UPA’s budgets: Populist or pro-poor?

The UPA government came to power on the promise of caring for the ‘aam aadmi’ rather than for the shining few.

Shafey Danish

Even a cursory look at the budgets presented by the UPA government would convince us that it has tried to fulfill its promise of acting for the good of the common man. The budgets, over the course of five years, have consistently raised fund allocation to education, healthcare, social schemes and mid-day meal schemes, and other such scheme that is connected to the poorer sections of the Indian populace. Every year, without exception, the budgets were praised for their focus on the common man. The last budget, presented in 2008, was especially tilted heavily towards the middle class. Another driving concern for the Finance Minister has been a return to fiscal prudence. In his last budget presented in 2008, he managed to reduce the fiscal deficit to 2.9% from a high of over 4% at the beginning of his tenure. Union budget 2005 hiked expenditure on education by 31.5% and on healthcare by 22%. In his budget speech the Finance Minister urged banks to lend more to the food processing sector, a sector employing a large section of India’s population. The budget that year also placed special focus on the textiles and irrigation sectors, other high employment area. The budget also set a target of 120 million job generation in these sectors. Banks were asked to raise their credit limit to the agriculture sector by 30% in accordance with the goals of the Common Minimum Programme. Side by side, the budget set a clear target of bringing in fiscal responsibility by narrowing the deficit, setting a target of reducing it to 3.8% of the GDP by the next year. In February 2007, possibly the best year for the budget, Chidambaram used increased tax collections to invest in key growth areas. He hiked planned expenditure in agriculture to almost a third of the entire budget. The Finance Minister also used the budget speech to introduce the ‘Aam Aadmi Bima Yogna’ targeted at the landless rural households. The scheme was aimed at providing death and disability cover through LIC to poor households. Investment in the social sectors got a boost with spending being hiked by 22%. Laying stress on making cheap farm credit available to farmers, Chidambaram set a target of bringing additional 5 million farmers within the ambit of the banking system. This step was a necessary corollary to freeing the farmers from the web of rural moneylenders. The budget also increased allocation to education by a massive 34.2%. Chidambaram levied a 1% education cess to fund this huge outlay. The last budget of the UPA, presented at a time when rising farmer suicides were finally coming to the notice of the media, became famous for giving a massive Rs 60000 crore loan waiver to the farm sector. At the same time, the government continued its policy to hike spending in sectors like education and health, hiking expenditure in the sectors by 20% and 15% respectively. The budget also gave relief to the middle classes by extending the tax exemption limits. Social sectors also saw a hike in outlays. Bharat Nirman program allocation was hiked from 24,603 cr to Rs 31,280 cr. Nehru Urban Renewal Mission outlay was hiked to Rs 6,866 cr. UPA’s flagship programme NREGS was extended to all the 596 rural districts. The 2008 budget was an all in all populist budget with focus on delivering to the electorate. Looking at the measures taken by the UPA government one fails to understand the record number of farmer suicides taking place in villages which are symptomatic of a larger, deeper distress. The streets and empty spaces in any large cities are filled with migrants who have been unable to find a home. Despite record allocation to the healthcare sector one is unable to see any improvement in the healthcare infrastructure. Good medical attention remains expensive and out of reach for the greater part of the populace. Education still remains a grey area. While the number school enrollment has gone up, the drop out rate remains a matter of concern, not to speak of the poor quality of education in government schools and the glaring problem of teacher absenteeism. NREGS the flagship programme of the UPA, has been extended to all the 596 rural districts, yet it has met with some success only in Rajasthan. In rest of the states, the scheme has become mired in corruption and controversy as to how much actual good it is doing. Farm credit seems not to have reached those for whom it was actually meant. Farmers continue to borrow from local moneylenders. The benefit, it seems, has mostly gone to the big landlords. The UPA government has also been blamed to not taking adequate measures to contain inflation that reached double digits during the later half of 2008. While a good part of the problem was due to the rise in commodity prices, including oil, the government’s flawed policies also deserved some blame. It had followed a consistent policy of letting the buffer stocks deplete. It is imperative that the UPA government, apart from framing policies, also works on bettering the implementation mechanism so that their effect is felt on the ground.