Ban The Budget

The top-20% take everything away & in turn leave the bottom 80% with nothing, forever placing them at a serious disadvantage. In a democracy like ours, if this does not get upturned, the budget loses its essential quintessence...

Before the honourable Finance Minister Mr. P. Chidambaram goes on to deliver another of his Union Budget speeches (this is his seventh) on 29th February, 2008, isn’t it reasonable for him to introspect in retrospect what have been the effects of his previous seven budgets on the Indian economy? Isn’t it essential for a Finance Minister to know whether his previous budgetary initiatives have been instrumental in pulling out even one Indian out of the millions from indigence and insolvency? Isn’t it fair common sense to find out how many new children have got admitted to the various schools across the country? Doesn’t it make sense to ask how many mothers are still dying in this country while giving birth; or for that matter, how many of his countrymen are still dying of curable diseases like TB and malaria? For all the budgetary allocations that have been announced over the years, isn’t it significant to know how many young Indians still stand productively disengaged, devoid of any essential human capabilities and developmental capacities? Or for that matter for all the budgets that have been allocated over the years, isn’t it imperative to take stock of the status of our senior citizens, people of special needs, Dalits and women? And finally, isn’t it most urgent to know what has been the status on justice delivery - the bedrock of democratic India?

If a Finance Minister, guided by conventions, does not feel that it is his job to take a stock of all these strategic socio-economic outcomes, then there’s no point in the entire budget exercise. Even if a Finance Minister defies all conventions and makes an attempt to take stock of the aforementioned parameters and does not find convincing improvements, then too, there is no economic rationale to continue the budget exercise in its extent and entire versions. For it has been long that politicians of this ministry have been aiming at power, and power without any responsibility. It’s important for policy makers to realise that the Union Budget is a national exercise, wherein each and every citizen contributes to its fund, in form of taxes (direct and indirect) and thus it should be an exercise wherein the benefits should encompass each and every citizen’s life in a definite and proportionate fashion. The crude fact is that in the present budgetary framework, the top 20% of the society take everything away and in turn leave the underprivileged bottom 80% with nothing, forever placing them at a serious disadvantage. In a functional democracy like ours, if this does not get upturned, the entire budget exercise loses its essential quintessence.

It is an open secret that nothing like that has ever happened, as then the state of affairs would not have been as miserable as it stands today. Post independence, Union Budgets have always been a low key affair (relatively speaking!); but then, all this had gone in for a complete image makeover since 1991 when our current Prime Minister and then Finance Minister Dr. Manmohan Singh, made budget a platform to announce economic reforms packages. Then onwards, each and every gentleman from North Block has tried his best to blatantly utilise this platform to gain political mileage, to such an extent that the budget at times delivered reckless policy packages, only appeasing the ruling political party’s stakeholders, with no concern to the vast majority. As a result, over the years, the budget, which ideally should put up with serious stock taking exercise(s), has been reduced to a weak document with persuasive political overtones.

What is amazing is the manner in which Finance Ministers, over the years, have been baselessly allocating invaluable financial resources, which are hard earned tax payers’ money, to earn brownie points from a few sections in connivance with popular media!! In fact, over the last few budgets, it became all the more evident that various budgetonomics of almost all FMs were more to gratify select top sections of the society. This can be corroborated by the fact that in almost all pre-budget talks and consultations, the FM talks to the big corporate and industry associations and rarely to any social watch group and representative of budget advocacy organisations. It’s very clear that the society and social sector representatives are not asked for any significant input or invited for active participation in either pre-budget discussions or textual proposals. The whole concept of budget for aam adami is nothing but a big farce, which has got lost somewhere in the crowd of big lobbyists. Consider this: The manner in which the fertilizer policy has been structured is simply to allow companies to profit, and not farmers in anyway. The resultant economic packages (that aim at reducing the budget deficit) have been consequently reducing the social sector allocations and expenditures.

And the irony is that, in most of the Union budgets, the prices of cosmetic and luxury products are revised; rarely do any essential products find reference (giving an impression that India needs Pedigree more than Paranthas). Worse is media, which ideally should have been responsible in addressing many understated concerns taken as a whole, but instead has played the role of a mute spectator, persistently playing to the tunes of policy makers and over-hyped budgets year after year in a meaningless manner! At this juncture, it is very appropriate to indicate that the research undertaken by the noted organisation International Budget Project (IBP) suggests that the most significant results achieved by independent budget groups lie in improvising budget transparency, awareness and civil society participation on one hand, and augmenting budgetary resources for existing programmes and process improvements in their eventual utilisation on the other. IBP’s research also provides evidence that the analysis carried out by independent groups can directly lead to positive improvements in budget policies, more specifically in social sectors.

The strategic intent (inclusiveness) of the previous budgets can clearly be gauged by the nation’s economic performance. Seventeen years into reforms, India’s economic performance had been undoubtedly stupendous. It has not just quadrupled its GDP, doubled its growth rate, our economic performance even went on to ensure accumulation of mammoth foreign exchange reserves (from a mere $1 billion in 1991, to almost $290 billion plus now). It is interesting to note that in the year 1990, the Sensex for the first time touched the four digit figure of 1000, a figure that shot up to a staggering twenty fold mark, and currently cruising at 18,000 plus. The biggest threshold to this growth came post the year 2000. Between then and now, India has almost doubled its per-capita income. Most of the other economic indicators too have shown a persistent northward trend.

But as far as key social indicators are concerned, the results have fallen into an alarming abyss, which clearly shows the exclusive and elitist intent of our Finance Ministers while drafting budget documents! Pathetically, there have been virtually no changes in India’s lowly rated social development quotients and corresponding equity and social justice indicators.

In 2000, UNDP HDR ranked India at the 128th position. In 2007, we were placed at 126, a pitiable improvement of 2 ranks! This has been true not just for UNDP HDR, but for most other global reports. It is amazing that India could not perform better in even a single social indicator – be it education, health, employment, gender issues or on justice delivery or even social security to unemployed, senior citizens, Dalits and people with special needs.

There isn’t much doubt in the fact that this year’s budget too would have its typical and selective stretch of the rosy picture of Indian economy, conveniently undermining those 60% children who drop out from schools (even before they finish Class VIII). Of those who finally make it to higher secondary, only 11% have the privilege of higher education and with just 3% having access to technical education! At best, a few extra rupees are allocated by sycophantic politicians as lip service to those 1.34 crore school children in the age group of 6-14 years. If education was bad, health is worse. It is amazing how a policy maker never is interested in investigating how India – which has evolved as a global health destination – languishes at a paltry 18th from the bottom, in terms of health sector spending as a share of GDP. On account of such meagre allocations and lack of accountability, a staggering 15% of our population dies before seeing the age of 40. It is estimated that there are three million people who are living with HIV/AIDS, some 1.8 million people who contract TB every year (of which 3.5 lakhs die), some 107,000 more with leprosy... That’s just the tip! As such, the public health delivery system does not reach significant parts of the country; and ever wherever it does, there is a crying need for a complete overhaul. There are public health centres across the country where there are no doctors; and even if doctors are there, then there are no medicines available! You read it right...

‘No’ medicines! For all health budgets that have been allocated to public health systems, people still spend 95% of their health expenses on private healthcare services. What’s more, health costs still remain one of the primary reasons for people being pulled back to poverty levels in India. In fact, in this given scenario, it is indeed amazing that in the 2005-06 budget, Rs.2.5 billion was initially allocated for setting up six AIIMS-like institutions, which was then eventually reduced to Rs.750 million in the 2006-07 budget and for the year 2007-08, Rs.1.5 billion was kept aside for the same programme. But then, leave alone initiating this scheme; the FM does not even seem to have any apparent idea of allocating funds at the first place in an efficient and effective manner.

For all that our honourable Finance Minister announced in his previous budget with respect to people with special needs, there still exist some 150 million who are visually impaired and some 2.19 million people with some other forms of disabilities. Of those, there are only a mere 34% who are productively engaged! On the issue of gender equality, India’s performance is going from bad to worse. The Global Gender Index measures gender-based inequalities on economic, political, education and health-based criteria. India ranks 114th in 2007’s report, slipping several notches from the previous year’s ranking. India has the single highest share of neo-natal deaths in the world, 2.1 million. Moreover, critical exploitation of children had placed India in the ‘World’s Worst Place to Be A Kid’ list – prepared by Foreign Policy magazine. About 1.2 million children (under five years of age) die from malnutrition every year and about 12 million are forced to work as child labour in most excruciating conditions. Not just women and children, even the state of the underprivileged sections of the society is most scandalous!! Picture this: As per Human Rights Watch Report 2007 – ‘Crimes against Dalits are appalling, which occur every 20 minutes in India. Every day on an average, three Dalit women are raped, two are murdered and two of their houses are burnt!

These figures represent only a fraction of actual atrocities, for many Dalits do not register cases for fear of retaliation by the police and upper-caste Hindu individuals. Official figures show that there are still 0.343 million manual scavengers in India from Dalit community. Yet there have been no significant budgetary allocations for their socio-economic upliftment! In fact, not just Dalits, as far as the Indian poor are concerned, it is all the same. Over the years, budgetary priorities have been misplaced to such an extent that on one hand, India takes pride in having four billionaires in the world’s top 10 billionaires list, yet there exist 400 million people who find it difficult to manage even one square meal per day. The well intended NREGA scheme, which guaranteed a minimum 100 days of employment in 600 districts across the country is riddled with corruption, poor physical implementation and administrative incapacity at all levels.

People are rampantly cheated on wages and there have been reports that on an average, some 40 days of employment are generated as against the stipulated 100 days. Last year, the budget added 330 districts under the purview of NREGA programme. An allocation of Rs.113 billion was made for NREGA in 2006-07, but only Rs.79.86 billion was released (leave utilisation) up to February 28, 2007. Thus, somewhere about Rs.35 billion was left unused with the government. Since the scheme was launched in 2005, there was an old surplus of Rs.20 billion, which was used in last year’s allocation. In effect, the total funds available for this scheme for 2007-08 are Rs.175 billion. This effectively meant that allocation per district had been actually reduced from Rs.565 million to Rs.363.6 million, clearly indicating the intent of the budget exercise!

The state of affairs looks alarmingly similar on other social fronts as well. Any Finance Minister might say that his role is just confined to giving an account of revenues and expenditure through the budget and nothing more than that. He might even state that it is not the ministry’s sole responsibility to track as to where the funds, which were meant to construct schools, hospitals or pay wages through the NREGA scheme, actually go. Or for that matter, it is not his ministry’s concern that a Dalit woman is being raped and beaten up every eight hours! Actually the first priority and the foremost responsibility of the FM should be to adequately fund the judiciary and set up hundreds of courts, so that no one can get away by siphoning funds and raping an innocent woman. Today, they can get away simply because they know that at any given point in time, there are over 20 million cases pending in High Courts and about 26 million cases pending in subordinate courts across India, so justice can never be delivered. In addition, almost all courts today are facing a dearth of funds. The expenditure on judiciary is a mere 0.2% of GNP. About 50% of this expenditure is currently generated by court fees and fines, making the entire process dangerously slow. As a net affect, not only do corruption, criminalisation and inefficiency thrive at every stage of social delivery, but also the slow delivery of justice has forced some quarter of a million undertrials to languish in jails in inhuman conditions.

This year, the FM can definitely bring in a change in the budget by allocating adequate funds for the social sectors, as there has been an unprecedented collection of tax revenues. But that alone would not serve the purpose, as it is pertinent for the ministry to realise that Union Budgets have to be a stock-taking exercise on all these basic parameters, as only this would entitle basic human existence for all, leaving nothing else left that’s important enough for the government to put its mind on. For everything else would be taken care by itself. It is also pertinent to realise that various social schemes and allocations in the budgets have direct ramifications for the entire economy and polity.

It is essential for Finance Ministers to portray public priorities & present their budgets against an excellent record of effective execution of reforms in previous year as well. In a rapidly growing economy like India, where socio-economic problems also need to be handled urgently, a budget should actually inform millions of people glued before their television sets, about initiatives in the social sector – just like a progress report – and should also speak about societal development, not about what has been done for the top 20%. But then, being election year, chances are that the FM would, to appease the party’s stakeholders, deliver a non-representative budget again, which would only grossly discount and discolour social priorities and engineer a magnificent growth story for the upper crest of our population. It would again become an annual platform wherein, using the fine art of rhetoric, attempts would be made to build an economic system of the top 20%, by the top 20% and for the top 20%! And if that happens, it is time that we immediately ban such a futile budget exercise!!!


Deputy Chairman of Planning Commission Montek Singh Ahluwalia met with the Finance Minister on December 13, 2006.

Several agricultural experts including Ashok Gulati of International Food Policy & Research Institute and farmer leader Sharad Joshi participated in a pre-budget meeting with the Finance Minister on December 29, 2006.

All Indian Trade Union Congress’ Gurudas Dasgupta & Indian National Trade Union Congress’ Sanjeeva Reddy presented a joint memorandum to the Finance Minister on December 29, 2006.

CII submitted a pre-budget memorandum to the Finance Minister on January 1, 2007.

ASSOCHAM presented its list of pre-budget proposals in the form of a memorandum on January 4, 2007.

Corporate bigwigs & industry representatives including Ratan Tata, Mukesh Ambani, Anil Ambani, Sunil Bharti Mittal, Azim Premji, Venu Srinivasan, A. M. Naik, Venugopal Dhoot, Kiran Karnik, Malvinder Singh, Kiran Mazumdar Shaw, CII President R. Seshasayee, FICCI past-president Y. K. Modi & Assocham President Anil Agarwal met with the Finance Minister in a pre-budget meeting on January 9, 2007.

Representatives of Foreign Institutional Investors held discussions with Finance Minister on January 27, 2007.

Leading economists such as Director-General of Research and Information Systems for Developing Countries (RIS), Nagesh Kumar and the Director, Madras School of Economics, D. K. Srivastava met with Finance Minister on December 31, 2006.

Indian Electrical & Electronics Manufacturers’ Association (IEEMA) met Finance Minister to submit their pre-budget memorandum on November 7, 2006.

Union Petroleum and Natural Gas Minister Murli Deora met Finance Minister to present the ministry’s pre-budget proposals on January 25, 2007.

Congress Parliamentary Party held a pre-budget meeting with the Finance Minister on December 14, 2006.

Several civil society organisations (CSOs), despite all efforts have been unable to meet the FM.

People’s Budget Initiative – a coalition of several people’s organisations, including reputed national and international NGOs, made numerous attempts to seek an audience with the FM without any success.