblies.

The Economic Survey has provided ample indications that the budget might include both tax relief as well as big funds, schemes, etc. directed at women, a vote bank the Government is going to woo. Announcements alone will carry the momentum over the next nine months before elections are notified. It may also launch ‘bold’ initiatives and pilot schemes like trying out Universal Basic Income in a north-eastern state or in a suitably small state like Goa. It may try to placate the unemployed by raising unemployment allowances or with the announcement that the Central Government would fill up half a million or so vacancies in the next five years.