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Union Budget 2016-17: Business as usual - Part I
Even before Arun Jaitley completed his budget speech, PM Modi's fans went to town declaring the budget as a historic pro-rural and pro-farmer. But the facts are different. It is the same old Manmohanomics wine served in a new Modinomics bottle. It is an attempt by the Modi Sarkar to shed its pro-corporate image and present itself as pro-rural and pro-farmer. But nevertheless the budget is sticking to the government's core agenda of Lala service.

Modi Sarkar has once again established itself firmly as a Suit Boot Ki Sarkar. Funda is straight away borrowed from the UPA. Tap the poor to pat the rich. Let us go back to the Economic Survey presented before the budget to grasp the fundamentals of Modinomics.

India's rich were fed off subsidies worth over Rs. One lakh crore in 2015-16 that are meant for the poor. This figure only considered the subsidies on six commodities, two public utilities - the Railways and electricity - and one small savings scheme, the Public Provident Fund. From the subsidised kerosene, the non-poor were benefited nearly by 50 per cent. In respect of subsidies given for Electricity, LPG, Railway fare, Petrol & Diesel and Gold, the non-poor ineligibles were immensely benefited respectively by 84 per cent, 91 per cent, 92 per cent, 96 per cent and 98 per cent.

The tax structure has resulted in aviation fuel being cheaper per litre than petrol and diesel. Aviation fuel is taxed at about 20 per cent, while diesel and petrol are taxed at about 55 per cent and 61 per cent. The real consumers of aviation fuel are those who travel by air, who essentially are the well-off. The rich consume 98 per cent of the gold in the country, and yet gold is taxed at only 1-1.6 per cent. Commodities that are primarily consumed by the rich have a lower tax rate. This is the guiding principle adopted in the 2016-17 budget (Source: The Hindu, New Delhi – Feb 27 – Rich feed off subsidies worth over Rs. 1 lakh crore).

Tapping the wretched

Special Component Plan (SCP) for the Scheduled Caste and Tribal Sub Plan (TSP) for the Scheduled Tribe are components of Union budget, which are in effect since 1979-80 with provision for population-proportionate allocation for their welfare and development with specific focus on individual family and hamlet. As per norms, 16.6% for SCP and 8.6% for TSP (over the Plan Budget amount) are to be allocated in the budget.

But the finance minister's allocations for SCP & TSP are 7.06% (16.6% due) and 4.36% (8.6% due) respectively of the Plan Budget of Rs. 5,50,010 crore. Against the total amount of Rs. 1,38,603 to be allocated for SCP & TSP, the actual amount allocated is Rs 62, 838 crore. The deficit works out to Rs 75,765 crore and has been increased by Rs 11,149 crore over the Revised Budget Estimate for 2015-16. Virtually this amount of Rs. 75,765 crore is a shameless thieving from the poorest people of the land, a sure sign of a Suit Boot Ki Sarkar and a carbon copy of the notorious neo-liberal Manmohanomics.

Let us have a look at the precarious allocations made against the very essential services like nutrition, healthcare and education which has a large bearing over the vast majority of our population.


The very essential aspect of health which sucks a large amount of money is also left dependent on health insurance schemes. The budget for this year for the National Health Mission is Rs. 19,037 crores, which is almost the same last year. Along with inadequate investments in healthcare, it is also disturbing that the entire strategy of this government for improving access to healthcare seems to be based on provision of insurance for a few rather than provision of universal and free health services. Such an approach will only benefit the private sector (insurance companies as well as healthcare providers) and there are serious doubts as to how effective it can be in reducing the burden of health expenditure on people. Similar schemes had already failed miserably in several states.

The NSS data shows that more than 70% of spells of ailment were treated in the private sector. This high dependence on the private sector has been mainly because of poor access to public health services and neo-liberal policies that allowed the unregulated growth of private provision of health care since the 1980s. India is amongst the countries that spend the least on health care with a public spending of 0.24 % of GDP on healthcare compared to 3% in China and 8% in the UK. Successive governments and expert panels have recommended that at least 2.5% to 3% of GDP must be devoted to public expenditure on health (Source: NAPM's Critique of the Budget-2016 as posted by Kamayani on March 3, 2016).


Probably for the first time in the history of the budget, elementary education simply has been glossed over. The budget speech by finance minister made a reference to primary education that was not just only factually incorrect. India has not achieved universalization in primary education, as claimed by him. But it did not even include the budgetary allocation the government plans to make to this sector. Instead, Jaitley moved swiftly to higher education, for which we are told Rs. 1000 crore has been put aside for its financing.

Budget documents, however, reveal that the allocation for school education is up by a meager Rs. 1367.5 crores from the RE of 2015-16. The demand for grants in 2016-17 for school education by the ministry of HRD was Rs. 63, 826.7 crores, but only Rs 43, 554 crores has been allocated by the finance ministry – a whopping shortfall of 20, 273 crores! However, for higher education the demand for grants has been met by the increase in allocation this year, indicating a clear shift in priority towards higher education.

It is not surprising that for Sarva Shiksha Abhiyan, which is the government's vehicle for fulfilling its constitutional obligation under the Right to Education Act, the allocation has gone up by a negligible Rs. 500 crores (even less if compared to the RE). The allocation to the higher education sector thus registers an increase of 13.5% from last year's RE, while school education shows a negligible increase of 3.24%, which if adjusted does not even cover the inflation rate (Source: A Budget that evades the real issues in the social sector by Kiran Bhatty as posted by Kamayani on March 4, 2016).

Women and children

The worst fate is reserved for women and children, despite the florid concerns expressed in the budget speech. The entire ministry will experience a real cut as the increased allocation does not keep pace with projected inflation. But worst of all, the allocation for the Integrated Child Development Services programme (which is still not universalized) has actually been cut in nominal terms, from Rs.15,394 crore to Rs.14,000 crore. As states are struggling to find ways of even paying the anganwadi workers and helpers who are the backbone of the programme, it is terrible to think what will happen if such a stringent cut is actually implemented (Source: 'India budget 2016 – A continued attack on social sectors' by Jayati Ghosh as posted by Kamayani on March 4, 2016).

On food, there is an estimated reduction in budget by nearly Rs 5000 crore. The budget estimate puts the bill at Rs.134,835 cr against Rs.139,419 cr in the RE of current year. Despite the pompous claims of a gigantic push in infrastructure, capital expenditure in 2015-16 was lower than the budgeted and is proposed to be kept at almost same level in 2016-17 – implying a reduction in real terms and as a share of GDP from 1.8 to 1.6 per cent. While budget envisages 11 per cent hike in total expenditure, the capital expenditure that creates assets is enhanced only by 4 per cent (Source: 'True to sustained image' by Santosh Kumar Mohapatra – Orissa Post March 4, 2016).

Space does not permit me to delve deeply on the pathetic budgetary allocation for achieving the PM's promise to free rural India from open defecation. It was promised on Oct 2, 2014 that the whole of rural households will have toilets by 2019. Petty allocations made in 2014-15 and 2015-16 budgets were mocking the PM's pet scheme. If you look at the present allocation of Rs.9500 crore against the total requirement of Rs one lakh crore for Swachh Bharat Abhiyan (rural sanitation), the goal cannot be achieved even after a few decades. Less we say about the provision of safe drinking water the better.

Rural Employment Guarantee Scheme

Jaitley proudly declared that he has increased the Mahatma Gandhi National Rural Employment Guarantee Scheme allocation to the highest ever level of Rs.38,500 crore. But that is false, as the spending under this head reached Rs.38,552 crore in 2013-14. At only 0.25% of GDP, this would also be much lower than the 0.59% that was achieved in 2009-10. And this also conceals the arrears that must be paid by the centre for this programme.

As many as 21 states are still waiting for the money they have already spent that the central government has yet to pay them for the current year, so the final allocation will be around Rs.6,500 crore less if that is accounted for (Source: 'India budget 2016 – A continued attack on social sectors' by Jayati Ghosh as posted by Kamayani on March 4, 2016).

Patting the Suited-Booted

FM Jaitley said the global economy was in serious turmoil and did not appear to be set to emerge from it anytime soon. With scope for exports being limited, the budget was a direction to the economy to generate domestic demand, which would generate employment and growth. However, the FM enhanced indirect taxes and reduced the purchasing power of common people, dampening demand. Meanwhile, direct tax proposals will lead to a revenue loss of Rs.1060 crore, a petty gain to the rich in comparison with the mega bumper lottery called 'Revenue Foregone'.

While the government tried to raise resources by taxing the poor and the middle class more, it failed to take measures to control the Revenues Foregone. In 2015-16, the centre lost the potential tax revenue of Rs 6.11 lakh crore owing to exemptions, concessions and rebate given to a section of tax payers, particularly rich corporates. This whopping concession for creating a jobless wonder growth amounts to more than a third of the budget estimate.

This was an increase of Rs.56779 crore over the previous fiscal. Earlier called "Revenue foregone" and now renamed "Revenue Impact of Tax Incentives" by the Modi government, it is indirect subsidy to preferred taxpayers. This figure does not include export promotion-related concession which amounts to Rs 50938 crore (Source: 'True to sustained image' by Santosh Kumar Mohapatra - Orissa Post March 4, 2016).

The corporate world has on an average received Rs 70 crore every hour (or Rs 1674 crore every day) in write-offs on direct corporate income tax, excise and customs. And that for eleven years running. It's tucked away at the very rear of the budget document. A seemingly innocuous annexure. Its title, though, is disarmingly honest: 'Statement of Revenue Foregone' (Source: 'How much can we forego to India Inc' by P. Sainath, March 1, 2015).

Budgets only started carrying that annexure a few years ago, and we only have the data from 2005-06. During the eleven year period from 2005-06, a whopping amount of Rs 48 lakh crore was doled out to corporate sector in the form of tax concessions. That is in a much acclaimed Free Market Economy where we are told that competition was the mantra and no more free lunch. Nine were UPA years averaging an annual dole of Rs 4.05 lakh crore. It is an average annual dole of Rs 5.9 lakh crore for the years 2014-15 and 2015-16. Easily Modinomics has defeated Manmohanomics in the Lala Seva. These are the same Lalas who owe well above 75 per cent of NPAs of public sector banks amounting to more than 7 lakh crore. Govindacharyaji, how accurately you called the fight between Congress and BJP a shadow boxing!

Under these circumstances, to boost revenue the budget has announced an aggressive disinvestment of the public sector to the tune of Rs.56,500 crore for 2016-17. It amounts to selling family silver to meet current expenditure. Strangely the finance minister does not want to sell the shares of Union government held in Axis Bank, ITC and L&T amounting to nearly Rs.60,000 crore. Why and for whose convenience, corruption-free Modi Sarkar?

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of In case you have a opposing view, please click here to share the same in the comments section.
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