Has the Arun Jaitley Budget met expectations? The view that it lacks any Big Idea is a muted response. It is not in everybody’s luck to encounter each year a Victor Hugo moment of a Big Idea. But what is wrong with the big idea promoted by the Budget of “nurturing an aspirational rural society”? And this is what it seeks to do. Budgets are about opportunities and making credible choices.
First, the choice between adherence to fiscal rectitude versus tweaking the numbers. Eschewing the easier route of re-calibrating the path of fiscal consolidation reinforces credibility. Off balance sheets and extra-budgetary resources combine the virtues of fiscal consolidation with enhanced public investment. Deliberating on the preferred path of fiscal consolidation and debt to GDP ratio, and an acceptable methodology for cyclical adjustments deserve a review. The proposed committee would enlighten us on these.
Second, the arithmetic of the Budget is a credible one. Broadening the definition of disinvestment to include standalone asset sales and the projections from sale of spectrum are not unrealistic. Using disinvestment to finance infrastructure is a form of asset-swapping.
Third, doubling farm incomes by 2020 is a daunting challenge, implying faster growth for both farm and non-farm sectors. The allocation of Rs 2.78 lakh crore to Gram Panchayats and municipalities will enable this tier of governance to do what was expected in the 73rd and 74th Constitutional Amendments. Similarly Rs 38,500 crores for MGNREGS, 100% village electrification, enhancing reach of agriculture and the long-term Irrigation Fund with improved water management and agricultural practices and market access to farmers through e-marketing, have many positives. Too many still live off agriculture even as its contribution to GDP has shrunk. Creating low to medium intensive agriculture hubs, non-agricultural livelihoods patterns, and synergising gains through orderly urbanisation, needs action beyond the budget.
Fourth, the Budget recognises that we need to improved outcomes from our education system. Sarva Shiksha Abhiyan’s allocation has been enhanced, 62 Narvodaya Vidyalas will cover uncovered districts and a Higher Education Financing Agency will benefit sector as a whole. The setting up of 10 public and private institutions for world-class teaching and research is aspirational. It will undo the ignominy of India having negligible institutions reckoned as centres of global excellence.
However, a regulatory culture and enabling ecosystem for education needs creative restructuring. Improving teacher training and quality of pre-parental education is necessary to improve outcomes at the primary and secondary levels. Similarly, centres of educational excellence will need autonomy and creating a milieu in which innovations flourish. These need painstaking reforms beyond the calculus of financial provisions.
Fifth, growth is a necessary but not sufficient condition to harness employable youths. Skilling India through 1500 Multi Skill Training Institutes, promoting entrepreneurship among SC/ ST and women in the Stand Up India initiative will encourage small and medium entrepreneurs.
Unfortunately, employment coefficients have remained muted. An era of jobless growth is a prelude to social unrest. Job creation to absorb both older and new entrants — 12 million per annum— is fundamental. The hiatus of micro, small, medium, large, for job creation is a false one. We need them all. We need far greater compact between the Centre and the States, notwithstanding competitive federalism. Changes in the regulatory framework, particularly for land and labour, are inescapable.
Sixth, the health of our financial system remains worrisome. It is to the credit of the finance ministry and RBI to nudge greater transparency on impaired assets. Patronage driven portfolio decision by banks, encouraged by successive governments, will be sticky to undo.
The commitment for Rs 25,000 crore towards recapitalisation of banks, amendments of the SARFAESI Act 2002 to enable an asset reconstruction company to hold 100% stake and allow non-institutional investors in securitisation receipts are positive steps. The Indradhanush programme on autonomy of banks and the constitution of a credible Bank Board Bureau are important initiatives.
Seventh, improving governance through synchronisation of Jan Dhan Yojana, Aadhaar and mobile (JAM) platforms is a creative initiative. The proposed enactment of the National Identification Authority of India Bill 2010 as a Money Bill, and the separation of issues of privacy, citizenship/nationality while providing a neutral technology platform can be a game changer.
Given the success of the LPG, extending its reach to fertilisers and subsequently for agro-based programmes and the now rationalised Centrally Sponsored Schemes (CSSs) will minimise leakages and multiply benefits to beneficiaries.
Finally, there are other initiatives like a statutory basis for the Monetary Policy Committee, Code on Resolution of Financial Firms and Financial Data Management Centre. Among others, inter alia, they will enhance trust between RBI and Finance Ministry, ensure symmetry between monetary and fiscal policy and provide impetus to financial sector reforms. Incidentally, eliminating the distinction between plan and non-plan expenditure will improve asset maintenance while optimising benefits from past investments.
This budget galvanises a new aspirational rural India. It would be applauded by economic historians. The ‘Achhe din’ is a process not a product. It is a departure, not an instant arrival. That process and departure has now begun in earnest.
NK Singh is a member of the BJP and a former Rajya Sabha MP. The views expressed are personal.