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Union Budget 2018-19: Tilted Balance?
The Union Budget is always anticipated with baited breath every year. Since 2017, it has begun greeting us sooner than the February-end sojourn that was the convention earlier. The wait for the budget is exacerbated by the Economic Survey that is released immediately preceding the budget. It diagnoses the policies of the year gone by and doles out key pointers for the road ahead.
The budget for this year holds greater relevance since it is the last budget from this government before the General Elections in 2019. As such, budgets preceding election years are known to be populist. This piece analyses this year’s budget with respect to some key sectors and infer what the months to come hold in store. The budget shows great promise for farmers, the aged and the health sector, in general. It has also been hailed for giving greater importance than before to research and science. However, only a detailed analysis of the fine print reveals the substance behind the proposals.
A key segment of the budget is the ‘Ayushman Bharat’ programme, which aims at making interventions to address health holistically, in primary, secondary and tertiary care systems. The initiatives under the programme are: (1) Health and Wellness Centres, and (2) the National Health Protection Scheme. The former traces its origin to the National Health Policy, 2017, which envisioned Health and Wellness Centres as the foundation of India’s health system. Under this scheme, 1.5 lakh centres will enhance the accessibility of the health care system for the people. These centres will provide comprehensive health care, including for non-communicable diseases; maternal and child health services; and free essential drugs and diagnostic services. The scheme is multi-faceted in its approach in that it envisages the contribution of the private sector through CSR and philanthropic institutions in adopting these centres as well. The latter is bursting with promise and is being touted as the world’s largest government-funded health cover scheme- it will cover over 10 crore poor and vulnerable families, roughly translating to around 50 crore beneficiaries. It provides coverage of upto Rs. 5 lakh per family per year for secondary and tertiary care hospitalization. The enhanced quantum is definitely praiseworthy, when seen in contrast to the Rashtriya Swasthya Bima Yojana (RSBY), which guaranteed a maximum cover of Rs. 30,000 per household. Notably however, the roadmap for the implementation of this scheme is yet to be chalked out and therefore, one must wait before lauding/criticizing this move.
The government has also espoused benefits for old age people- there is a proposal to extend the Pradhan Mantri Vaya Vandana Yojana till March 2020 under which an assured return of 8% is given by the Life Insurance Corporation of India, and the existing limit on investment of Rs 7.5 lakh has been doubled to Rs. 15 lakh. At a time when fixed deposit returns are around 7%, this will help senior citizens get higher interest rates. The government has also raised the exemption limit on income from interest by five times to Rs. 50,000 per year. No TDS will be deducted from the interest income of senior citizens. Arun Jaitley also increased the limit of deduction for health insurance premium and medical expenditure to Rs 50,000 from Rs 30,000 under Section 80D. The tax benefits can also be claimed by those who incur expenditure for buying health insurance policies, or spend on medical treatment of dependent senior citizens.
The next segment that has been paid considerable attention is the farming community. The government has announced a Minimum Support Price (MSP) atleast 1.5 times that of the cost of production for hitherto unannounced Kharif crops. This is in consonance with the declared objective of doubling farmers’ income by 2022. Additionally, ‘Operation Greens’ has been announced to augment food processing and 22,000 Gramin Agriculture Markets to help farmers sell their produce. Furthermore, the institutional credit for agriculture has been increased to Rs.11 lakh crore. However, the move regarding the MSP will again have to go through a test of fire. The Centre had in November last year announced MSP for the rabi (winter sown) season and the prices of most crops were significantly higher than 50% of the cost of production when the actual paid cost plus imputed value of unpaid family labour was used as a base to fix the margin. This formula has not proven a hit with many farmers’ organizations, who are instead asking for “comprehensive cost” evaluation, including imputed rent on owned land and the value of capital assets. Sudhir Panwar, the president of the Kisan Jagriti Manch has said, “The finance minister’s claim that his government already included 50% profit in MSP of rabi crops is misleading as it excluded rental value of land, depreciation and interest which are always computed in other enterprises.” There is also a fear that an increase in MSP will mean a hike in food prices for consumers.
The budget has also increased the allocation to the science sector by 10%, and the biggest gainer among the related Ministries and Departments is the space arena, where the allocation has seen an 18% hike. While all this sounds pleasing, the truth is that the current budget allocation to this segment is a mere 0.8% of the GDP, much below the 3% GDP threshold demanded by researchers in the ‘march for science’ events across the country in August, 2017.
The government has also paid attention to infrastructure and the education sector, among other areas. The budget however, does seem to fall short on delivering immediate relief to the middle class- a point that was highlighted during the post-budget presentation press conference as well. Further, as laudable as the initiatives may be, there will be an ad-hoc question on them so long as their implementation is not explained and their impact appraised. Further, before embarking on these promises, the ones gone by need to be re-looked at, to ascertain how effective they were and to make up for shortcomings in the ones undertaken now, and a key role in this will be played by all stakeholders at all levels.
