But what's in store for the poor?

The Budget will mean little to millions of people FM wants to help. Survey Highlights
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Published on Feb 28, 2006 10:44 AM IST
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None | ByAgencies, New Delhi

When Finance Minister PC Chidambaram tells Parliament on Tuesday how much money he has in the Budget to aid millions of poor, it will mean little to many of the people he aims to help.

Outside city-based economic boom, people like Bala, gathering sugarcane by hand on a farm 50 km outside New Delhi, do not even have electricity -- let alone a television -- to bring them the news.

At Nangla Jamalpur's school, classes are held in the open because lighting is intermittent while the three outdoor toilets teachers and pupils use have been bricked up to keep other villagers out. The school's caretaker has been let go due to lack of funds.

For Bala, a widow, the ruling Congress party-led coalition's drive to improve roads and sanitation in Asia's third-largest economy, and its policy of allotting billions for health and education, have made little or no difference.

"I barely earn Rs 50 to 60 a day. I have four kids to look after," she said. "Budget? Sir, I have not heard about it."

Analysts say the Finance Minister will once again announce measures to improve the lives of the common man when he makes his budget speech for the fiscal year starting on April 1.

"Lack of a proper delivery system and very slow implementation of budget proposals means that there is a huge wastage of resources," said DH Pai Panandikar, president of private economic think-tank RPG Foundation. "This means that the money does not reach the real beneficiaries."

Social divide

A year ago, Chidambaram unveiled plans worth billions of dollars aimed at India's 260 million poor. Last year the communist-backed government also introduced a scheme which guarantees 100 days of work a year to every rural household.

The scheme was officially launched in February, but even news of its existence has not trickled down to all of those who need it the most.

"Nobody has told us anything. No one comes to our village," said 60-year-old Vidyapati, who also lives in Nangla Jamalpur, a village of 3,000 people off the road from Delhi to the Himalayas.

Economists say India urgently needs to improve rural infrastructure to prevent the growing wealth gap from creating social unrest and to maintain the economy's 8 per cent growth.

Failure to improve roads and ensure steady power supply could also hurt demand for industrial goods since a large chunk of the economy is driven by rural demand.

"If you don't improve power, roads and other infrastructure in rural areas then the structure of demand for industrial goods such as televisions and transport equipment will fall," said Pronob Sen, economic adviser to India's Planning Commission.

Chrome offices, open drains

India's town-country divide has widened since economic reforms began in 1991, a problem reflected in the 2004 election which saw the rural poor vote in large numbers against the ruling Bharatiya Janata Party.

Swanky glass-and-chrome office blocks and shopping malls are common in India's cities. In contrast, an open drain cuts in front of Bala's nearest hospital and sewage stagnates behind it. It has four beds and two doctors, who between them see 250 to 300 patients a day.

More government spending would help. But after 21 months in power, Congress's revenue-raising reforms have progressed very slowly, partly because its communist allies have blocked the sale of stakes in state-run firms.

Economists say reforms in agriculture, retail and real estate are needed urgently to generate more jobs and stem the flow of the rural unemployed to already-overcrowded cities.

"The government should allow contract farming, take steps for large investments in agriculture and improve rural connectivity," said Tapan Kumar Bhaumik, chief economist with India's largest conglomerate, Reliance Industries Ltd.

"There is no room for rhetoric. It's time to implement and consolidate reforms which impact the lives of the rural poor."

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