Union Budget 2018-19: Gimmick Vs Reality

This article critically analyses the Union Budget 2018 through the eyes of a conscious citizen of India. Farmers' resentment, unemployment, education and health were the main issues to be addressed by the government in the budget. This article tries to check the main announcements of this budget on these issues on the basis of reality.

Normally, union budget is for all sorts of citizens of the country. The union government is supposed to address the needs of all classes of citizens and make prudent provision of funds to achieve a uniform economic growth for the country. In last few years, it has been observed that the economic growth was highly imbalanced. Demonetisation and GST had a negative impact on the economy of the country. Demonetisation ruined the employment and income of people in unorganised sector of the economy. The worst hit sector was the agriculture sector. The small scale and medium scale industries, where a considerable employment is created, were the second to feel the negative impact of the same. This budget was the last working budget for the ruling party. The unemployment in the youth, farmer's resentment, health and education are the pressing issues before the government. The Economic Survey by the government focused on three major topics: Unemployment, Education & Agriculture Sector. Keeping these in view, the budget is slightly tilted towards the farmers and rural economy. The budget has given some space to health and education. The issue of unemployment did not find any place in the budget. This clearly shows the compulsion of the government in the election year. As usual, the main announcements in the budget seem to be election gimmicks rather than reality. The budget is analysed critically in the following lines for its proposed schemes and allocations for the agriculture sector, employment, health and education.

Since the article is based on the announcements made by the Finance Minister in his budget speech, portions related to the relevant announcements have been taken as it were from the published text of the speech.

Agriculture and Rural Sector

In his speech the Finance Minister announced that the government plans to build 17 lakh kilometers of rural roads, 51 lakh new rural houses, 1.88 crore toilets, and provide 1.75 crore new household electric connections to make rural areas attractive vis-à-vis urban areas. Government proposes to launch an ''Operation Greens'' on the lines of ''Operation Flood''. ''Operation Greens'' shall promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management. The budget proposes to allocate a sum of Rs. 500 crore for this purpose. The budget also announced setting up a Fisheries and Aquaculture Infrastructure Development Fund (FAIDF) for fisheries sector and an Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirement of animal husbandry sector. Total Corpus of these two new Funds would be Rs. 10,000 crore. The time frame for these announcements has not been specified.

During last budget presentation,the announcements on the Pradhan Mantri Fasal Bima Yojana (PMFBY) and increased allocation for Mahatma Gandhi National Employment Guarantee Scheme (MGNREGS) were the main announcements for this sector. But, this time the finance minister did not even mention the PMFBY and MGNREGS in his Budget speech. There is no mention of steps towards providing debt relief to farmers, which has been a major demand of the farmers across the country. This means that the massive debt burden that is pushing farmers into distress and suicides, has not been considered in the budget. There is no mention of steps to bring many excluded sections of the farming community into the ambit of institutional credit, crop insurance and other support systems. This includes women farmers, Adivasi farmers, tenant farmers and landless agricultural workers.

But, this year, the big announcement is about minimum support price (MSP) for agricultural produce. According to the budget the government will implement Prime Minister's and BJP's campaign promise of fixing MSP of agriculture products at one-and-a-half times the cost of production during the election campaign of 2014 general elections. This was also a promise that attracted the farmers' votes to the BJP. In reality, during the three years since this government has been in power the incomes from the agricultural sector have been stagnant or declined. The Economic Survey has highlighted that the farmers are in crisis, their incomes have not increased, their prices are low, they are in deep debt and their income may go down by 20% because of the effects of climate change. The budget speech simply states that NITI Aayog is working with the states to come up with a mechanism for market intervention and procurement, which will ensure this MSP. However, the Budget allocation for the the Market Intervention Scheme is a meagre Rs. 200 crore. This amount seems to be very less compared with the gap of payment of MSP. The double speak of the government on this issue is clarified in an affidavit submitted to the Supreme Court in 2015 which states that the demand of MSP at 50% above cost of production cannot be met.

Another big announcement is regarding the implementation of Ujjwala scheme. The budget proposed to increase the target of providing free connection under this scheme to 8 crore poor women during this financial year. According to data from the Centre for Monitoring the Indian Economy, 20 million out of the 32.2 million new LPG connections in 2016-17 were part of this scheme. This scheme was aimed to replace unclean cooking fuels with the clean and more efficient LPG. This scheme contributed to the BJP's win in the UP assembly polls. Data shows that increase in the consumption of LPG rose from 9 percent to 9.8 percent from 2015-16 to 2016-17, while the increase in LPG customers in the same time period rose from 10.2 percent to 16.2 percent. This is because the poor women are not able to purchase the refill. The government calls the scheme a success because of the rise in LPG connections.


The budgetary estimate for health in 2017-2018 was Rs 48,878 crores, the revised estimate is Rs 53,198 crores and the budgetary allocation for the current year is Rs 54,667 crores. Thus, this year's allocation shows an increase of around 12 percent over last year's allocation but only 3 percent increase over the revised estimate. In terms of public health expenditure as a proportion of GDP, it has declined as compared to last budget. The budget speech had some announcements on exemption on health for senior citizens. But the FM forgot the Senior citizens, who have no regular income and are living on savings, are in deep trouble. Around 65 percent of rural elderly and around 90 percent seniors without any social security are in precarious condition. The worst thing for the senior citizens is 18 percent GST levied on elder and disabled care.

However, the FM announced the flagship National Health Protection Scheme that will cover 10 crore poor and vulnerable families in the country, or about 50 crore beneficiaries, with a cover of 5 lakh per family per year for secondary and tertiary care hospitalisation. In the last Budget, the government had announced the National Health Protection Scheme (NHPS) which had proposed to give Rs.1 lakh per family. The government told to parliament recently that NHPS was sill to take off and the scheme was yet to be finalised. The new scheme is the revival of this old scheme with a hike, from Rs. 1 lakh to Rs. 5 lakh per family. Each of the families will receive Rs. five lakh for secondary and tertiary care. Also, the policy might be to offload some of the burden of government hospitals since the scheme would be extended to the private hospitals in the same way as the private health insurance schemes do. This also shows that instead of providing equitable and affordable healthcare to all its citizens the government is encouraging private players without any regulation on them. This scheme will require very huge fund for its implementation. The ironical part of it is that the scheme is not yet ready to launch and it would take six more month to workout the scheme. The states will also pose their financial problems for this scheme since they have their own health schemes.


In the budget there are so many good announcements. Moving from black board to digital board, integrated B.Ed programs, the promise of the proposed investment of Rs 1,00,000 crore 'Revitalising Infrastructure and Systems in Education (RISE) and the Eklavya schools for ST students etc.. But, there are no allocations made for them in the current year. The allocations for education increased from Rs 81,869 crore (revised estimates) to Rs. 85,010 crore, an increase of around 4 percent only. This government repeatedly accepted India must spend at least 6 percent of GDP on education.

Now if we check the reality, then we see that the government will get Rs. 11,000 crores from the new cess named as 'health and education cess'. This is not clear what percentage of this would be spent on education. The probability of using this money on mega health scheme seems to be more in this election year. If we see GDP wise then the allocation for education comes to around 3.5 percent of GDP which is in fact less than around 3.7 percent of GDP last year. This Budget on education is lip service and without any concrete investment for education. The tax payers are being eye washed in the name of education and health.


If we read the FM's then we find that there is no problem of unemployment in the country. And if there were some problems then those have been solved and sufficient employment is being generated in the country. He very confidently said that the measures taken by the government have started showing results. He also said that an independent study conducted recently has shown that 70 lakh formal jobs will be created this year without mentioning the source of survey and the methodology of arriving at this figure. He forgot that his government came into power on promising 1 crore jobs annually. But, according to the International Labour Organization, only about 823,000 jobs had been created in the country till October last year and most of it classified as vulnerable employment.

A face saving scheme on the issue of unemployment is Pradhan Mantri MUDRA scheme The FM has announced that the budget has allocated Rs. 3 lakh crore for MUDRA scheme. This is nearly 20 per cent rise from the last year's allocation of Rs. 2.44 lakh crore. This was launched in 2015 and the scheme was aimed at "funding the unfunded" which empowers entrepreneurs through financial assistance. Self employment does in the long run leads to employment for others also but it is a long process and takes place only after stabilisation of the business. The government data shows that under this scheme, loan worth Rs. 3.92 lakh crore was sanctioned to 9.52 crore beneficiaries up to 15 September 2017. The Loan disbursements under Pradhan Mantri Mudra Yojana, the government's micro loans scheme, are at only 62% of the target for 2016-17 and now the reports are showing that the scheme fails to reach targeted section owing to the banking hurdles and corruption in the disbursing agencies. These loans will turn out to be liabilities of the already burdened banking system.


We see that this budget is for nobody. Time will show whether the budget announcements may give benefit to the farmers and other deprived people, but, it is sure that the politicians on the constitutional posts will get hike in their salaries and perks as per the announcement in the budget. Salaried middle class was expecting some change in the income tax slabs but they got Rs. 40000 standard deduction replacing the travel and medical expenditure. The cess has been increased to 4 percent from 3 percent in the name of health and education cess. This has increased the tax payment. As the reality checks submitted in the article, the big announcements made in the budget are aimed at gaining political mileage in coming general elections only on the cost of honest tax payers' hard earned money.


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