Concerns of the Aam Aadmi

Speech made by Dr. Bhalchandra Mungekar, Member Rajya Sabha, on annual Budget 2011-12

Mr. Dy. Chairman Sir, I rise to support the Budget 2011-12.

Sir, I congratulate the Finance Minister for presenting an inclusive, growth-oriented and balanced Budget.

Sir, Budget is not only a mechanism of allocation of resources, but also an instrument of income redistribution. Sir, as we know, in welfare economics, there is what is called Pareto optimality, which means that any set of income redistribution is desirable that makes some people better-off without making some others worse off. This Budget has precisely attempted to do that. Sir, I consider the budget "balanced" not in narrow, technical economic sense where revenue equals expenditure. It is balanced in the sense that it has tried to address the concerns of different sections of the society, focusing on Aam Adami.

Sir, the Opposition Parties, have argued that the Budget lacked vision and inclusiveness. Some others said that the Budget does not contain a 'big-ticket' item, and yet others have criticized that the Budget does not contain reforms agenda.

Sir, in a country, suffering from pervasive poverty, hunger, mal-nutrition and illiteracy in the midst of all sorts of inequalities, I do not think that there could be a greater and better vision than addressing the concerns of Aam Aadmi. There can not be a big-ticket item than adding to the amount of welfare of the disadvantaged and marginalized sections of the society, subject to the degrees of freedom available to the Finance Minister.

Sir, I complement the Finance Minister for his position when he said, "at times, the biggest reforms are not the ones that make head-line, but the ones concerned with the details of governance, which affect everyday life of Aam Aadmi ". He has also rightly mentioned that reforms are not a one-time story, but an ongoing process.

Sir, lets mention the context of this Budget. 2011-12 will be the last year of the 11th Five Year Plan prepared by the UPA Government. The 11th Plan has been committed to securing faster and more inclusive growth and, therefore, I would like to describe it as a turning point in the post-Independence economic planning of our country. I was privileged to get involved in its making. I put on record my gratitude to the Prime Minister Dr. Manmohan Singh for the same.

Sir, 60% of total resources of 11th Five Year Plan have been allocated to social sectors, of which 20% were allocated for education and 10% to health alone unprecedented since independence.The Plan introduced revolutionary National Rural Employment Guarantee Programme (MGNREGM), which is unprecedented in the history of world economic development. It launched National Rural Health Mission (NRHM) and Bharat Nirman,with a view to changing the face of rural India. The JNNURM was launched to encourage cities to initiate steps to bring about improvement in existing civil service level over 7 year period in a mission mode manner. The government passed Right to Information Act, which brought a kind of revolution in the democratic discourse ushering the era of transparency in the matters of national governance. The Right to Education Act has been passed and came to be implemented with 1st April 2010. And last but not the least, the historic National Food Security Bill is sought to be shortly introduced in the Parliament. I urge the Government to introduce the same at the earliest and make financial allocation in the revised Budget for 2011-12. For all this, unqualified credit goes to Smt Sonia Gandhi, UPA Chairperson and President of the Congress Party and Prime Minister Dr. Manmohan Singh.

Sir, the Budget 2011-12 is reiteration of the goals of the 11th Plan. Sir, the eventful developments that took place in our economycan successfully refute the charge of the opposition that the year was only of scams. First, when the advanced western world is limping towards recovery post-global financial crisis, India is the only country after China to grow at the rate of 8% in 2009-10 and 8.6% in 2010-11. Second, about 4.10 Crore households were given jobs under MGNREGP till December 2010.Out of 145 Crore person days created under this scheme, 23% were accounted by Scheduled Castes, 17% by the Scheduled Tribes and 50% by women. Third, the achievements under the SSA till September 2010 included 3.09 lakh new schools, construction of 2.54 lakh school buildings, 11.66 lakhs additional class rooms, 1.90 lakhs drinking water facilities and 3.27 lakhs toilets. 8.70 Crore children were given free text books and 11.30 lakh teachers were appointed. Around 14.02 lakh teachers received in service training. Fourth, under NRHM selection of 8. 33 lakh accredited Social Health Activists (ASHAS) was made upto September, 2010. I am not complacent with this success, but it would be absolutely erroneous and biased to under-estimate these achievements.

Sir, this is growth-oriented and inclusive budget, because out of total Outlay of Rs. 4,41,547 Crore, amount of Rs. 2,14,000 Crore, i.e. 48.5% has been earmarked for infrastructural development.This public investment will complement the private investment and, through famous Keynesian multiplier effect, would also help generate employment. Sir, the Finance Minister has rightly allowed the Foreign Institutional Investors to invest in unlisted bonds with the minimum lock-in period of 3 years. Sir, an amount of Rs. 1,60,887 Crore, i.e. 38.4% has been earmarked for the social sectors. Thus, growth-facilitating infrastructure projects and inclusive agenda have together attracted Rs. 3,74,887 Crores or 84.9% of the total Budget Outlay. I call this a big-ticket item.

Sir, I don't want to go into details of inclusive agenda of the budget, but I must mention a few novel features such as: creating a Corpus Fund of Rs. 500 Crores for women Self-Help Groups, strengthening Bharat Nirman, linking MGNREGA wages to Consumer Price Index for Agricultural Laborers, extending RSBY to other segments of unorganized sectors, doubling wages of Anganwadi workers and helpers benefitting 22 Lakh workers, and creating, for the first time, Pre-Matric Scholarships for needy SC and ST students studying in 9th and 10th standards that would benefit 40 lakh students.

Sir, since we do not have a comprehensive national level social security measures as strong as in the advanced western countries, I complement the Finance Minister for creating a new category of very senior citizens of 80 years and above, and making their income tax free upto Rs. 5 lakh per annum.

Sir, I must complement the Finance Minister for providing in this budget Rs. 8,000 Crore in addition to Rs. 28,000 Crores for the Prime Minister's Jammu and Kashmir Reconstruction Plan. Sir, this is not the time for me to go into the logistics of Jammu and Kashmir issue. But to the best of my understanding, the issue of Jammu and Kashmir is primarily the result of not satisfactorily fulfilling the developmental aspirations of the region and a feeling of frustration for not finding sufficient space in the process of socio-economic development of the country.

Sir, the Finance Minister has shown an exemplary commitment to the federal spirit of our constitutional arrangement by not pushing for GST as some States have shown unwillingness. He has even refrained from introducing Central GST, and assured that he would take the disagreeing States on board.

Sir, the Finance Minister has brought down fiscal deficit from 5.6% of GDP to 5.1% in 2010-11. Many, including the Opposition Parties, have expressed concern about the laxity in fiscal consolidation. I don't buy this criticism. Without even remotely justifying profligacy on the part of the Government, I don't consider that fiscal consolidation by itself is a sacrosanct objective of economic policy, particularly in a country like ours where the State has yet to play a major role in the process of economic development. Second, fiscal consolidation cannot be thought independent of other macro-economic variables such as rates of saving and investment, level of desired autonomous expenditure on the one hand, and revenue collection on the other. I am happy to know that the Government is considering amendment to the Fiscal Responsibility and Budget Management Act, so as to introduce flexibility in the targets of the FRBM depending upon the economic scenario in the country that I was demanding since I joined the Planning Commission.

Sir, my other worry is about Current Account Deficit. Despite 29% increase in exports during 2010-11, the imports exceeded exports by US$ 189.0 billion. As a result, the CAD has reached to 3.5% of the GDP. It needs to be watched more carefully, particularly the means to financing the Current Account Deficit.

I fully support direct cash transfer for kerosene and suggest its complete elimination and replacement by providing LPG cylinder with one-time subsidy in a phased manner.

Sir, I have now to raise some concerns.

Let me first take inflation. Sir, historically, higher rate of economic growth and price stability appear to be mutually incompatible objectives. And yet, inflation and particularly food inflation, has rightly emerged as a major issue as it cripples the daily lives of Aam Adami. In a country with one-third of the people still living below the poverty line, the issue of food inflation becomes the life and death and it is obligatory for the Government to deal with inflation firmly and effectively, notwithstanding the consequences of some of the anti-inflationary measures.

Sir, the gap between demand for and supply of commodities is the principle factor causing inflation. Sir, in a growing economy experiencing rise in the income levels of people, first due to growth itself and, second, due to several welfare and poverty alleviating programmes of the Government in our country, demand for goods and services is bound to increase. This precisely has happened in the economy. We can increase the consumption expenditure with the sign of the growing economy since it is desirable.

Sir, the main culprit is the supply side. But I don't see any reason for the food-grains' inflation when government go-downs have stocks of food-grains, mainly rice and wheat, twice the size of buffer stocks. Sir, I emphasise that it is a complete failure of our public distribution system to contain the food-grains inflation. I, therefore, urge the government to give top- most priority to total restructuring and re-hauling of the PDS, if at all it has to be an effective instrument of making food-grains available to the needy people at affordable prices, as also to ensure judicial use of food subsidy. In this context, I suggest, Sir, that all new Fair Price Shops should be allotted to the Women's Self-Help Groups. They would run better than what it is today. Such restructuring is even more eminent in view of the prospective National Food Security Scheme.

Sir, now I say something about agriculture. Sir, in my maiden speech last year, I had mentioned about the disproportionality crisis that agriculture has been facing for over last one and half decade or so. It is one of our glaring failures that progressively declining share of agriculture in the GDP is not accompanied by reduction in the share of employment. Even today, it is supporting more than 52% of the labor force and around 60% of the country's population depends on agriculture with barely 14.2% of the income. Sir, though the country has been talking about the second Green Revolution for more than two decades, no comprehensive and integrated road map for ushering the second Green Revolution has been prepared. Sir, according to me, without quality research in productivity-raising and cost-reducing technology, it would not be possible to bring agriculture out of chaos. Sir, in this context, I suggest the Government to call a special meeting of the National Development Council to exclusively discuss the issue of Indian agriculture.

Sir, Micro, Small and Medium Enterprises contributing 8% of the Country's GDP, 45% of the manufacturing output and 40% of our exports deserve much better deal than what is given in the Budget.

Sir, there can be no two opinions in the country about the disastrous effect of endemic corruption on the Indian economy and society at large. It is eating into all vitals of our democratic polity and adversely affecting the lives of the common men and women in the country. Sir, politicization of the issue of corruption is not going to help. Because it could be legitimately asked that how much money the NDA Government brought from the Swiss Bank when it was ruling during 1998-2004. But I don't want to go into hair-splitting, because the issue of corruption is more substantial than apportioning credit or blame along the party lines. It is a national issue and as the Finance Minister has said, let us fight it collectively. Sir, the question of corruption in this country has never been raised in the last 60 years. The most important question is: Who is corrupt in the country? What are the sources of corruption? Are 90 million slum dwellers in this country corrupt? Are millions of marginal and small farmers and artisans corrupt? Sir, I am constrained to say and I emphasize that in this country the elite class that may be comprising 15 to 20% of population is the main source of corruption. The infinite greed of the elite is breeding corruption. Sir, the main constituents of the elite class, I underline, namely, the political class, the corporate sector, the bureaucracy, judiciary and the big trading community must seriously introspect their contribution to corruption. But that is not all. Corruption takes place because of the failure of rule of law. It takes place because those who indulge into corruption are mostly left scot-free either because the law is weak or the law fails to rule. Sir, this is not surprising when Laski said that law rules the poor and rich rules the law. Sir, it was only in yesterday's news that one Hasan Ali, a Pune businessman is charged by the IT department with defaulting of Income Tax payment of Rs. 71,845 Crore. This is unacceptable. What was IT department till now doing? Rule of law without fear or favor will be an effective step to check corruption. I complement the UPA Government for initiating certain major policies at the international level. But Sir, it is more prudent to ensure that, in the first place, the black money is not generated. Sir, people want results. I would therefore like to suggest the Government to call for a National Round Table Conference of representatives of the political parties, judiciary, corporate sector, media and independent experts who could collectively contribute to evolving ways and means for dealing with corruption.

Sir, as we know, the SCs and STs constitute the most disadvantaged sections of our society. I put on record my appreciation of the post-independence Congress Governments and now the UPA I and UPA II for initiating several economic policies and programmes aiming towards development of these sections and that have yielded results. Sir, as is known, there have been two major schemes, namely Scheduled Castes Sub Plan and Scheduled Tribes Sub Plan for their better development. But Sir, I am constrained to mention that my five year experience as a Member of the Planning Commission was not satisfactory with respect to the implementation of these schemes at the end of the Central Government. Recently, the Planning Commission has revised guidelines of these schemes and exempted 43 ministries from making any allocations to these schemes, mainly on the ground of indivisibility. The argument of indivisibility is disputable and, therefore, I refrain from going into the details. After revised guidelines, it was to be ensured that nearly population-proportionate allocations of the Central plan outlay could be made under these schemes. I want to bring to the notice of the Finance Minister that this has not happened in this Budget. As my calculations show, the actual allocations made are less by about Rs. 24,000 to Rs. 25,000 Crores each for the SCs and STs together amounting to around Rs. 50,000 Crore. I urge the Finance Minister to look into this matter urgently and seriously.

I also expect that the schemes meant for the minorities, other backward communities and differently disabled people are strictly implemented, properly monitored and dispassionately evaluated.

Sir, economic growth requires variety of economic and technological resources. But that is not all. The process of economic growth also involves certain moral and cultural values. In this context, I would like to borrow from this year's Economic Survey:

"For India to develop faster and do better as an economy, it is important to foster the culture of honesty and trustworthiness. Thanks to the fact of this social prerequisite of economic development remaining unrecognized for a very long time, this has not received adequate attention in the scientific literature. Fortunately, a large body of recent economics research has been stressing the importance of these social and cultural factors. While it is true that we do not as yet have a hard science of how to develop these cultural qualities in a population, we know that even the mere understanding of the importance of certain qualities for promoting the economic development of a group of people, helps nurture these qualities in people. After all, people have learnt not to smoke in a crowded room even when not smoking is not in their self-interest simply because they have come to understand that this is not in their collective interest. These good values are then further supported in society through mechanism of social stigma, which help bring individual and social interest into alignment. So once we recognize that honesty, integrity, and trustworthiness are not just good moral qualities in themselves but qualities which, when imbibed by a society, lead to economic progress and human development, people will have a tendency to acquire these qualities; and that should help build a more tolerant and progressive society."

Sir, I thank you very much.

[Courtesy: Dr. Bhalchandra Mungekar's website]