Farewell to ‘Welfarism’

Bharat Dogra

Although the Union Budget is discussed extensively in the media every year, its implications for the poor and weaker sections do not get attention.

In this year's Union budget heavy cuts have been imposed in several social priority programmes. The ICDS budget has been cut from Rs 16000 crore to Rs, 8000 crore, the mid-day meal budget from Rs 13000 cr to Rs 9000 cr while the Sarva Shiksha Abhiyan budget has been reduced from 28000 crore to Rs 22000 crore. And sharp reduction in drinking water, health and family welfare defies logic.

The budget for the scheduled caste sub-plan was reduced from Rs 50548 cr (Budget estimate 2014-15) to Rs 33638 (Revised estimate 2014-15) to Rs 30850 cr (Budget estimate for 2015-16). The budget for tribal sub-plan has been reduced from Rs 32386 cr (Budget Estimate 2014-15) to Rs 20535 cr (Revised Estimate) to Rs 19979 cr (Budget Estimate 2015-16).

The outlay for Women and Child Development Ministry has been reduced from Rs 21193 crore in the previous year to Rs 10351 crore this year. The overall allocation under gender budgeting has also gone down significantly.

Such heavy cuts were probably imposed on the understanding that the state governments which are now entitled to a significantly higher share of Central taxes on the basis of the recommendations of the 14th Finance Commission will be able to make up for these cuts.

However there is no assurance that all state governments will have enough extra resources to do this and also that they'll have the social commitment to do so.

There is certainly some strength in the assertion that in a highly diverse country like India, states should have a greater say in designing various schemes and programmes according to their specific needs. If they have a greater share of funds to spend according to their specific needs, then this can result in improvements in various schemes.

Nevertheless, three specific problems can emerge in this phase of important changes. Firstly, it has been seen that even before the issue of changing centre-state allocations came up, a tendency to make significant cuts in important social sector programmes had been visible. Significant cuts have been made in this financial year and in recent years in several important areas of social sectors including health and rural employment.

Secondly, even assuming that cuts in Union budget in social sectors will be adequately made up by the enhanced state budgets, there may be a time-lag in this. During the transition period there is a possibility that very important welfare programmes will be deprived of funds causing grave hardships to the most needy people.

On the whole it is clear that despite the new situation created by the Finance Commission's recommendations, the Union Budget should not have made such big cuts in social priority programmes. Many exemptions given to the corporate and trading sectors could've been removed to get more resources for the poor. For example the exemptions given on custom duties for trading gold and diamond could have been removed to generate enough resources to avoid many cuts. By making significant efforts to raise the tax-GDP ratio and the other ways, the government could've raised extra resources to avoid any sudden and drastic cut in social priority programmes.

Unfortunately these and related aspects of the Union budget did not get adequate coverage in the extensive media discussion on budget, particularly on TV. There is clearly a need for giving much more emphasis on issues relating to the poor and vulnerable sections of society in the discussion on Union Budget as well as state budgets in media.

Vol. 47, No. 40, Apr 12 - 18, 2015