Seducing People with Promises

Political Economy of Budget 2018-19

K.B. Saxena

The Budget for the year 2018-19 was awaited with a slightly greater interest than the Budget for the previous four years of the NDA government for several reasons. First is the slowdown of economy with a falling exchange rate of rupee, stagnant agricultural income and real agricultural wages for last four years, jobs not being created, private investment not forthcoming and sluggish credit growth and negative export growth. (Chidambaram, 2018)'&3The second is the continuing agrarian distress with no respite from farmers’ suicides and increasing restiveness of farmers due to low prices of farm produce. The third is declining priority to social development while privileging growth through fiscal consolidation which is reflected in deteriorating infrastructure and services in education, health, affecting coverage, availability, access and quality, and low level of social security. The fourth is the continuing marginalization of the marginalized groups both by economic policies and declining commitment to affirmative action evidenced by absence of targeted schemes and programmers and increasing physical insecurity resulting from cow politics. The budget also had a definitive political context in that, being the last budget of the NDA government’s tenure, it was expected to be expansionary with a higher level of public expenditure to win in the election as against the contractinary one hitherto.

The Budget estimates 2018-19 presented by the Finance Minister has claimed to respond to these concerns. It is argued that the growth process has achieved momentum through structural reforms characterized by transparent allocation of natural resources, reform of the indirect tax system through GST, demonetization, use of digital technology, bankruptcy code and recapitalization of PSU Banks resulting in ‘Ease of Doing Business’ for investors. The agrarian crisis has been addressed by an increased allocation for agriculture, higher Minimum Support Price, enhanced provision for credit extension, shifting agriculture policy from ‘production centrism’ to ‘value addition’ and tapping fisheries and livestock sectors. (TOI, 2018) Social sector development has been focused with emphasis on learning outcomes (quality of education), training of teachers, and setting up an agency for Revitalization of infrastructure and system in Education (RISE) in the Education sector, and introducing in the health sector, a mega health insurance scheme (Ayushman Bharat) to cover 10 crore poor families with a Rs. 5 lakh cover of medical expenditure per family per year for secondary and tertiary care hospitalization, setting up 1-5 lakh Health and Wellness Centres, upgrading 24 district hospitals into medical colleges and hospitals. Social Security is promised to be expanded by coverage by all poor households including SCs/STs under insurance schemes and bringing all sixty crore basic accounts within the fold of Jan Dhan Yojna. Marginalized groups have been given special attention by increasing the total allocation for welfare of Schedule Castes by Rs. 18,385 cr and Rs. 10,697 Cr for Schedule Tribes over the provision made last year. Women’s development needs have been addressed by an additional 3 cr. poor women households to be provided benefit under Ujjwala scheme (LPG connection and cylinder), construction of additional 2 crore toilets, increased coverage of women self-help groups under MUDRA Yojna for provision of credit to self-employed and pushing up their formal employment through reducing their share of EPF contribution and enhanced period of maternity leave. This paper would scrutinize these claims with respect to Agriculture, Social Development and Marginalized Groups to see if the intended benefits are likely to materialize.

The Budget document is primarily a statement of the level of public expenditure as against resources available and its apportionment to different sectors of economy as well as the policies and programme proposed to be introduced to realize the objectives defined in the Budget speech. Since all the major concerns highlighted above call for higher level of public expenditure, the first indicator to test this commitment is whether the Budget Statement (B S for short) raises the level of public expenditure compared to the preceding four years when Government pursued fiscal conservatism combined with disinclination to tax the rich which had considerably squeezed the fiscal space and, therefore, public spending. The B S places this year’s expenditure at Rs. 24.42 lakh crore which is higher in absolute terms than 2017-2018 (B E) of 21.46 lakh crore and even of 2017-18 (RE|) of 22.17 lakh crore. But this rise of 10.1% with a slightly higher revenue expenditure of 10.3% is less than 11.75% increase in the GDP given in the document. When seen as a proportion of GDP, the Government expenditure expected to be 13% in 2018-19 is a decline from 15.8% in 2009-10 to 14.9% in 2011-12 12.9% in 2016-17 and 13.2% in the revised estimate for 2017-18. Revenue Expenditure has also gone down from 13.1% of GDP in 2011-12 to 11.1% in 2016-17. The rate of growth of total expenditure also was lower than rate of growth of GDP (Raj Kumar, 2018). It is also the slowest rate of expenditure growth in last three pre-election years: 13.8% in 2003-04, 24.0% in 2008-09, 10.6% in 2013-14. It is also lower than 12.3% growth in 2017-18 over the RE of the preceding year (Magazine and Verma, 2018). Even this level of expenditure may not materialize considering the rise in crude oil prices and doubts in projected receipts from tax collections. (Rao, 2018; Chidambaram, 2018)' In such an eventuality, the axe will fall inevitably on social sector and welfare spending as it has happened in the past. The Budget has received polarized comments with media describing it as ‘pro-poor and pro-farmer’ (Outlook, 2018) and a prominent farmer organization viewing it ‘as a step forward (Jakhar, 2018) while the social activists and left leaning commentators terming it as ‘by the privileged for the privileged (Roy, 2018) ‘anti-people and deceptive’(Peoples’ Democracy), 2018, experts critiquing it as ‘seeds of illusion (Ghosh, 2018) and too little too late (Himanshu, 2018) serving richest 1% of population (Trivadi, 2018). But there is convergence in the opinion of most commentators that there is a wide gap in the Budget between announcements and allocations (Karnik and Lalvani, 2018)and is, therefore, more manifesto less budget (Yashwant Sinha, 2018) with ‘impossible promises to have -not’s (Trivedi, 2018).

One of the two challenges underlined by Economic Survey 2017-18 is that of reviving agriculture and boosting of rural economy. The B S has responded by the hiking the allocation of Ministry of Agriculture by 12.9% with a slew of schemes. This level of expenditure cannot be termed as pro-farmer because as percentage of total expenditure of Union Government, this increase is only 0.1% over the preceding year. As percentage of GDP, the share of agriculture has stagnated at 0.3%. The major announcement in this sector is the increase in MSP to 1.5 times the cost of production, as promised by BJP in its manifesto, to give more income to farmers battered by crashed prices of commodities they produce. It has been claimed that for Rabi crop this year, this enhanced MSP was already being paid to farmers. This claim is however, contested in respect wheat, barley, gram, lentil, rape seed and mustard and safflower crops. But there is a lot of controversy about basis of calculating ‘cost of production.’ (CoP) There are three variations in this calculation 1) actual paid out cost in cash or kind plus cost of family labour 2) besides 1) above, the imputed rent on own land and imputed rental on own fixed capital 3) besides 2) above, the interest foregone in buying fixed capital and transport cost. Government’s promise appears to be based on CoP in 1) above while Swaminathan Committee Report’s recommendation of CoP conforms to the 2) above. The genuine cost of production would be 3) above. The Budget allocation for MSP shows only 7% increase which cannot take care of payment even on the basis of CoP (1). There is also the problem that if farmers are paid 1.5 times the genuine cost of production, it would lead to food inflation and increase the cost to the consumer. If the latter has also to be protected, the level of subsidy would need to increase. (Patnaik, 2018) This would shoot up fiscal deficit which would hurt Government’s strategy of growth. In any case, increasing MSP is not enough to increase income of farmers. More than 86% farmers fall under small and marginal category and most of them do not have a marketable surplus. There is no specific scheme for such farmers who cannot avail of benefit of MSP. Some mechanism would have to be evolved to compensate these farmers. Telangana model may address this problem partly as it has paid outright subsidy to all farmers @ Rs. 4000 per acre irrespective of the size of land and the crop grown. Besides, MSP is only notional as for most crops other than wheat and rice, there is no procurement mechanism in place and if such procurement is undertaken, it would create the problem of storage and disposal of commodities procured unless exported or PDS basket expanded. Export to also may not provide relief when there is a glut at the global level due to excess production as is already the case with some commodities as for example in milk powder. In any case, increasing MSP does not address the complex multi-dimensional agrarian distress and would require measures subsidizing input cost substantial government investment, non-farm employment sorting out bottlenecks in credit execution to small and marginal farmers, expanding PDS (Public Distribution System) basket and altering inequities of agrarian structure (De Roy, 2018).

The other dimension of agrarian distress is indebtedness of farmers and the reliance of a large section particularly small and marginal among them on non-institutional sources of credit. This problem is sought to be addressed in BS by the announcement of credit extension by one lakh crore. This, however, may not be of much help as the lending decisions are to be made by banks which are notoriously sceptical of extending credit to poorer sections. More important, even the ‘Priority Sector Lending’ norm does not help needy farmers due to wide definition of ‘eligible’ categories of persons for such credit as a result of which agri consortiums, other collectives and large farmers corner bulk of the loans. (Patnaik, 2018) Only cooperative credit could reach small and marginal farmers but cooperative credit institutions are in a bad shape due to defaulting loans, lack of capital, mismanagement.

The Budget has completely ignored agricultural workers and other rural poor who are not cultivators in the ambit of those affected by agrarian distress. This category of persons needs wage work for sustenance MNREGS was their only source of assured casual non-farm employment. But this programme has failed to provide 100 days of promised employment. In 2017-18 there was even a decline in the share of households that were provided work against demand and average days of employment. The latter were 39, the lowest under NDA dispensation (Kishore, 2018). The BS provides no increase in allocation of MNREGS over last year even though 56% of wages are unpaid and more than 15% of wage seekers did not find work. With the overwhelming emphasis on infrastructure creation including rural agricultural markets (IE, 2018) in MNREGS, provision of employment on demand has ceased to be its priority PMAY (Prime Minister’s Awas Yojna) has also shown slow progress with only 6.5 lakh houses built against target of 5.1million by March 2019. In respect of Prime Minsters Gramin Sadak Yojna, (PMGSY) the allocations for last two years have not been utilized and there is shortfall in meeting the targets. Thus even on infrastructure spending, prioritized by this Government, there has been slack which is increasing rural distress (Kishore, 2018).

The other major programme to have received attention in the farm sector is the Crop Insurance Scheme (Pradhan Mantri Fasal Bima Yojna) which has seen an increase of 23% in allocation from the RE of 2017-18. The scheme is intended to compensate farmers for crop loss. The scheme has failed to deliver the intended benefit despite its comprehensive revision 2 years back. In 2016-17, the insurance companies collected Rs. 22180cr as premium but delivered only Rs. 12959 cr as disbursement for claims filed by State governments. In 2017-18, Rs. 24454 cr was collected as premium but only Rs 450 cr was paid to farmers till 23 months back. (Gulati and Hussain, 2018) The scheme suffers from a design flaw in that 50% of premium subsidy is to be paid by State governments (the other 50%by Central government) as per the time schedule fixed for each crop. States with weak financial position are not able to adhere to this time schedule and the farmers suffer as a result. States are also responsible for carrying out crop cutting experiments (CCES) to determine yield losses, 4 per village GP and 24 for every district within a month of harvesting and submit the results to Insurance companies by January for Kharif and July for Rabi. CCES assessment of yield loss is prone to questioning by Insurance companies. This results in a gap between claims estimated by State governments and those approved by companies. Adhering to timelines of CCE data gathering and accuracy of data collected are the key to the success of the scheme. It is not easy to carry out 10 lakh CCES in a single season, particularly with staff shortage in many States. Thus the scheme as of now is enriching the insurance companies rather than compensating the farmers. (Gulati and Hussain, 2018).

The Finance Minister has also claimed to shift from ‘Production Centrism’ to focusing on value addition and tapping allied sectors and has therefore, included small schemes to boost agricultural growth such as specific funds for agri-markets, fisheries and animal husbandry, bamboo, medicinal plants, food processing and irrigation (TOI, 2018).These schemes may give long term results and do not provide immediate benefit to the farmers. ‘Tax holiday for Farmer organizations’ is unlikely to be of any use in most states due to skewed spread and vibrancy of such organization (Biswas, 2018). In view of the above and notwithstanding loan waiver in many States, agrarian distress is likely to persist with no cooling down of the anger of farmers.

Government administered twin shocks of demonetization and GST one after the other to the rural economy which crippled the unorganized sector. The expectation that it would announce compensatory measures and provide higher investment to revive this sector has been belied. The increase in loan amount in circulation by Self Help Groups and allocation of National Rural Livelihood Mission is unlikely to realize the laboured optimism in the Finance Minister’s speech of boosting the rural economy.

Social Development

Contrary to the claims made by Chief economic Advisor in Economic Survey that expenditure on social sector has remained in the range of 6 per cent of GDP during the last five years but has actually increased to 6.6 per cent of the GDP from 5.8 per cent in 2015-16, this is not borne out of allocations in key social sectors of this budget. For example, in education, allocation has declined from 3.1 per cent of the GDP in 2012-13 to 2.7 per cent in 2017-18 and, in health, it has declined from 1.5 per cent in 2013-14 to 1.4 per cent in 2017-18. Union Government’s expenditure on education has also fallen from 0.49% to 0.45% and on health from 0.37% of GDP to 0.29% in the same period. As a share of total expenditure (Central and States), it has declined to 10% in 2017-18 (BE) from 11.6% in 2012-13 in Education and to 5.1% (2017-18 (BE) from 5.6% 2016-17 RE) in Health. Revenue expenditure on Social Services not only continued to remain low at 1.2% of GDP in 2011-12 but has declined to 0.6% in 2017-18 (Rajkumar, 2018). There is also decline in expenditure in key sectors highlighted in the Budget, from 2.49% in 2016­17 (A) to 2.73% is 2018-19 (BE) in Agriculture and allied sectors, from 6.77% in 2016-17 (A) to 5.6% in 2018-19 (BE) in Rural development, and a slight increase of 5.68% in 2016-17 (A) to 5.78 in 2018-19 (BE) in Education and Health taken together (Karnik and Lalvani, 2018). As a percentage of GDP, expenditure on agriculture and rural development has reduced from 1.15% last year to 1.08% this year (PD, 2018). Even where the allocation for a Programme has seen an increase, as for example in Crop Insurance Scheme, this has been offset by a decline in allocation to other schemes of Ministry of Agriculture. Similarly, in the Ministry of Rural Development, enhancement in allocation for the National Rural livelihood Mission has been offset by stagnant allocation under MGNREGS.

The Centre for Budget Governance and Accountability (CBGA) has calculated that social sector ministries (nearly 17 in number) continued to be in the range of 26 per cent of allocations of the Union Budget as last year while allocation to Ministry of Rural Development has stagnated over the last two years. (CBGA, 2018) The Budget has also reduced allocation for many critical schemes such as Pradhan Mantri Awas Yojna, National Drinking Water Mission, Swachch Bharat Mission, National Health Mission, Gram Jyoti Yojna etc. Therefore, the claim about thrust in social sector spending is also untenable (Chidambaram, 2018). In Social Sector, this paper would focus only on Education and Health, the two key sub­sectors.


Ministry of Human Resources Development has been allocated Rs. 85010 cr. of which Rs. 50,000 cr is for School Education and Rs. 35010 cr for Higher Education. This represents a very low increase of 7% over previous year’s RE. (Revised Estimates). But even this negligible increase in absolute terms camouflages the decline in budget allocation in real terms when seen in the context of GDP and total Union Government’s expenditure. Union Government’s expenditure on Education as a percentage of GDP has declined from 0.55 in 2014-15 (Actual) to 0.45% in 2018-19 (BE). It has even reduced from the previous year’s 0.49% (RE). As a percentage of Union Government’s expenditure in the Budget also it has declined from 4.1% to 3.6% during the same period and also declined from previous year’s 3.8%. This lack of importance given to Education has also been acknowledged in Economic Survey and attributed to limited fiscal space. The problem is that, in the fiscal space, priority has been given to growth of physical infrastructure such as roads rather than on building social capital. The Central Government is not embarrassed by this deprioritisation of Education as even the States have incurred higher expenditure than it has.

In respect of School Education, Finance Minister’s Budget Speech follows the Niti Ayog’s Three year Action Agenda which has assigned top priority to ‘learning outcomes’ the strategy of which is a shift in focus from inputs to outcomes and implementation of outcome based on incentives. (Kundu, 2018) This strategisation ignores the formidable problems of access and retention and continuing of quality gap in infrastructure of government schools. Economic factors influence access and retention while lack of adequate funding is responsible for infrastructural deficiency. Both are critical determinants in ‘learning outcomes’. The latter is not an isolated phenomenon. Only 8% government schools are RTE complaint. The allocation from SSA (Sarva Shiksha Abhiyan) is so pitifully low that there is little hope for significant improvement in school infrastructure. While the need for improvement in learning outcomes is not denied and the importance of professionally qualified teachers to achieve it, as acknowledged in the Budget Speech, cannot be over emphasized, it is not the only factor. ‘Single teacher’ and ‘single classroom’ schools, vacancies in teachers’ posts, contract appointments, higher teacher - pupil ratio, teacher’s attendance equally influence outcomes. Even in respect of teachers training the task is huge. There is a backlog of 11 lakh untrained teachers in public and private schools. First step to train them is for them to acquire a minimum required qualification which would, hopefully be facilitated by an integrated B.Ed. course announced in the Budget. The current practice is to train teachers through in service training courses / refresher courses. But there are not enough exclusive teachers training institutions to undertake this mammoth task. A mere Rs. 70 crore increase in the Budget over last year for establishing such institutions is too meagre for the purpose.

The announcement of combining school education from pre-nursery to secondary is welcome both from the view point of students as well as more efficient utilization of available resources. It is also, at least conceptually, a baby step towards universalization of elementary and secondary education. But this is an empty promise not followed by any schematic announcement or financial backing. When even the existing schemes of school education - Sarva Siksha Abhiyan, Rashtriya Madhyamik Shiksha Abhiyan, Mid-Day Meal, Teacher’s Training face accumulated deficits, integration of segmented schools turns out to be a rhetoric unlikely to be realized. Besides, holistic development of schools education is not a mere merger of existing schemes of SSA, RMSA and Teachers Training but restructuring of entire school education system. This restructuring should first be conceptualized and debated and its form and process should be finalized after a lot of consultation with the stakeholders.

A significant element of Government’s deprioritisation of education is to shift major portion of expenditure on to the 3% Education Cess which has been levied since 2006 and now being replaced by 4% Cess for Education and Health. More than 60% of the current expenditure on RTE (Right to Education) and MDM (Mid-Day Meal) has been met from this cess. The Cess was intended to provide additionality of resources to the budget provision and not to substitute it. This creates uncertainty over financing besides lowering the commitment of the Government to education and is a retrograde step.

In respect of Higher Education, the Government’s increasing push towards privatization, obsession with skill development and preference for technical education are markers of its priority and reflects its narrow vision of education as an enabler of employability. A mere 5% increase in allocation over last’s year RE which taking inflation into account would be a decline. One of the methods for this push towards privatization is increasing emphasis on candidates taking loan to pursue it rather than government providing it as a public good. This view is corroborated by increase of Rs. 2000 cr in the scheme on interest subsidy for education loan. Loan based pursuit of education has an inherent bias towards technical education as only candidates pursuing technical courses which can fetch good paying jobs would be inclined to take a loan. The bias towards technical education is also reflected in the scheme to set up two Schools for Planning and Architecture to be established in IIT (Indian Institutes of Technology) and NITS (National Institutes of Technology) as autonomous schools and setting up a Railway University at Vadodara as also launching a new scheme called the “Prime Ministers’ Research Fellows” which would be available to 1000 best B. Tech students each year to do a PhD in IIT (Indian Institutes of Technologies) and IIS (Indian Institutes of Science) with a fellowship of Rs. 80,000 pm,. The bias is reinforced by a negligible increase of Rs. 100 cr in allocation for RUSA (Rashtrya Uchchtar Shiksha Abhiyan) which caters to the vast ambit of higher education.

The push towards privatization is also reflected in the announcement to launch a Revitalizing Infrastructure and System in Education (RISE) by 2022 with an investment of 1 lakh crore. Centrally funded institutions such as IITS, IIMS and Central Universities will have to approach this funding agency for expanding existing and building new infrastructure which would mobilise funds from the market and offer 10 year loans for this purpose. These Institutions would have to generate internal resources to pay back this loan. (Chopra, 2018) Government continues to withdraw its resources from higher education so much so that universities have been directed to generate specified percentage of their budget requirement from sources other than Government. This is a signal to the universities to seek funding from private agencies which would want courses to be self-paying and designed to serve their needs. As a result, the door for higher education would be further shut for the poor and lower middle class students.


Public health system is in a bad shape and has been so for a long time. It suffers from shortfall in infrastructure, deficiency in human resources and a very high out-of-pocket expenditure by health care seekers. The shortfall in infrastructure consists of 19 per cent of sub-centres, 22 per cent of primary health centres, and 30 per cent of community health centres as on March 31, 2017. (CBGA, 2018). Besides, the existing infrastructure across states suffers from dilapidated condition and requires a thorough rejuvenation. Deficiency of personnel across different categories of health providers is glaring. There is 82 per cent shortage of required number of specialists at the community health centres. The vacancy level of ANMs at sub-centres and the PHCs is around 14 per cent. The out-of-pocket expenditure as per recent health statistics is 63 per cent of the total health expenditure which is in terms of consultation, diagnostics and medicines. In view of these deficiencies, it was expected that the budget would increase allocation for health sector substantially particularly because the National Health Policy, 2017 has recommended 2.5 per cent of GDP as health expenditure over the next few years inclusive of centre and states of which central share should have been at least 1 per cent but continues to be 0.3% of GDP. The increase in allocation for Ministry of Health including Ayush over the last year’s B E (Budget Estimates) is a mere 12 per cent. But when compared to RE (Revised Estimates) figures of last year, the increase gets reduced to a lowly 2.5 per cent. This is disappointing because even the increase in 2017-18 budget over the budget of 2016-17 was higher at 27 per cent (CBGA, 2018). The highlights of current year’s budget consist of three major announcements. The most important is Ayushman Bharat, a health insurance scheme, to cover 50 crore beneficiaries, as a major initiative towards universal health coverage. It is proposed to cover 10 crore families per annum and provide insurance cover up to Rs. 5 lakh per family. No allocation has been provided for the scheme. The second major announcement is the conversion of existing 15 lakh sub centres into Health and Wellness Centres for which Rs. 1200 crores has been allocated. The third major announcement is setting up of 24 new government medical colleges and hospitals by upgrading district hospitals.

The scheme Ayushman Bharat is presumably a replacement of existing RSBY (Rashtriya Swasthya Bima Yojna) which was renamed as RSSY (Rashtrya Swasthya Suraksha Yojna) in 2016-17 and NHPS (National Health Protection Scheme) in 2017 budget documents. Financial experts have calculated that going by the premium paid for a cover of Rs. 30,000 per family in the existing RSBY and taking into account the expectation that States would share 40% of the cost of premium, the Budget should have provided somewhere around Rs. 50,000 crores. (Patnaik, 2018) But officials expect that the annual premium for this programme would be around Rs. 1100-1200 per family which is slightly higher than the existing premium of Rs. 500 which is paid for existing coverage of medical expenditure of Rs. 30000 per family. This does not seem feasible. However, since the details of the scheme have not yet been worked out, more comments cannot be made at this stage. Besides, Government expectation that State governments would share 40 per cent cost of the premium is unlikely to be realised because 1) poorly resourced states may to find it difficult to generate additional resources for contributing this share.2) many states have their own health insurance schemes in operation and may not be inclined to replace their schemes with the central scheme. The scheme in any case would not significantly reduce out of pocket expenditure as insurance schemes both central and the state are only meant to cover hospital care, and that too, for only selected procedures while the major part of out-of-pocket expenditure is outpatient care i.e., consultation, diagnostics, medicines, injections and treatment of those diseases that do not require hospitalization (Sengupta, 2018). The Budget has provided a substantial increase in Rashtriya Swasthya Bima Yojna from Rs. 471 crore into 2017-18 (RE) to Rs. 2050 crores in 2018-19 which is surprising because even the last year’s allocation of Rs. 1000 cr (BE) was not fully utilized. Presumably this increase is intended to be used for Ayushman Bharat.

More important, the insurance scheme strikes at the root of the public health system. Health experts all over the world, including India are of the view that the best way of extending universal and cost effective health coverage is by strengthening public health system. The proposed health insurance scheme as the earlier ones would do just the opposite. They allow public resources to be diverted to private health providers. All health insurance schemes operate on the basis of split between financing of health care and provisioning of health care. While financing is covered from public resources, treatment can be provided by any accredited facility: public or private. In practice, this would be largely private as accredited institutions in private sector are larger in number. This is the experience of States which are implementing such insurance schemes. Further, while the insurance schemes will cover a larger share of state’s health budget, their coverage of burden of disease would be very small. Thus, public resources will go towards strengthening the dominant corporate health sector (Sengupta, 2018). More worrying aspect is the practice of irrational medicine and unnecessary procedures resorted to by private health providers and in some cases, frauds committed by private health providers in nexus with unscrupulous families.

The scheme for up-gradation of Sub Centres into Health and Wellness centres is problematic. This is because Government has invited contribution from private sector in establishing such centres in accordance with recommendation of National Health Policy, 2017. Therefore, the scheme’s objective appears to be to purchase health care services from private players and not to strengthen public health system. The details of the scheme are not available and so far there have been no examples of such centres having been established. (CBGA, 2018) The announcement of 24 new medical colleges by upgrading existing district hospitals has not been matched by an increase in resources for it from the level of last year. Rather, the allocations for this programme within the National Health Mission has seen a decline of 12% from 2017-18 (RE). (CBGA, 2018) Is it because not much progress is expected in respect of this scheme?

The flagship programme of Ministry of Health i.e. National Health Mission has two components: rural and urban. The budget for NHM has declined from Rs. 31292 crores in 2017-18 (RE) to Rs. 30634 crores in 2018­19 (BS) which seems surprising because earlier NHM was confined to only rural areas and was called NRHM (National Rural Health Missions). The urban areas were added to it the year before last and the scheme was named as NHM. The composite budget for both should have seen a substantial increase. This has not happened. Within the NHM budget, the component of urban health has increased substantially while that of rural health has declined marginally between 2017-18 (RE) and 2018-19 (BE). The decline in rural component, in the context of deficiencies in the frustrate and personal outlined above does not seem to have any rationale. Among the other three schemes, PMSSY (Prime Ministers’ Swasthya Suraksha Yojna) which is for establishment of AIIMS-type super-specialty institutions and upgrading of state government hospitals has been given an increase of Rs 650 crores over 2017-18 (RE). But the allocation has actually declined by Rs. 150 cr. over BE of 2017-18 indicating underutilisation due to slow progress. The Jan-Aushidhi scheme renamed as Pradhan Mantri Bharatya Janaushdhi Pariyojna (PMBJP) which is to provide generic medicines at low cost has been given a very small increase of Rs. 9 crore. The coverage of the scheme remains very low with only 850 centres in operation across the country as against the target of 3000 centres. (CBGA, 2018) There are many bottlenecks in the operations as well. Now 1000 more centres are being added to the target. The very small increase in the budget shows that the scheme is unlikely to see a substantial spread and has only publicity value.

CBGA has also noted the decline in allocation of components of health schemes specially focused on women’s health as for example in respect of the RCH (Reproductive and Child Health) component of NHM allocation by 33% and in respect of Pradhan Mantri Matru Vandona Yojna (PMHVY) in 2018-19 (BE) by 8%compared to 2017-18 BE. This is surprising as we have not yet achieved even MDGS (Millennium Development Goals) let alone SDGS (Sustainable Development Goals) (CBGA, 2018) Thus the overall approach to addressing health issues and budget provisions do not provide any assurance about strengthening of public health system. Therefore, they are unlikely to lead to improved health outcomes for the poorer sections.

 Marginalized Groups
Scheduled Castes

Weaker sections (particularly SC, STs and Minorities) are not merely marginalized in the society but also remain marginalized in financial architecture of the country. Although in absolute terms, the allocation of the Department dealing with the SCs has increased by 12% and that of SC Sub Plan now termed as welfare of SCs by 7% over the preceding year’s allocation. But this allocation is just 2.32% of the total Budget (PD, 2018) and is too meagre considering the level of under-development the community faces with 36 per cent of SC children not going to school and a high IMR of 45/1000 birth. The incidence of poverty in the group is also second highest which is reflected in their level of consumption expenditure. This small increase does not contribute either to the expansion of schemes already in operation in the Department of Social Justice and Empowerment or to increase their unit cost after taking inflation into account not to speak of taking up new schemes. More important, in respect of SCs-STs as also other marginalized groups, the allocation for the ministry/ department concerned does not carry much significance as it deals with small gap filling schemes. These groups drive major share of resources for their development and welfare from the budget allocation of other ministries which deal with substantive programmes having a bearing on improving their conditions.

For SCs/STs, the Sub Plan arrangement was devised in the 1970s with a view to ensuring that adequate resources are assigned to the need based programmes for these groups which may not happen in programmes taken up by different ministries for the general population. This sub-plan strategy had four important features: i) earmarking of plan resources by different ministries for the Sub-Plan from their budget in proportion to the percentage of population of these groups. ii) spending those funds exclusively on schemes which directly benefit the members of these groups. iii) identification and planning of need based programme for this purpose. Iv) monitoring of these allocations and their utilization.

There has, however, been a shift away from this sub-plan strategy in the NDA government ever since it has abolished the distinction between Plan and Non-plan resources in the Union budget from the last year. Ministries are now contributing their share of allocation to this pool which has been given by the nomenclature of ‘welfare’ in place of ‘Sub-Plan’. This change is not merely of name but of substance. The expenditure from this ‘welfare’ pool shifts away from ‘targeted benefit approach’ to ‘incidental benefit approach’ as there is no requirement that the allocation has to be exclusively spent on the target group. The funds may now be spent in a manner that does not necessarily benefit the concerned target groups. This makes the whole exercise of pooling of resources ineffective and irrelevant to the concerns of these groups. There is also no insistence on need-based planning for incurring expenditure from this pool. This means that the concerned ministry is not required to formulate specific schemes to benefit the target groups. As a result of these shifts in strategy, the monitoring of expenditure from this pool currently only tracks whether funds are released by ministries to the state governments and by the State governments to the implementing authority but does not monitor whether the implementing agencies have spent funds on the target group and if so, specific number of individuals benefitting from it. National campaign for Dalit Human Rights (NCDHR) has observed that the outlay of this pool for SCs is for 279 schemes. Only 31 of them are appropriate, accessible and available to the community. Other schemes are for general welfare and notionally benefit the entire population. (Divakar, 2018). In 2017-18 of out 36 new schemes in the Budget, only eight were for of direct benefit to SCs. Eight of the important schemes for them are severely underfunded (ET, 2018)

The most glaring injustice to the community in the budget is the reduction of Rs 350 crore under the scheme of Post-Matric Scholarship. This is despite the fact that there was already an accumulated arrear of Rs. 8000 crore at the end of 2016-17 which would have gone up further at the end of 2017-18 and the Department has been asking for one time clearance of this fund which the Parliamentary Standing Committee also recommended. The saddest aspect is that this is the oldest and most popular scheme for SCs where the benefits directly accrue to the members of SCs. The low allocation not only constrains expansion of the programme but may even be adversely affecting the completion of courses by SC students in the absence of regular payment of their scholarships.

The scheme for Self-Employment for Manual Scavengers for the purpose of their rehabilitation has been implemented for a very long time with a view to abolishing of this obnoxious practice. But the actual expenditure under the scheme has been zero during the last three years. Even the meagre allocation of Rs. 5 crore in 2017-18 budget could not be spent. (CBGP, 2018) The budget allocation this year has been increased to Rs. 20 crore. There is also a corpus available with the Safai Karamchari commission which implements the programme. This poor implementation of programme brings out various constraints which have not been sorted out. One of these constraints is lack of agreement on number of manual scavengers who need to be assisted and whose number differ in various surveys. There is a wide gap in the estimated number between surveys conducted by government agencies and those carried out by NGOs.

Scheduled Tribes

STs are at the rock bottom of all development parameters and have remained so for the past many decades. Even NITI Ayog in their Three year Action Plan has admitted that STs are 20 years behind average Indian population. 71 per cent of their households fall in lowest wealth quintile. They have highest incidence of poverty and lowest annual rate of reduction. They also have worst indicators of nutrition with 44 per cent of stunted children and 45 per cent of underweight children. 60 per cent of their women are anemic. The incidence of child labour and trafficking is also very high.

The budget allocation for Ministry of Tribal Affairs has increased by 13% and for Tribal Sub Plan now called welfare of Scheduled Tribes by 20 per cent over the previous year. But the allocation for welfare of STs is below 1.6% of the Government expenditure (PD, 2018). The size of outlay is, however, misleading as the resources from this pool is for allocation of 305 schemes out of which only 52 schemes are appropriate, ‘accessible or available’ to STs (Divakar, 2018 cited in ET, 2018). Most schemes in this pool are mere extension of development schemes notionally benefitting the whole population and do not target STs such as support to IITs and IIMS, Project Tiger, solar power, grants to central universities, establishment of new medical colleges etc. Out of 70 new schemes, only 15 were benefitting them directly (ET, 2018). In fact, some of the benefits claimed for the tribals under this pool or erstwhile Tribal Sub-Plan are actually detrimental to them. For example, the Ministry of Coal has spent funds from this pool for exploration of coal and lignite in tribal areas. This by no stretch of imagination can benefit local tribals. Rather, this exploration leads to alienation of their land, loss of livelihood displacement from their habitat and pollution of their over-ground resources, thereby worsening their quality of life. Similarly, Department of Telecommunications (DoT) used fund from the pool for laying down optical fibre cable based network for the defence services and has claimed to benefits tribals. This, to say the least, is ridiculous and is actually diversion and misutilisation of fund. In such a situation, monitoring of how funds are spent under the Welfare pool does not carry any relevance unless it indicates how many tribal households / individual members have derived benefit from it.

This year’s budget specifically focuses on promotion of residential schools in tribal areas at par with Navodaya Vidyalayas. It has been announced in Finance Ministers’ speech that by the year 2022 every block with more than 50% of ST population and at least 20,000 ST persons will have one Eklavya Model Residential School. But no funds have been allocated for it under the budget. The scheme is to be financed from statutory grant of Special Central Assistance under article 275 (i) of the Constitution. The allocation under this assistance has been increased by Rs. 300 crore.

Special Central Assistance (SCA) is a constitutionally mandated grant from the Consolidated Fund which the states with tribal population receive. They are required to spend these funds for strengthening administration and welfare activities for tribals. By diverting these funds for residential schools, the States are deprived of the autonomy and flexibility to use this money as per requirement for each specific tribal area. This autonomy has been replaced by a centralized decision of uniform strategy of expenditure and a single item on which it would be spent. The funds for such a scheme should have come appropriately from the allocation of the M/O Tribal Affairs or from the allocation of Ministry of HRD. By transferring this expenditure to Special Central Assistance, the Central Government has deprived the tribals of their share from the Central budget. Besides, every State with tribal population has residential schools for boys and girls as well as hostels which are in a bad shape, suffering from dilapidated infrastructure, poor quality of food and absence of elementary facilities and required staff and mismanagement. But no allocation has been made to improve these schools. Therefore, before starting new residential schools, the first priority should have been to improve the functioning of existing schools.

The incidence of out of school children in tribal areas is quite large because of various factors and yet the implementation of Pre-Matric scholarship is very poor. Only 52.11 crore was spent till December 2016 during the last year out of the allocations made. This implies that bottlenecks in the implementation of the scheme have not been sorted out.


Religious minorities constitute 21 per cent of the population but receive 0.49 per cent of the total budget. The budget for Ministry for Minority Affairs has increased by 12 per cent over the preceding year’s allocation, a large part of which has been allocated to Multi-Sectoral Development plan and some to scholarship schemes. As in respect of other marginalized groups, development expenditure on minorities is carried out through 2 streams. One is the 15 point programme which requires certain identified ministries such as agriculture, commerce and industries, trade, small and medium enterprises to earmark 15 per cent of funds to the programme and physical targets, where possible, in their on-going schemes for members of minority communities. The second stream consists of programmes which are implemented by Ministry of Minority Affairs. The total expenditure on minorities by the central government through these two streams has declined from 1.93 per cent of the Union Budget in 2012-13 to 0.49 per cent in 2017­18. Last year also witnessed a decline in the utilization of funds from 97.8 per cent in 2016-17 to 74 per cent in 2017-18. The low utilization is primarily in respect of Multi-Sectoral Development Plan, the flagship programme for development of infrastructure in minority concentration areas, due to poor completion rate of schemes sanctioned and many activities under the programme not having been started. But where the demand has increased and utilization is also good such as Pre-Matric Scholarship and National Minority Development Financial Corporation, there is a decline in the budgetary allocation.

Two important commitments were made in the 15 point programme: a) 15 per cent share in public employment and 15 per cent annual disbursement of credit under priority sector. The progress in respect of share in public employment is very dismal. Their share in public employment has seen a decline over the last four years. It has been only around 6 to 8 per cent in which of public sector enterprises, banks and postal department have registered a decline from earlier years, Except for Muslims, all other minorities got a share in employment higher than their population size. This is also true of share in credit. While overall share of minorities in credit has been able to achieve 15 per cent mark, the share of Muslims among minorities is low as compared to their size in population.

There are some significant deficiencies in the programme implementation for minorities.

  1. the Central government not opening a separate minority head and budget statement on minorities related schemes on the pattern of Scheduled Caste and Scheduled Tribe Sup Plan.
  2. Unit cost of scholarship has not been revised. The current unit cost of Rs. 1000 per annum is insufficient and getting eroded by inflation.
  3. Multi-Sectoral Development Plan is not need-based and specific to the area.
  4. There is no provision for setting up of secondary and senior secondary residential schools.
  5. Students are not able to submit online application for scholarship due to poor internet connectivity and lack of electricity. There is no provision for manual submission which deprives needy minority students to get benefits of scholarship.

The programmes for minorities suffer from inadequate budget allocations, inappropriate policy design and weak implementing capacity of implementing agencies. These have been known but not sorted out. The most glaring deficiency is the failure to target the Muslim among the minorities in the programmes as they constitute the largest percentage of population and have the worst human development indicators among religious minorities.


The foregoing brings out that the hype about pro-poor budget and pre-farmer lacks credibility. Finance Minister has settled for promises and announcements with no financial allocation in the hope that this would win his government popular support for the 2019 election. But he has not ceased to pursue his core reformist agenda of regressive taxation policy and aggressive pursuit of reducing fiscal deficit which reduce thrust on government expenditure. He cannot finance big ticket schemes announced with the receipts anticipated in the Budget (Chidambaram, 2018)2without resorting to borrowing which his macro-economic position would not permit him to do. (Chandrashekhar, 2018) The distressed peasantry and other sections of the poor would judge the Government by what is delivered on the ground rather than by grand announcements. We shall have to wait till May 2019 to see if the skill of packaging and advertising in the Budget speech and documents would win their support.


(2018): ‘Budget 2018: Vox Populi’, Outlook, Feb. 12, 2018

(2018): ‘Protests Against Further Attacks on Peoples’ Livelihoods’, Peoples' Democracy, January 29-February 04, 2018

Centre for Budget and Governance Accountability (2018): Of Hits and Misses an Analysis of Union Budget, Feb. 2018, New Delhi

Chandrashekhar, C.P. (2018): ‘In a Macroeconomic Bind’, Economic and Political Weekly Vol LIII, No. 9, March 3, 2018

Chhetri, Shradha (2018): ‘Passed by Parliament, Disabilities Act Still not Helping, Say Residents’, Indian Express, February 19, 2018

Chidambram P. (2016)3 ‘Searching for Shangrila’, Indian Express, June, 1, 20187

Chidambram, P (2018)1: ‘The Hole in the Budget,’ Indian Express, Feb. 11, 2015

Chidambram, P (2018)2: ‘Courage Fails, Rhetoric Remains,’ Indian Express, March 2, 2018

Chopra, Ritika (2018): ‘Loans to Replace Infrastructure to IITS and IIMS,’ Indian Express, Feb. 2, 2018

De Roy, Shantanu (2018): ‘Will Increasing Minimum Support Price Cure Indian Agriculture’, Economic and Political Weekly, Vol. 53, Issue N0. 9, March 3, 2018

Economic Times (2018): ‘Experts Raise Concerns over Lack of Targeted SC/ST Schemes in the Budget’, Economic Times, Feb. 2, 2018

Gulati, Ashok and Siraj Hussani (2018): ‘Premium delayed, farmer denied,’ Indian Express, May 14, 2018

Himanshu (2018): ‘Too Little, Too Late Apathy Towards The Rural Sector’, Economic and Political Weekly Vol LIII No. 9 March 3, 2018

Jakhar, Ajay Vir (2018): ‘A Step Forward’, Indian Express, March 2, 2018

Kapur, Wamika (2017): ‘Why Beti Bachao Beti Padhao Scheme has failed on Several Counts’, The WIRE, May 4, 2017

Karnik, Ajit and Mala Lalvani (2018): ‘Incongruence, Between Announcements and Allocation’, Economic and Political Weekly, Vol. LIII No 9, March 3, 2018

Kishore, Roshan, (2018): ‘Has Infrastructure Spending Slack Worsened Rural Distress’, Hindustan Times, March 14, 2018

Kumar, Arun (2018): ‘Union Budget 2018: Creating a Crisis and Missing Opportunity to Resolve it,’ Mainstream, Feb 19, 2018

Kundu, Protiva (2018): ‘NITI Ayog’s Three years Action Agenda, What is There for Education,’ Economic and Political Weekly, Vol. LIII No. 18, May 5, 2018

Magazine, Aanchal and Sunny Verma (2015): ‘Government Spending Slowest in Three Pre Poll Years’, Indian Express, Feb. 2, 2018

Patnaik, Prabhat (2018): ‘The 2018-19 Union Budget’, Peoples 'Democracy, Feb. 5-11, 2018

Rajkumar Dennis J, (2018): ‘Misguided Priorities, Union Budget 2018-19,’ Economic and Political Weekly Vol. LIII, No. 10, March 10, 2018

Rao, Kavitha, R. (2018): ‘A confused Taxation Narrative’, Economic and Political Weekly, Vol. LIII, No. 9, March 27, 2018

Roy, Aruna (2018): ‘A Budget by the Privileged and for the Privileged,’ Financial express, Feb. 2, 2008

Sengupta, Amit (2018): ‘Who is dreaming for ‘Modi Care,’ Peoples ’Democracy, Feb. 5-11, 2018

Sinha, Yashwant, (2018) : ‘More Manifesto, Less Budget,’ Indian Express, Feb. 20, 2018

Times of India (2018): ‘Jaitley Goes On A Field Trip Bats For Maximum Support,’ Times of India, Feb. 2, 2018

Trivedi, Dinesh (2018): ‘An Election Manifesto’ Budget 2018 has tangible benefits for Haves and Impossible Promises for, have not,’ Indian Express, Feb. 5,2018

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