Intro: With such a broad paradigm for growth, the India story should take a flying leap.
The Modi Government has drawn up a roadmap for boosting public investments in infrastructure, facilitating ambitious programmes like Make in India, Green India, Skill India and as well as providing safety nets for the poor and the common man, despite the “squeeze” in the fiscal space.
The squeeze in the central government’s fiscal space has been caused due to implementation of the recommendations of the14th Finance Commission whereby 62% of the total tax receipts, including the divisible pool of taxes, grants and plan transfers, would be devolved to the States. Also the current scheme of transparent coal auctioning will accrue more benefits to coal-bearing States. Hence, the Union government expects the States to assist in some of its welfare schemes in the spirit of cooperative federalism.
Union Finance Minister Arun Jaitley, while presenting the Budget, made his intention clear to use the Jan Dhan Yojana-Aadhar platform and Mobile phone (called JAM trinity by the Economic Survey) to facilitate direct transfer of benefits in a leakage-proof, well-targeted and
cashless manner.
The Union government, however, has not attempted much to phase out subsidies, as was expected. Subsidies on food and fertilisers have been increased marginally, factoring in the cost of production; so also subsidies on interest. The petroleum subsidy has been drastically reduced from Rs 60,270 crore in 2014-15—revised estimates to Rs 30,000 crore in 2015-16—budgetary estimate, while other subsidies have been reduced from Rs 1,631.55 crore to Rs 1,520 crore.
The government has not yet proposed winding up of any welfare scheme. It has identified two major factors critical to agricultural production, namely, soil health and irrigation. Accordingly Rs 5,300 crore has been allocated to support micro-irrigation, watershed development and Pradhan Mantri Krishi Sinchai Yojana. It has assured to create a Unified National Agriculture Market. For boosting job augmentation in rural areas Rs 34,699 crore has been allocated under Mahatma Gandhi National Rural Employment Generation Scheme.
Further, for developing rural infrastructure Rs 25,000 crore has been allotted to the corpus of Rural Infrastructure Development Fund (RIDF), Rs 15,000 crore for Long Term Rural Credit Fund and Rs 15,000 crore for Short Term Regional Rural Bank Refinance Fund. Government has set an ambitious target of disbursement of loans to the tune of Rs 8.5 crore to farmers by banks.
Financial inclusion of the common man is government’s key agenda for creating safety nets. It boasts of the success of roping in over 12.5 crore families in 100 days under Prime Minister’s Jan Dhan Yojana, wherein one can open account against zero balance and also have insurance
benefits.
The Budget proposes setting up the Pradhan Mantri Suraksha Bima Yojana to cover accidental death risk of Rs 200,000 for a premium of just Rs 12 a year. Atal Pension Yojana will be launched to provide a defined pension, depending on the contribution and its period, and government will contribute 50% of the beneficiaries’ premium limited to Rs 1,000 each year for five years in new accounts opened before the end of 2015. The third social security scheme to be launched is Pradhan Mantri Jeevan Jyoti Bima Yojana which would cover both natural and accidental death risk to the tune of Rs 200,000. The premium will be Rs 330 per year for the age group 18-50.
There are unclaimed deposits in pension funds, such as about Rs 3,000 crore in PPF and about Rs 6,000 crore in EPF. The government intends to use these as corpus to set up a Senior Citizen Welfare Fund which will be used to subsidise the premiums of vulnerable groups such as old age pensioners, BPL card holders, small and marginal farmers.
Allocation of Rs 30,851 crore has been made for welfare schemes of Scheduled Castes, Rs 19,980 crore for Scheduled Tribes, Rs 79,258 crore for women. For small businesses run by SCs, STs and other backward class, Micro Units Development Refinance Agency (MUDRA) Bank will be set up with a corpus of Rs 20,000 crore and credit guarantee corpus of Rs 3,000 crore. It will assist the beneficiaries through Pradhan Mantri Mudra Yojana.
The government has selected infrastructure as a priority area for investment and has increased outlays for roads and gross budgetary support to railways by Rs 14,031 crore and Rs 10,050 crore respectively.
Ashok B Sharma (The wrtier is senior columnist)
