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Budget 2018-19. A Fine Balancing Act

The FM has certainly taken a long-term view by focusing on agriculture, healthcare, education, and infrastructure

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Budget making is always a tightrope act, but when a Finance Minister has to prepare it towards the end of a term, the balancing act becomes that much more challenging. The pulls and pressure to keep everyone happy, from the middle class to the farmers, from the rating agency to exporters and from the investor to the tax man, is no mean task. Clearly, all cannot be pleased! The budget in recent years has also become a platform to spell out government’s thinking and priorities on various sectors for the medium to long term. This means that pronouncements are often not reflected in allocations made in the short term. The budget, therefore, needs to be looked at in this context. The FM has certainly taken a long-term view by focusing on agriculture, healthcare, education, and infrastructure. Lets first look at how specific pain points of the farmers have been addressed. 

  • By Assuring revenue of 1.5 times the cost incurred, it has safeguarded the farmer’s income. A clarification by NITI Ayog Vice Chairman, Rajiv Kumar that all costs will be considered is welcome; we have to wait and see the operational roll out.
  • By funding agricultural market development and increasing the reach of e-NAM, farmers’ access to market has been strengthened. The proposal to develop 22000 Garmin markets and link each of them to e-NAM is indeed necessary as it will bring transparency in price discovery. 
  • Extending Kisan Credit Card and creating a Rs 10,000 Crs fund for animal husbandry was essential, as this subsector is the single largest component and contributes almost 30% GDP of Agriculture.
  • The effort to recognize lessee cultivators as farmers and provide them with benefits of government schemes is commendable. This will help raise production, utilize fallow land and importantly, provide relief to the most vulnerable section of the farming community.

The announcement of the National Health Protection Scheme is groundbreaking. While large segments of our population have moved above the poverty line in the last 25 years, it is also well documented that some slip back into poverty because of health expenses. This will provide a much-needed relief for the underprivileged, to face such adversities.

The Education sector has seen two major innovations. The launch of RISE (Revitalizing Infrastructure and Systems in Education) reflects a deep commitment to Higher Education. The intention to partly finance Higher Education institutions through a special purpose vehicle will bring more accountability and responsibility. Only grants can sometime bring complacency, especially since the money doled out by the central government is huge. Of course it needs to be ensured that the new IIMs, AIIMS etc, get adequate grants to get them off the ground. There is finally recognition that poor quality school education has had a debilitating impact on the younger generation. As employers, we have seen that a school pass out is no guarantee for a minimum education standard. Therefore the plan to conduct a survey of more than 20 lakh children to assess the status on the ground, will squarely address where the problems lies.

Finally, like all budgets, the proof of the pudding is in the eating. Implementations challenges remain and these need some structural changes in government functioning. This budget has laid a particularly strong emphasis on Agriculture, Heath, Education, and Infrastructure. All these are concurrent subjects and require close Centre-State working. Fortunately, the working of the GST council has shown that it is possible to introduce reforms for common good, even in a complex federal structure like ours. I would, therefore, suggest that the government should consider creating forums for the four sectors mentioned above with State and Central Government representatives. An intuitional framework where all policy issues and implementation challenges are discussed and solutions arrived at will go a long way in making benefits reach the poor. NITI Ayog will need to take this initiative and suggest an appropriate structure.

Overall, my compliments to the FM for performing the proverbial “Indian rope trick”.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Budget 2018 Union Budget 2018

Ajay S. Shriram

The author is Chairman & Sr. Managing Director of DCM Shriram

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