Budget for whom?

The Finance Ministers of India: First row: R.K. Shanmukham Chetti, John Maththai, C.D. Deshmukh, T.T. Krishnamachari, Jawaharlal Nehru and Morarji Desai. Second row: Sachindra Chaudhuri, Indira Gandhi, Y.B. Chavan, C. Subramaniam and H.M. Patel. Third row: Charan Singh, R. Venkatraman, Pranab Mukherjee, V.P. Singh, and Rajiv Gandhi. Fourth row: N.D. Tiwari, S.B. Chavan, Madhu Dandavate, Yashwant Sinha, Manmohan Singh and P. Chidambaram. -

While the Union Budgets are growing richer, the poor are becoming poorer. How long will it take for the fury of the long-suffering masses to explode?

THE budget of a government is something more than a mere statement of financial transactions for a year. It is an operational document through which the executive and the legislature decide and act on estimates about programmes to be undertaken, expenditures to be incurred, resources to be raised and distribution to be made of the benefits.

In a democracy, the state is primarily responsible for implementing social welfare schemes and hence the public expenditure should be adequate for providing the people with education, public health, water supply, sanitation and social justice. As the poor form a formidable majority of the electorate, there is also a political compulsion to make electoral assurances about giving high priority to meeting their needs. The party or the coalition of parties coming to power initiates programmes to redeem their commitments and to sustain the popular support through the process of budgeting and planning. Budget is a tool of action and accountability for politicians in general.

Thus, Budget and planning become political documents. All political actions compete for Budget resources and distribution of benefits. Let us see how far the successive Union governments in India since 1991 have succeeded in fulfilling the assurances given and implementing the schemes and targets announced from time to time towards specific social services.

Supplanting the Nehruvian model of growth and industrial policy, the P.V. Narasimha Rao government introduced a new model of liberalisation, privatisation and globalisation in 1991. The new economic policy relied on the strategy of market economy to cut the Gordian knot of chronic poverty of the people. In his 1991-92 Budget speech, Finance Minister Manmohan Singh declared: "Markets can only serve those who are part of the market system. We need direct credible programmes of direct government intervention focussing on the needs of these people. In a society where we lack drinking water, education, health, shelter and other basic necessities, it would be tragic if our productive resources were to be devoted largely to the satisfaction of the needs of a small minority."

Detailing the budgetary provisions, Manmohan Singh paid special attention to increasing the allotment for education: "Budget support provided by the Central government and the State governments are an important source, but cannot continue to remain the only source. I am raising the allocation for education from Rs.865 crores in 1990-91 to Rs.977 crores in 1991-92."

Though the Finance Minister was committed to "direct government intervention focussing on the needs of these [poor] people" and made enhanced allotments every year for `Education', the Ministries concerned always manoeuvred to cut down the expenditures on education and other social services wherever possible, in the name of economy. Even in the first year of his Budget for 1991-92, wherein Manmohan Singh raised the Budget Estimate for Education to Rs.970 crores, the Revised Estimate at the end of that financial year was found to have been reduced to Rs.905 crores.

India was one of the foremost countries, especially among the developing countries, to emphasise the objectives of Universalisation of Elementary Education (UEE) and Universal Adult Literacy at the 1990 World Conference on Education for All (EFA) in Thailand. At the EFA summit in Delhi in December 1993, the Narasimha Rao government reaffirmed India's commitment to EFA through the Delhi Declaration and Framework of Action. It said India was committed to "ensuring a place for every child in a school, consolidating efforts towards basic education for children, improving and extending literacy and adult education programmes for all people, according highest priority at the national level and at others levels and ensuring that a growing share of national and community resources is dedicated to basic education".

At a special conference convened in February 1994, the Chief Ministers of all the States and Union Territories decided that coordinated and concerted action would be needed on the part of the local community, State governments and the Central government for the mobilisation of resources for education so that there would be a substantial increase in Budget allocation so as to accord higher priority to primary and adult education.

The Narashima Rao government was succeeded by the coalition government of H.D. Deve Gowda. Its Finance Minister P. Chidambaram defined the basic objectives of his government in his 1996-97 Budget speech as: "To remain steadfast on the course of economic reforms and liberalisation aimed at accelerating economic growth. To address the concerns of the poor and provide them with basic minimum services in a time-bound manner."

The National Agenda for Governance (NAG) of the Bharatiya Janata Party-led National Democratic Alliance, which came to power in 1999, declared that the alliance would `continue with the reforms process, giving it a swadeshi thrust' and assured `Food Security for All', `Drinking Water for All Villages in five years', `Health for All', `Education for All' and `Housing for All'.

Presenting the Budget for 1999-2000, Finance Minister Yashwant Sinha affirmed that the Budget strategy of his government was, among other things, to "revitalise and redirect public programmes for human development, encompassing food security, health care, education, employment and shelter". However, there was no significant attention or progress in respect of welfare schemes for `all' as enunciated in the NAG. The Agenda proved to be notional.

The general elections of 2004 saw the formation of the Congress-led United Progressive Alliance government at the Centre. The National Common Minimum Programme of the UPA states: "The UPA government pledges to raise public spending in education to at least 6 per cent of GDP with at least half this amount being spent on primary and secondary sectors. This will be done in a phased manner."

In the 2004-05 Budget, Finance Minister P. Chidambaram announced: "One of our greatest assets is our human resources, our people. Empowering the people, especially the poor, with universal access to education and health, and facilitating their full participation in the growth process through gainful employment, will enhance their welfare. It will also reinforce the growth process itself."

There has been no dearth of electoral promises, budgetary allocations and time-bound programmes for education, health and other social services. However, the announcements and allocations for social services in the Budgets by government after government did not somehow materialise.

Table 1 gives the particulars of Budget, Revised Estimates and Actual Expenditures incurred in each financial year from 1991-92 to 2003-04. It is clear that there have been flagrant reductions in the expenditures for social services against the Budget allocations announced by the respective Finance Ministers.

The actual expenditures for the social services during the 15 years of the Union Budgets had been Rs.1,57,980 crores against the total of the Budget Estimates of Rs.1,65,926 crores. The reasons for the reduction of the Budget allotment cannot be attributed to any reduction in the total financial resources made available to the governments. On the other hand, the Budget allocations and government expenditures have been growing at a rapid pace.

Table 2 shows that the total of the expenditures of the governments, the Centre and the States combined, have grown from Rs.1,63,673 crores in 1990-91 to Rs.9,07,363 crores in 2004-05 representing a rise to 554 per cent.

At the same time, the share of expenditure on social services which went up from 20.3 per cent in 1990-91 to 22.1 per cent in 2000-01 slided down to 19.3 per cent in 2004-05.

Correspondingly, the share of Education had been reduced from 10.4 per cent to 9.4 per cent and that of Health from 4.5 per cent to 4.4 per cent.

Further, the gross domestic product (GDP) at market prices was growing rapidly and the total government expenditures also grew at a pace faster than that of the GDP.

As given in Table 2, the GDP had grown from Rs.11.88 lakh crores (in 1995-96) to Rs.31.09 crores (in 2004-05), recording a growth of 262 per cent.

While the total government expenditures had grown from 25.55 per cent to 29.18 per cent of the GDP, it is unfortunate that there has been a reduction in the share of the expenditures for the social services.

Article 45 of the Constitution gave a time-bound directive that the State should give free and compulsory education to all children under 15 years by 1961. Even after four and a half decades, the government is nowhere near fulfilling this constitutional obligation.

The Kothari Commission of 1965 recommended that 6 per cent of GDP be spent on education. But the proportion of education to GDP reached its peak in 2000-01 (3.2 per cent) and came down to 2.7 per cent in 2004-05. During the same period, the allocation for health declined from 1.33 per cent to 1.29 per cent.

To reach the 6 per cent allocation, the 2004-05 Budgetary allotment for Education should have been pegged at Rs.1,86,517 crores. In reality, the total of the expenditures of all social services for the year was below the recommended target for education.

A major priority in the economic growth of a country is to build on human capital by improving the quality of education and health care and provide these services to all people. For instance, Asian countries, which were lagging behind in the 1950s in many respects, gave high priority to investment in human development, which paved the way for higher economic productivity and rise in the standard of living of the people. In 2002, the adult literacy rate (for ages 15 and above) of India was 61 per cent whereas that of South Korea was 98, China 91, Vietnam 90, and Philippines 89.

The Finance Ministers should have been sincere in their announcements and should have tried their best to give as much as possible within the limited resources available to them towards education, health and other social schemes. Once the grants are adopted and the appropriation bill passed, the task of implementation goes to the respective Ministry. And the Finance Ministry, which is in command of the flow of funds, imposes cuts in the Budget Estimates in order to reduce the expenditures of the government, the first casualties in the process being invariably the social services. The Members of Parliament come to know of the reduction in the allocations spent only at the end of the financial year and the new Budget will show new estimates higher than the previous year's.

On one side, India appears to have made credible advancement in the adoption of sophisticated devices of electronic and information technology and claims to have 30 per cent of the software engineers of the world. On the other side, we have the largest number of illiterates, malnourished children and persons affected with tuberculosis, AIDS (Acquired Immune Deficiency Syndrome) and other infectious diseases. The metropolitan cities in India have glittering multi-storied structures and dazzling five-star hotels; the same cities are noted for the ill-starred millions in the largest and dirtiest slums of the world.

In his Address to the Nation on the eve of the Republic Day in 2000, President K.R. Narayanan said: "The unabashed, vulgar indulgence in conspicuous consumption by the noveau riche has left the underclass seething in frustration. One half of our society guzzles aerated beverages while the other has to make do with palmfuls of muddied water. Our three-way fast lane of liberalisation, privatisation and globalisation must provide safe pedestrian crossings for the unempowered India also so that it too can move towards `Equality of Status and Opportunity'. `Beware of the fury of the patient man' says an old adage. One could say `Beware of the fury of the long-suffering people'."

In the June 2005 Report `One Year of UPA Government', Prime Minister Manmohan Singh declared: "The essence of the National Common Minimum Programme is the recognition that policies that are aimed at promoting economic growth must also advance the cause of distributive justice and create new employment opportunities. We want India to shine, but India must shine for all." At the macro level of GDP, Budget and foreign exchange reserves counted in billions, India appears to be shining, to be bright; at the micro level it is dark, gloomy and miserable.

We have to see whether Manmohan Singh as Prime Minister will succeed in promoting economic growth together with distributive justice, which he, as Finance Minister, failed to achieve.

Ramon Magasasay once said: "Those who have less in life should have more in law." In India, those who have less in life have much less in law.

While the Budgets are growing richer and richer, the poor are growing poorer and poorer without having any worthwhile share in the benefits of budgeting and the government expenditures. How long will it take, as President Narayanan warned, for the fury of the long-suffering masses to explode?

Era Sezhiyan is a former Member of the Lok Sabha.