Commenting on the Union Budget for the year 2010-11 presented by Union Finance Minister Thiru Pranab Mukherjee, DMK President and Chief Minister Kalaignar M.Karunanidhi had said ‘agriculture, education, health and infrastructure have been given importance’ and congratulated the Centre ‘for presenting a very good budget, keeping in mind the objectives of the United Progressive Alliance to ensure inclusive growth and overall economic development. Similarly Kalaignar commended Railway Minister Selvi Mamata Banerjee for ‘reiterating the emphasis on social responsibility in implementing railway projects’.
Prime Minister Dr. Manmohan Singh described the Union Budget as an ‘exceedingly good’ one which could help the economy return to nine percent growth.’ For his part Thiru Pranab Mukherjee said he had three objectives while formulating the budget – ‘fiscal consolidation, inclusive growth and returning the country to a growth trajectory as quickly as possible’.
In the context of the section on Agriculture and Food Management of the 2009-10 Economic Survey’s conclusion, that the approach adopted and allocations made in this budget, assume importance. For the first time, in the recent years, the Minister had laid out a road map for agricultural recovery and progress based on integrated attention to the conservation of ecological foundations essential for sustained agriculture, cultivation based on principles of conservation and climate-resilient farming, consumption with attention to food safety and quality, and farm-centric commerce. For the first time, he has also addressed the issue of increasing feminization of agriculture by proposing a Mahila Kisan Sashaktikaran Pariyojana (empowerment of women campaign) with an initial outlay of Rs.100 crore. The four-pronged strategy outlined by him relates to agricultural production, reduction in wastages, credit support and a thrust in post-harvest technology and food processing. In order to increase the production of pulses and oilseeds, Rs.300 crore is provided for organizing 60,000 villages for cultivating pulses and oilseeds, in rain-fed areas during this year. If this programme is implemented properly by the ICAR and agricultural universities in States, we can see the beginning of a pulses and oilseeds revolution of the kind originally envisaged in the eighties.
A substantial step-up of the credit availability in rural areas has been proposed, the target being Rs.3,75,000 crore. Also the effective rate of interest to farmers who repay their short-term crop loans as per the schedule will be 5 percent per annum. Slowly we are progressing towards the target of 4 percent interest rate proposed by the National Commission on Farmers. The food processing sector has been given support for developing efficient infrastructure.
The FM had also mentioned that a draft food security bill be placed in the public domain soon. There are also proposals for establishing a strong supply chain for perishable farm produce. Also there will be concerted attempt to convert primary produce into value added products. Incentives have also been provided for relevant farm mechanization and for establishing cold storages and other facilities for the preservation of perishable commodities. These steps should help to improve the productivity and profitability of horticulture, animal husbandry and aquaculture.
In social sector spending, Health gets a strong dose of funds. The acute shortage of trained medical manpower has finally received some attention. The FM increased allocation for human resources in health from Rs. 62 crore in 2009-10 to Rs.323 crore in 2010-11. India is short by six lakh doctors, 10 lakh nurses and two lakh dental surgeons. The overall allocation for Health Ministry increased by 14% - from Rs.19,534 crore to Rs.22,300 crore in 2010-11. Programmes to combat cancer, diabetes, mental health and cardiovascular diseases also received a major push. Cancer kills 50 people an hour in India while 7% of the country’s adult population is estimated to be suffering from mental health problems. The FM announced that an annual health survey to prepare health profile of all districts will be conducted in 2010-11 to benefit the NRHM. Strengthening of district hospitals has been taken seriously with the allocation going up from Rs.36 crore to a whopping Rs.200 crore.
Two flagship programmes under Education – Mid-day meals and Sarva Siksha Abiyan (SSA) – also saw substantial increase in allocation. The increase in elementary education funding – from Rs.26,800 crore to Rs.31,036 crore – will ensure that is well funded to become the main vehicle for implementation of the Right to Education (RTE) Act, excepted to be effective from April 1. SSA alone will get Rs.15,000 crore, an increase of Rs.1,000 crore from last year, while Mid-day meals coffers have also been strengthened with an allocation of Rs.9,440 crore.
Though the HRD Ministry had pitched for more than Rs.40,000 crore for elementary education and the Planning Commission had cleared around Rs.35,000 crore, Finance Ministry pruned the proposal. But with education now a fundamental right, it is unlikely that securing more funds will be an obstacle during the year. Rastriya Madhyarmik Shiksha Abiyan, promising free education till class X, has also been allocated a significant sum of Rs.1,700 crore. The Higher Education sector has been granted just Rs.2,000 crore. Most of the new Central Universities, IITs and IIMs are functional and stress is now on consolidation. However, in the context of foreign universities with deep pockets will be coming in now, a grant to strengthen some institutes of excellence would have ensured that the public education system is fortified.
For the UPA government, development of rural infrastructure remains a high priority area. For this year, Rs.66,100 crore has been provided for Rural Development. The National Rural Employment Guarantee Scheme has completed four years during which it has been extended to all districts covering more than 4.5 crore households. The allocation for NREGA has been stepped up to Rs.40,100 crore in 2010-11. Bharat Nirman has made a substantial combination to the upgradation of rural infrastructure through its various programmes. For the year 2010-11, an allocation of Rs.48,000 crore has been made for these programmes.
Taking note of the increase in cost of construction, the unit cost under the Indira Awas Yojana, popular rural housing scheme for weaker sections, has been raised to Rs.45,000 from Rs.35,000 in plain areas and to Rs.48,500 in the hilly areas – allocation for this scheme is being increased to Rs.10,000 crore. As part of the strategy to bridge the infrastructure gap in backward districts of the country, the allocation under Backward Region Grant Fund has been increased by 26 percent from Rs.5,800 crore in 2009-10 to Rs.7,300 crore in 2010-11.
‘Swarna Jayanti Shahari Rozgar Yojana’ designed to provide employment opportunities in urban areas, has been strengthened with focus on community participation, skill development and self-employment support structures. For the year 2010-11 the allocation for urban development has been increased by more than 26 percent from Rs.3,060 crore to Rs.5,400 crore. The allocation for Housing and Urban Poverty Alleviation is also raised from Rs.850 crore to Rs.1,000 crore.
The scheme for one percent interest subversion on housing loans up to Rs.10 lakh where the cost of the home does not exceed Rs.20 lakh, is extended up to March 2011, a sum of Rs.700 crore provided for this scheme. The Rajiv Awas Yojana (RAY) for slum dwellers and urban poor to extend support to States that are willing to provide property rights to slum dwellers, is now ready to take off. The allocation for 2010-11 has been increased by over 700 percent. The government’s efforts in the implementation of RAY would be to encourage the States to create slum free India at the earliest.
Accelerated development of high quality physical infrastructure such as roads, ports, airports and railways is essential to sustain economic growth. In the budget for 2010-11, an amount of Rs.1,73,552 crore has been provided for upgrading rural and urban infrastructure, which accounts for 46 percent of the total plan allocation for infrastructure development in the country. The targeted construction of national highways is at a pace of 20 km per day. The allocation for road transport has been increased by 13 percent from Rs.17,520 crore to Rs.19,894 crore. Rs.16,752 crore has been provided for modernization and expansion of railway network.
Income Tax payers have gained significant relief from broadening of the income slabs and from tax deductions for investing in infrastructure bonds and contributing to the Central Government Health Scheme. It is a measure of the government’s confidence that the move to a higher growth path of 7.2 percent this year and to a projected 8.2 percent next year is sustainable even in the absence of the stimulus that it has reversed courses. As in the earlier budgets, much of the focus on the expenditure side is on social sector spending that now accounts for 37 percent of the total plan outlay, while another 25 percent is to be spent on rural infrastructure.
As a whole, it is true that expectations were low, but they have been well exceeded. This has been one of the best budgets in recent times. This is not a big-bang budget in any sense, nor was it meant to be. Rather, it is marked by prudence and solidity, and is highly positive – taking India towards double digit growth furthering the process of fiscal consolidation and promoting inclusiveness!
(07-03-10)
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