A budget that doesn't invest in human capital
While there is an overwhelming emphasis on physical infrastructure, the budget has neglected social infrastructure, writes Darryl D’Monte.ht view Updated: Jul 22, 2014 23:15 IST
The rail and Union budget make it clear that the NDA government is gung-ho on building infrastructure, which, it believes, is the best way to revive the flagging economic growth rate. This, for the most part, involves bricks, mortar and steel, not to mention mining for coal and other minerals. The total allocation for infrastructure for the Centre and states is Rs 1,52,966 crore. An indication of this thrust is the setting up of a Rs 100-crore National Industrial Corridor Authority in Pune.
The urban bias is evident. As Narendra Modi promised in his campaign, the government will build 100 “smart cities”, as satellites of larger cities — à la Navi Mumbai — and modernise existing mid-sized cities, for Rs 7,060 crore. A smart city will have all essential services — roads, traffic, electricity, water and sanitation — connected through a technology platform. This will require cities to be ‘ring-fenced’ through close-circuit cameras and the like. Is this a priority for cities or shouldn’t the creation of jobs and the improvement of slums be?
The government is particularly keen on constructing roads. The National Highways Authority will get Rs 37,880 crore for building 8,500 km in the current financial year, or 23km a day. This is a genuflection to the Golden Quadrilateral, which former Prime Minister AB Vajpayee initiated in 2001, connecting the four major metros, the fifth-longest highway network in the world at the time.
In Mumbai, the Congress-dominated state government expects that the budget could prove a harbinger for big-ticket schemes such as the coastal road from Nariman Point to Versova and the trans-harbour sea link. Each kilometre of the coastal road will cost Rs 250 crore. In any urban area, this predilection for highways caters to only the tiny percentage of motorists. Delhi is already the most polluted city in the world. In rural areas, road haulage rather than rail increases dependence on fossil fuels, which adds to global warming.
Foreign direct investment will be permitted for bullet trains and other railway infrastructure, with a Diamond Quadrilateral high-speed network. Metros will be promoted, starting with Lucknow and Ahmedabad. But to imagine that metros can provide mass transport in our context is fanciful. The cost of the second line in Mumbai has almost doubled in six months to Rs 4,300 crore. And for the first route, Reliance Infrastructure is asking for Rs 40 as the fare for 11.4 km, which puts it out of reach of most.
The budget has also revealed the shift to public-private partnerships (PPP). According to Union finance minister Arun Jaitley, India comprises the largest PPP market in the world, with over 900 projects in various stages of development. These include infrastructure like airports, ports and highways. He promised quick redress to iron out contractual glitches.
The revival of special economic zones (SEZs) is disquieting, because these had been discredited during the UPA regime. SEZs are not charged many taxes and receive several concessions. Critics accuse these of being a thinly-disguised movement to grab land, and in the process the exchequer loses crores. This goes in tandem with the reappraisal of the Land Acquisition Act, one of the UPA’s prominent laws. The rural development ministry has now sent a note to the Prime Minister’s Office, suggesting amendments such as reducing the requirement that 70% of landholders have to agree to sell. It has also advocated that the Social Impact Assessment procedure should be restricted to large or PPP projects, which would make acquisition procedures for smaller projects opaque.
While there is the overwhelming emphasis on physical infrastructure, the budget has neglected that other, more significant, counterpart — social infrastructure. The UPA’s flagship scheme, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), has got only `33,364 crore this year — a mere Rs 364 crore over the previous year. With drought staring the country in the face, this deficit will cause widespread distress. Fortunately, the food subsidy allocation has been increased from Rs 90,000 crore last year to Rs 1,15,000 crore.
The allocation for education as a whole has gone up by 11%, but there is a tilt towards elite institutions like the IITs and IIMs, which receive around Rs 7,100 crore out of the outlay of Rs 16,900 crore on higher education. Thus, of the total outlay of Rs 68,728 crore, higher education gets a quarter, whereas — as sociologists have been pointing out for ages — the real need is for spending on primary education.
Not that the UPA, despite its rhetoric and the Right to Education Act, was a shining example of social commitment. As economist Jean Drèze cited on the eve of the budget from the latest World Development Report, public spending on health and education is only 4.7% of GDP in India, compared with 7% in sub-Saharan Africa. Even the average of ‘least developed countries’ is 6.4%. Expenditure on the Sarva Shiksha Abhiyan was halved between 2012-13 and last year, according to the Accountability Initiative of the Centre for Policy Research.
However, the instincts of the UPA were right in advocating rights to work, education, food, information and of small rural landholders. That it failed to project these in the polls and met its nemesis is now history. The question now is whether to emulate the lopsided ‘Gujarat model of development’, with its poor human indices, or a rights-based approach. Should we be concentrating on building physical capital or human capital? Or, as has been formulated, should ‘E’ stand for efficiency or equity?
Darryl D’Monte is chairperson, Forum of Environmental Journalists of India (FEJI)
The views expressed by the author are personal