Chasing a Mirage: Foreign Investment to Revive the Economy and Create Employment: The Budget 2019-20


The full budget 2019-20 after NDA’s thumping victory and unprecedented mandate across the country and social groups was eagerly awaited by broadly three sets of people: one, business, industry and economic experts; two, the middle class; three, the common people; all three were concerned with the slowing down of the economy but they had different expectations from it. The first group was hoping that the Government would reduce corporate taxes, liberalise the flow of credit clogged by risk-averse banks, come out with structural reforms – quick acquisition of land, a flexible and unshackled labour policy, stick to prudent fiscal deficit limit, simplified procedures and transparency for ease of doing business, supportive policy and regulatory environment, connected infrastructure and facilitation of capital penetration. The second group was keen to see a cut in personal income tax, the scrapping of various other taxes / surcharges which squeeze their income, a stop to raising taxes on fuel, the removal of non-merit subsidies, priority to infrastructural development, do away with reservations with ‘merit’ as the sole basis for jobs and access to education. The third group looked for effective and comprehensive measures to tackle agrarian distress beyond the tokenistic income support, creation of employment with decent wages, and provide an improved quality of life through enhanced entitlements to health, education, social security and environmental protection. All three were looking forward to a long-term vision of the Government to put the economy on a faster growth path which ensures a realization of their respective expectations. All three were disappointed that their expectations were not met and there was also no road map to the revival of the economy. To be sure, the Budget did provide a vision of making India a 5 trillion economy from the existing 2.7 trillion in next five years with the objective of doubling per-capita income. It sought to achieve this by increasing employment and productivity through massive infrastructure development, easing credit squeeze through the recapitalization of banks and revival of sick non-banking financial companies, enacting labour codes to replace numerous labour laws to address the concerns of the first group; structural reforms in education through New Education Policy, shifting to Direct Benefit Transfer in place of subsidized services in agriculture, priority given to infrastructure development with considerably enhanced investment, to cool down the frail nerves of the second group; and carrying out major structural changes in the agriculture, piped water to every household in rural areas, increase in construction of affordable housing, higher expenditure on schemes of skill development, enhanced allocation for National Health Mission and Rural Livelihood Mission as mild sops for the third group. But the Budget has stuck to the path of fiscal consolidation and preferred creating conditions for attracting private investment, particularly foreign, as a route to spur growth and generate demand rather than a direct growth stimulus by increasing public spending to put purchasing power in the hands of the people. As a result, the expenditure level projected in the Budget is virtually at the same level as was indicated in the Interim Budget (only a marginal increase of .02 lakh crore). It is 13.2% of the GDP and has hovered at around 13 % of GDP during the last six years. The reluctance to increase expenditure is on account of adherence to a fiscal deficit limit of 3.4 % (though .1% higher than last year’s level of 3.3% of the GDP). But even this level of expenditure is unlikely to be achieved as it is based on ambitious targets of revenue collection which bear no relationship with past efforts, reduced estimation of GDP growth in India by IMF, ADB and RBI to 7% and a low rate of 3.2% growth of world economy (Chidambaram 2019)

Doubtful Figures

But what is worse is that for the first time figures of receipts and expenditures in the Budget Statement 2019-20 have come under a cloud and been dismissed by economists as untenable. This is because actual receipts and expenditures under different heads for 2018-19 were concealed even though available with the Government (unlike at the time of Interim Budget) when these figures were not ready. The Budget projections (BE) for 2019­20 are based on Revised Estimates for 2018-19 rather than actuals. The latter is much lower due to a major shortfall in tax revenue receipts in 2018­19 by Rs. 1.68 lakh crore compared to Revised Estimates of that year which were themselves less than the Budget Estimates of that year by Rs. 0.23 lakh crore. (Mazumdar, 2019) This implies lower availability of resources to spend and consequently reduced expenditure. The collection from all central taxes during the two months of the current financial year too do not show an increase substantial enough to compensate for the shortfall of preceding year. As a result, there would be a significant cut in the expenditure in 2019­20 than what has been projected. Realizing that raising sufficient resources from tax revenues may not be achieved, the Budget has chosen to make up the deficit by three modes 1) non-tax receipts – transfer of surplus earnings from public sector enterprises, banks and RBI 2) higher disinvestment of government stake in PSUs (Public Sector Undertakings) and 3) surcharges and cesses. While the first may materialize despite resistance, the disinvestment targets are also high and have not been achieved in the past. In respect of the third, two new surcharges on personal income tax and corporate income tax have been added as also ‘Road and Infrastructure Cess’ on petroleum. This makes tax system more regressive, particularly GST compensation cess and Road and infrastructure cess.

Injustice to States

It has also been estimated that the States would lose around Rs. 35472 crores as their share in gross tax revenues due to lower than estimated earnings (Mazumdar, 2019).Besides, cesses and surcharge would weaken ‘fiscal federalism’ as it increases centralization of tax systems and emasculates resource availability of states. This is because receipts for surcharges and cesses are not shared with States and therefore have a bearing on their levels of expenditure. The 14th Finance Commission awarded a share of 42% from gross tax revenue (GTR) of the Central Government to the States. Despite this, the resources transferred to the States have been consistently lower – 34.77% (2015-16), 35.43% (2016-17), 35.07 % (2017-18) (Actual) (2018-19) and 32.87 (BE). A lower level of (direct) tax collections leads to lower tax devolution to States. (Chidambaram, 2019). Thus the States lose out both on account of lower collections of direct taxes as well as levy of surcharges and cesses. As this would reduce States expenditure also, the demand conditions would worsen and the prospects of a revival of economy becomes bleaker.

Foreign Borrowing

A highly controversial move to raise resources announced in the Budget is the Government’s intention to borrow from the international market through the issue of Sovereign Bonds. So far, the Government has desisted from it. There is little justification for doing so as there is no dearth of space to raise resources domestically. Foreign borrowing does not escape the fiscal deficit limit. It is not necessarily cheaper either though it has been so claimed by former Finance Secretary. There is also no threat of a balance of payment crisis. The reason given by former Finance Secretary is that Government borrowing in domestic market crowds out private borrowing by companies. This has never been so earlier and there is no objective basis for this assumption. But the move is not in the national interest. It gives international capital influence over state action. This capital is also beyond the control of the Government. Worse, in the case of failure to service debt, it can impose austerity measures for cutting down expenditure as was experienced after the Structural Adjustment in 1990. Besides, Government would have to repay the loan in foreign exchange. (Patnaik, 2019) It would also entail exchange rate risks, open up the economy to volatility and push us into the trap of dollarizing the economy (Moily, 2019). Further, the proposed dollar bonds may not raise overall foreign investment. Investors who are buying rupee bonds presently in the domestic market may switch to dollar bonds and pass on the currency risk to the Government (Rao, 2019).

Foreign Investment

Having resolved to stick to the fiscal limit norm and disinclined to raise taxes, the Government’s central strategy in the Budget is to attract around 100 lakh crore over a period of five years for infrastructure to accelerate growth and create employment, which would provide purchasing power to the people. But the prospects of getting significant foreign investment are not bright due to several reasons cited by industry sources which include cutting interest rates by global central banks indicating slowing down of the world economy, likely rise of oil prices due to geo-politics, weak demand side reflected in unutilized existing capacity, unfriendly business environment, regressive taxation and banks turning risk averse in lending. The expected level of investment has not materialized in the past few years. Rather, even Indian companies are investing in other countries. Conscious of this realization, the Budget has focused on attracting private financial capital for infrastructure development. As the infrastructure investment has a long gestation period and does not yield quick profits there is reluctance in investors to put in their capital. The government has therefore proposed two alternatives to interest capital. One is public-private partnership (PPP) and the other is to incentivize them in equity and bond market through policy changes. The first option has been tried for the last 15 years but has not worked. Many investors after bidding for projects and signing the agreement either declined to execute it or abandoned it midway The few PPP projects which were executed were largely with government funds and bank loans with only small equity by investor and the risks were borne by the Government. Those who abandoned / exited projects midway left behind unrealized loans and huge non-productive assets (NPA) with banks leading to their enforced write offs. Government banks, therefore, are not prepared to lend for infrastructure anymore. The Government in the circumstances has proposed to resort to the second option of making policy changes in Equity and Bond market towards further relaxation of restrictions to attract entry of foreign portfolio investors (FPIs) and foreign institutional investors (FIIS). Several measures have been listed in the Budget speech in this direction. But FPI is a relatively liquid investment depending upon the volatility of the market and is undertaken in the expectation of quicker returns on the money. It can cause economic disruption if withdrawn. FII is companies based in the home country investing in the financial market of another country by purchasing shares and debentures of that country’s company. This investment influences growth and policies of the companies and can destabilize them. Besides, it does not lead to additionality of investment. Both are risky investments relative to FDI. While it is doubtful that even with proposed liberalization of regulatory restriction, such investment in infrastructure would materialize, the danger is that these incentives ‘would attract speculative finance which would result in changes in financial markets with increased risks, enhanced fragility and melt downs. (Chandrasekhar, 2019)

Employment Creation

Two issues which are of utmost concern and which have figured in the public discourse prominently in the past few months and about which there is also recognition in the policy making establishment are very high level of unemployment (6.1% in 2017-18 the highest ever in India), and agrarian distress. As for the first, it was expected that Budget 2019-20 would have at the very least increased expenditure on important schemes for employment generation. But the allocation on these schemes has not shown any significant improvement in the last five years. It has remained around 0.4% of GDP and 3% of the total union budget. In fact at 0.39% of GDP and 2.9% of the union budget (2019-20 BE) it has declined from the 0.41% of GDP and 3.2% of Union Budget in 2018-19 (RE). Skill development has been regarded as a route to getting employment. But the allocation of flagship programme Kaushal Vikas Yojna has been reduced from Rs. 2932 cr. in the 2019-20 in the Interim Budget to Rs. 2657 cr in the regular full Budget year. The performance under the scheme has also not been very reassuring. Out of 33.93 lakh persons skilled under the scheme since 2016, only 10 lakh managed to get placement against a target of 1 crore to be achieved by 2020. This reflects on the quality of training imparted as well as its suitability in the labour market. The most significant employment generation programme for unskilled workers are MGNREGS and NRLM. MGNREGS is a demand driven wage employment programme while NRLM assists women self-help groups in taking preparatory steps for starting self-employment enterprises while credit comes from banks. The allocation for MGNREGS remains the same as in the Interim Budget 2019-20 and has declined from the actual expenditure last fiscal year. MGNREGS has been consistently short of funds relative not only to the demand but even to the work accomplished each year. Around 20% of the budget allocation in each of the last five years is spent in meeting the preceding year’s wage liabilities. (Narayanan and Swamy, 2019). NRLM’s allocation also remains the same as in the Interim Budget. But NRLM does not directly contribute to employment generation but only indirectly. It provides social support to targetted women self-help groups to engage in economic activities for income generation which are entitled to get loan up to 10 lakh. But a stock taking exercise by Ministry of Rural Development has indicated that out of total 52 lakh women self-help groups, 3.5 lakh which have taken loan up to Rs. 7 lakh, the initial loans were used for paying off debts, consumption or children’s education. Thereafter, they moved on to income activities. It has been claimed that non-productive loans of these groups have also come down from 7% in 2013-14 to 2.2% in 2018-19 and per capita income has gone up by 22%. (Nair, 2019). Irrespective of the truth or otherwise of this claim, integrating these women to financial markets would make them vulnerable to the exploitation by micro-finance companies. Burdened with loan and inability to pay would add to their fear of prosecution, ill-treatment by officials and humiliation by society and aggravating their impoverishment. In any case, women availing of credit for self-employment are a very small percentage of poor women. What women need is appropriate wage employment since not all women can become an entrepreneur overnight. MUDRA Yojna is yet another scheme which provides credit for self-employment programmes to self-help groups and individual small and micro-borrowers. MUDRA provides three categories of loans, ‘Shishu’ under which an applicant is entitled to a loan of up to Rs. 50,000, ‘Kishor’ under which a loan up to 5 lakh can be obtained and ‘Tarun’ category which entitles a borrower to a loan up to Rs. 10 lakh. In 2018-19, over Rs. 3.11 lakh crore were sanctioned as loan exceeding the target. But there is an increasing percentage of bad loans from 2016-17. In 2018-19, Rs 16,480 cr worth of loans were bad (Mathew, 2019). There is also imbalance in disbursement of loans across States with 10 states cornering 71% of the total (Mathew, 2019). But credit is only one aspect of self-employment generation. There are several obstacles to its success, most formidable being market, viability of operation and competition from organized suppliers. There is no study which brings out whether this credit has created sustainable income along with capacity to pay back loan. Besides, the educated youth segment is not inclined to work in low remuneration jobs and needs wage employment with decent wages. The basic problem is that economic activities are not generating such employment. It is a jobless growth. The option lies in a push to expansion of good quality public employment which has standard multiplier effects and for which there is sufficient scope as India has less than 2 public employees per 100 population against 3.5 per 100 in Europe and 8 per 100 in Scandinavia. The income the employed would get will increase demand. The first step in this direction would be to fill more than 200 million vacancies in the Government offices which besides providing employment would improve the delivery of public services (Ghosh, 2019).

Micro and Small enterprises

Micro small and medium enterprises are the backbone of economic activities in India. Government claims to promote these enterprises but expenditure on schemes promoting them has remained at 0.03% of GDP during the last five years. The allocation for credit linked capital subsidy scheme and credit support programmes under the Ministry of MSMES has also been reduced. The Ministry’s outlay has virtually stagnated with an increase of merely 7%. In such a situation it would be very difficult to revive the closed units of MSMES and sustain those which are languishing. Badly hit by demonetization and GST (Goods and Services Tax), these units are starved of credit. The gap between demand and supply of credit within the sector is estimated to be $ 230 billion. Government has offered 2% interest subvention for fresh and incremental loans for GST registered units and introduced on line portal where MSMES can get in principle approval for loans up to 1 crore. But a large number of them are not registered. The units are also saddled with the problem of filing bills and payment documents and forms for which trained staff is required. These units cannot afford to employ such staff due to cost constraints. Besides, the nature and tenure of credit needs of these units are different. They need longer term loans of 24 to 36 months with six to 12 months interest payment deferment. Evaluation metrics by banks to provide credit to them should also be different from those of large enterprises. They also need continuity of policies to insulate them from sudden shocks. Their other requirements include manpower help for complying with statutory obligations and quicker and cheaper forum for disposal of legal issues with other companies. These issues do not figure in Governments’ policies to help them (Sinha & Sinha, 2019)

Agrarian Crisis

The agrarian crisis seems to have received some attention in the Budget as the outlay of the Ministry of Agriculture has been given a huge jump from Rs. 67,800 crore in 2018-19 (RE) to Rs 1,30,485 cr in 2019-20 (BE). But the bulk of this increase would go towards funding income support to farmers under the Kissan Samman Nidhi Yojna which has been now extended to all farmers, interest subvention, price support and insurance. There is a visible shift in NDA’s approach to tackle the agrarian crisis. The earlier policy focused on core areas such as human resource, provision of inputs, extension services, training and soil and water management which involved subsidizing these services for improving income of farmers. Now, the Government is opting for short term measures like income and price support, insurance and interest relief for enhancing cash flow to them. (CBGA, 2019) These measures would fail to resolve the complexity of the crisis. Even as income support, the amount is inadequate as the gap between income they get from disposal of produce and the cost incurred in production is very high as a result of which farmers remain perpetually indebted. As per NSS (National Sample Survey 2003 reconfirmed by NSS 2013) 52% of farmers fall in this category. Cash transfer even if adequate is a fire-fighting measure. To make farming viable, action is required on several fronts such as improving soil health degraded by use of chemical fertilizers, judicious use of water and shift to less water consuming crops, certified quality of seeds at reasonable prices, assured credit, irrigation facilities, research on technology which is water use and cost efficient and resistant to climate change and compensation for crop damage due to natural calamities for sustained increase in farmers’ income. Tackling production glut is a top priority. The low price of agriculture commodities in the market is due to global glut and cheaper imports resulting from trade policies which need to be changed. Governments have suggested that 1 0,000 producer organizations would address it by linking farmers to market for getting better prices. But the real problem is not so much access to markets but the low prices offered in the market for the produce. What is needed is to correct farm prices through MSP and guaranteed procurement on which the Budget is silent (Scindia, 2019). Women farmers continue to remain invisible in policy space and have again failed to get attention. Action in all these areas are required simultaneously. Far from taking these measures, Government has increased the farmers’ burden by imposing a Rs. 2 cess on diesel which will increase the cost of production significantly. The agrarian crisis is, therefore, likely to continue.

Neglect of Agricultural Research

Agricultural research is crucial for augmenting agriculture productivity and requires to be given priority given the above tasks. Yet, the share of agricultural research in the budget allocation of Ministry of Agriculture has been falling during the past 4 years from 26.0% in 2015-16 (Actual) to 17.7% in 2019-20 (BE). This year it has been given a token increase of mere 125 cr. As per the Economic Survey, India spends a mere 0.37% of agricultural GDP on agricultural R&D (Research and Development), though the rate of return from agriculture R&D is one of the highest. (Gulati, 2019) Agriculture universities are starved of funds for research as 4/5*^ of their allocation goes towards meeting the cost of salaries of staff. As a result, they carry out research sponsored by companies rather than on the problems thrown up by the farmers in different regions. Another indication of Government’s apathy lies in 52% of vacancies in sanctioned posts in national agricultural research institutions remained unfilled. So also the agricultural extension services where nearly 45% vacancies have not been filled (Jakhar, 2019). As a result, farmers rely upon information disseminated by seed and insecticide companies. Regulatory mechanism to check spurious seeds, banned insecticides is so weak as to be nonexistent. Farmers suffer when crops using such seeds and insecticides fail.


On increasing irrigation facilities, the Budget speech highlighted that 1,592 blocks covering 256 districts are over exploited in respect of ground water. But the outlay for Pradhan Mantri Krishi Sinchai Yojna has been given a mere raise of 17%. With such meagre investment, when the country is periodically faced with drought, there is no way to shift people from ground water to surface irrigation by completing the existing long-pending projects and promoting micro-level water storage bodies. Efficient water use in agriculture has to get a very high priority for soil health, meeting drinking water needs, protecting fast depleting underground aquifers and reducing cost of production. It is not clear if the proposed new Ministry of Jal Shakti would have this task too in its mandate.

Zero Budget Farming

While the Finance Minister has taken no steps to reduce the cost of crop production and increased MSP followed by procurement for better returns, it has offered prescription of Zero Budget Farming (ZBF) with locally available resources and low on carbon energy, water and chemical use. But this is a penniless advice and is not backed up by funds to promote it. ZBF is not a new idea and has been in practice, particularly by tribals and other poor farmers with no access to working capital. Besides, some States governments have also been promoting organic farming which is least cost as well as environmentally friendly. The former AP Chief Minister gave organic farming a big push and promoted it in 291 clusters across 13 districts covering five lakh farm families. He wanted to cover 5000 such clusters by 2024 covering 60 lakh families. In any case for commercial production using this technology, an assured market (organic farming only caters to niche markets) and remunerative price is necessary, besides certification for authentication of its chemical free nature and research to ensure that farmers do not lose out in terms of output per unit of land compared to output using chemical inputs. But this is a promotional measure which will reform agriculture over a long run if farmers find it to their overall advantage. Therefore, farming with chemical inputs would continue to attract farmers in the near future and need comprehensive interventions by the Government to make it viable and remunerative to the farmers. This cannot be ignored or postponed.

Livestock & Fisheries

Livestock sub-sector has been given a lot of importance by creating a separate ministry acknowledging its growth potential highlighted in Economic Survey 2018-19. Livestock farming contributes 4% to GDP and fisheries 1%. Livestock population at 125 cr plus is the highest in the world. The country leads in milk production which is growing at the rate of 6.5% annually. Our production exceeds demand and milk powder stocks are piling up with no markets for disposal as there is a global glut in production. Our egg production is growing at 9.41% annually and fish production at 7% annually though our productivity per animal in fisheries and poultry is low. (Shridhar, 2019). But the Budget allocation of Rs. 3737 cr which largely consists of bringing together existing schemes is too inadequate since livestock rearing is the principal resource of income of 3.6% of agricultural households. Livestock development also suffers from inadequacy of infrastructure even more than agriculture in terms of veterinary dispensaries, breed upgradation facilities and feed arrangements. There is a huge shortage of veterinary doctors and farm extension for animal husbandry does not even exist which has led to chemicals, steroids and anti-biotics in food value chain (Jakhar, 2019). But the most critical input is fodder lack of which is a serious constraint since most livestock breeders are landless households who have neither land to cultivate nor money to buy fodder from the market. During drought a large number of animals perish for lack of fodder and water. Besides, cow vigilantes have adversely affected milch cattle rearing as the cash for replacing unproductive cows has ceased and these animals are abandoned uncared posing a danger to the safety of crops in the farms nearby. Infrastructure deficiency affects fisheries too. Pradhan Mantri Matsya Sampada Yojna is aimed at meeting critical infrastructural gaps which contributes Rs. 48000 cr of exports. (Shreedhar, 2019) But the outlay is meagre. The fishery sector has also to take note of huge environmental degradation and loss of livelihood of fisher folk resulting from over exploitation of the resource in the continental belt ever since the economy has been liberalized and corporate operators with huge trawlers have come into the sector. This may get intensified with proposed mega free trade agreements. This dimension of infrastructure development needs serious scrutiny for its iniquitous nature and threat to the health of the resource itself in the pursuit of fast growth.

Piped water to every Household

A major announcement in the Budget is the integration two Ministries of Drinking Water and Sanitation and Water Resources, River Development and Ganga Rejuvenation with a view to dealing with management of water resources and water supply in a coordinated and comprehensive manner. This has been done in the context of a major programme announced in the Budget to supply piped water to all rural households by 2024 for which the Jal Jeevan Mission has been set up. The Ministry would deal with creation of local infrastructure for source sustainability like rain water harvesting, ground water recharge and management and waste water for re-use in agriculture. The increasing emphasis on supplying drinking water to all rural households ties up well with sanitation facilities and is welcome. But, as with other big ideas and promises, it has not been matched by allocation of adequate resources. In fact, the outlay for Ministry of Jal Shakti is less than the provisions made towards earlier ministries dealing with water i.e. Ministries of Rural Development and Water Resources. The new ministry, it seems, would largely perform the role of a coordinator of existing different schemes to achieve its current objective. The outlay for Department of Drinking Water and Sanitation, though increased from Rs. 18, 201 cr in the Interim Budget to Rs. 20,0163 cr in the full budget for 2019­20 has, in fact, declined in real terms from the ‘Actual’ expenditure of Rs. 23,939 cr in 2017-18 and is virtually at the same level as in 2018-19 (RE) (CBGA, 2019). The priority has visibly shifted from sanitation to drinking water in the departmental outlays as evident from a 22% increase in the allocation for National Rural Drinking Water Mission and a reduction of Rs. 4484 cr in allocation for rural sanitation compared to 2018-19 (RE). The latter has come down presumably due to sanitation targets having been largely met. With the outlay provided to drinking water Programme the ambitious task assigned to the new Ministry cannot be accomplished. The task of supplying piped drinking water to all households is formidable as the coverage of piped drinking water supply so far has been very skewed across States. While the top 5 States accounting for percentage of household connections with PWS (Piped water supply) as on 18th July, 2019 were Sikkim (99.34) Gujarat (78.46), Himachal Pradesh (56.27) Haryana (53.47) Punjab (53.28) and Karnataka (43.8), at the bottom are the most populous States of West Bengal (1.31), UP (1.33) Bihar (1.88), Assam (2.31) and Odisha (3. 94) (IE, 2019). Strangely, however, water use efficiency in agriculture and watershed programmes have not been brought within the purview of the new ministry which would constrain holistic management of water resources.

Constraints in achieving the Task

It important to highlight serious constraints in achieving the task highlighted by experts. The source for supplying drinking water should primarily be surface water bodies – rivers, lakes, ponds/tanks and dug wells which are replenished by rain water failing which by tapping underground resources. However, in India, ground water has emerged as the main source of drinking water. This has made management of aquifers difficult because the scale at which water is extracted is not matched by natural recharge. It is, therefore, necessary to find a sustainable source for drinking water supply. The schemes to replenish aquifers have not made much progress and regulatory agencies to check extraction of ground water have no teeth.

(Shah, 2019). Also, 90% of India’s water is consumed in agriculture which includes ground water. Inappropriate cropping pattern with water intensive crops makes it worse leading to fast exhaustion of the resource. This disparity in end use cannot protect the domestic water needs. Use of water for agriculture is also iniquitous as well as inefficient. (Shah, 2009). The situation has worsened as the new economic policies have generated a lucrative water market for earning profit which has accelerated the process of water drawal by bottled water companies, often illegally, at the expense of domestic consumption by local users. The industrial usage has also expanded enormously which besides depriving local communities of their domestic needs, also pollutes the sources. There is no coherence in policies of the Government on water use. A conflict of objectives between growth, equity and environmental health is reflected in these policies which does not get resolved. Action, therefore, has to be taken on several fronts and active involvement of communities and local bodies at the grass roots would be required which is both complex and challenging (Shah, 2019). How the new Ministry approaches the task would have to be watched with serious interest.

Social Sector

In the social sector, the Budget speech has neither new ideas nor new schemes. A few proposals may be mentioned for brief comments. One is the extension of the pension scheme for unorganized workers (Pradhan Mantri Shram Yogi Maandhan (PMSYM) launched in the Interim Budget to retail traders and small shop keepers whose annual turnover is less than 1.5 cr. It is called the Prime Minister Karam Yogi Maandhan – (PM KYM) for which Rs. 750 cr has been provided. It requires Rs. 100 a month to contribute which would be supplemented by equal amount from the Government. The scheme is applicable to an eligible beneficiary aged between 18-40 years who would draw a pension of Rs. 3000 at the end of 60 years. Like the PMSYM, it is not very attractive as it is contributory in nature and the benefit would accrue at a very distant future by which time the inflation would hugely depreciate the value of this meagre amount. Even the PY SYM has not received enthusiastic response as only 35 lakh unorganized workers have enrolled so far out of an ambitious target of 10 crore by 2024-25. The allocation for PMSYM remains at 500 cr. as in the Interim Budget. In respect of maternity benefit scheme which provides cash assistance to pregnant women as per requirement of NFSA (National Food Security Act), the Budget provides an increase of 108% from that of the last year. But what it hides is that even last year’s provision did not cover all eligible women and that too on the basis of restricted eligibility norm for only the first child which itself was a violation of the law. The increased allocation is still insufficient to cover all eligible women. On the health side, in respect of the much publicized Ayush Bharat Scheme for providing hospitalization for catastrophic or emergency illness through an insurance cover of Rs 5 lakh, the current Budget provision at Rs. 6400 cr remains the same as in the Interim Budget. With this money, how would the ambitious target of covering 10 crore families annually be met? In fact, the Budget speech does not even speak of health care at all despite the backdrop of encephalitis disaster in Bihar and doctors strike nationwide highlighting lack of infrastructure and facilities (Dutta, 2019). The increased allocation of Rs.

1400 crore for National Health Mission over the interim Budget is distributed over five components to provide some additionality to flexible pool for immunization and communicable diseases etc and does not even make a tokenistic allocation for improvement of health infrastructure for primary health care and expansion of referral hospital services. There is no mention of how the 73.7% specialist vacancies and shortage of paramedics would be addressed. In the Education sector, the most prominent mention in the Budget Speech is that of New Education Policy to transform higher education for making India a hub for it. But the allocation in the Budget for education is a repetition of the Interim Budget. The promise of doubling of the Centre’s spending in next ten years is not matched by financial investment. It hopes that foreign investment would be attracted in higher education to realize this ambition. Foreign funding with high fee structure would make higher education even more exclusionary than what it is already. The proposal that has caused the greatest unease in this sector is to establish a National Research Foundation (mentioned in NEP) to which all research in various sectors would be integrated. This is a ‘pernicious’ attempt at centralization of all research funding to align with national priorities and a relentless attempt at thought control in the name of nationalism (Arun, 2019). For all the evocative references to women in the Budget speech, allocation for women oriented schemes have come down from 0.66% of GDP in 2018-19 to 0.64% in 2019-20 and for the ministry of women and child development from 5.1% to 4.9% of total expenditure between 2018-19 (Actual) to 2019-20 (BE). Allocations for National Mission for Empowerment and Protection of Women have been reduced by Rs. 50 crore. Nirbhaya Fund remains a non-starter with most schemes either not initiated or money allocated unspent (Porecha, 2019).

Overall, the Budget is insipid and bereft of any meaningful relief to the poor. There is nothing in it for the marginalized groups, the youth, the industrial workers and even the farmers. It is a betrayal to them for reposing so much faith in the Prime Minister. It comes out as a dampener after the euphoric victory at the hustings.


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Nair, Shalini (2019). ‘Rural Ministry to focus on 3-5 lakh women SGHs to scale up enterprises.’ The Indian Express, June 29, 2019.
Narayanan, Rajendrah and Rakshita Swamy (2019). ‘Six Reasons why the Economic Survey’s Presentation of MGNREGA is misleading.’ The Hindu, July 23, 2019.
Patnaik Prabhat (2019). ‘More of the dismal same.’ The Indian Express, July 8, 2019.
Patnaik, Prabhat (2019). ‘Some Disquieting Trends in the Budget.’
Peoples’ Democracy, July 8, 2019.
Poreeha, Maitri (2019). ‘Nirbhaya Fund is due as most schemes remain on paper, money unspent.’ Business Line, July 6, 2019.
Scindia, J. (2019). ‘Budget 19: Betrayal of the Mandate.’ Hindustan Times, July 8, 2019.
Shah, Mihar (2019). ‘Fault Lines in Water.’ The Indian Express, July 6, 2019.
Shridhar, Tarun (2019). ‘A New Ministry Promises a New Beginning.’ The Indian Express, July 25, 2019.
Subbarao, Duvvuri (2019). ‘The name is dollar bond. ’ The Indian Express, August 3, 2019.

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