Budget in a Box

Vithal Rajan

Vithal Rajan

The Finance Minister has deftly produced a non-controversial budget that cannot offend anybody, or put stress on the finances of anybody other than habitual smokers. All anyone can say is that the minister is solicitous about their health.

The refrain was maintained in the budget speech that the government was pursuing its policy of rooting out black money. However, there is little evidence that the massively disruptive demonetization scheme actually caught any black money, since the corrupt among the elite of this country are skilled in quick conversion of black into white through land transactions, jewellery purchases, or by ‘round tripping,’ as Dr. Y.V.Reddy pointed out recently, when the money is sent abroad to return from its tax haven as direct investment. These are only a few of the ways. The budget itself excused people from capital gains tax if they purchased land recently and had to re-sell it for the formation of ‘Amravati,’ the new capital of Andhra Pradesh. This ‘relief’ legalizes non payment of tax by smart operators among the Telugu Desam Party, which supports the government at the centre!

While Mr. Jaitley reiterated that India is the largest democracy and hence cannot be under the control of a shadow economy, it is pertinent to remember Kanhaiya Kumar’s anguished cry that despite seventy years of independence successive governments have failed to deliver purna-swaraj in terms of eradication of crippling poverty, female illiteracy, and malnutrition among the majority of India’s children. While the repeated boast by government that India is the fastest growing economy is correct as statistics, this growth has accumulated wealth rapidly at the top, and widened the gap between rich and poor without increasing jobs at the bottom of the social pyramid.

The budget’s focus on rural development is salutary.  Everyone will welcome the vast hike in its allocation to the MNREGA of 48,000 crore rupees, to create rural employment when there is distress due to monsoon failure or there are crop losses on account of other reasons. A couple of years ago, the Finance Minister bemoaned that ‘the rain gods’ had failed us again, though everyone knows that these gods will continue to fail us on an intermittent basis. Is it not better to plan for preventive measures against agricultural distress, rather than take ameliorative steps, first designed by the British colonial government as food for work programmes after successive famines had led to the fear of civic uprising? Enough technical knowledge exists in India, based on the experienced work of such scientists as the late Dr. T. Hanumantha Rao, a prince among engineers of minor irrigation, or Dr. R.Dwarkinath, former vice-chancellor, Karnataka University, so that livelihoods can be protected for the great majority of Indian small farmers living on dry-lands. But the implementation of such knowledge requires tedious continuous collaboration with farmer communities. Such knowledge cannot be delivered by a hierarchal ‘militaristic’ administrative system.

No one can challenge the decision of the Finance Minister in making ample allocations for rural housing, of 23,000 crores, and for rural roads of 19,000 crores. However, the first beneficiary of such allocation is always the construction industry, the darling of all politicians the world over. Credit for farmers has been substantially increased, but the pathways for retraining rural bank managers and getting them on board have yet to be defined. It is much easier for bank managers to accept that an honest mistake was made by extending credit to a great corporate chief, like Mr. Vijay Mallya, in the hope that his business genius could turn corporate fortunes around, than to be caught lending to a poor farmer who has no collateral except the crop he intends to grow in the next season. More than industry, farming communities need systemic collaborative support, rather than piecemeal action or giveaways.

Pandit Jawaharlal Nehru, in his first years of office as India’s Prime Minister, said that agriculture should take pride of place for government planning. That was the era after Partition of grassroots campaigns, like Grow More Food, Shramdan, and Miss a Meal a Day, with the President Rajendra Prasad himself setting an example. Nehru’s Minister of the day was Mr. S.K. Dey, totally committed to rural and agricultural development. However, when the crisis passed, even highly functional panchayati raj institutions were allowed to die out, as top politicians centralized all power in their own hands. The Big Three, Corporate Bosses, Netas, and Babus, coalesced to create a stranglehold on the polity. Castes and communities were seen as secure vote banks; farmers as such had no political clout, and could be appeased during crisis. Low living standards for small and marginal farmers and agricultural labourers ensured lower food prices, and contained inflation. For this elite attitude to change requires a paradigm shift towards viewing the vast majority of the poor as an untapped human resource for rebuilding the country from the bottom upwards, and for a much higher growth rate as yet unimagined.

As a final word, one can say that the cautious budget is the best that could have been produced considering the very uncertain future India is facing. Demonetization disrupted the economy, especially in the vast unorganized sector. Its effect on the winter rabi crop was disastrous. If the rain gods fail again and the coming kharif summer crop is lost, inflation will soar high hurting all sectors of the economy and beggaring the poor. President Trump is resetting America’s equations with Russia. This can only mean a rapidly rising price of crude oil in 2017. If the crops fail in a scenario of higher energy costs, it will be a double whammy for India in a year when the boisterous IT sector itself will be on rocky ground considering Trump’s ‘America First’ policy. If all this helps the government to turn towards rebuilding local communities instead of depending on sloganeering, it will be a good thing.

(The writer is a well-known author, economist, and a renowned rights activist. He is on the jury to select Alternate Nobel Prize)

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