Bharat Jhunjhunwala
The Budget has a number of plus points. Investment in infrastructure such as in urban metro rails has been increased. A target of strategic disinvestment of PSUs and even two public sector banks has been set to garner `1.75 crore in the coming year. Private players are to be encouraged to set up electricity distribution companies so as to save consumers from the inefficiency and corruption of state electricity boards and to give consumers a choice of suppliers. These are all good. However, the fundamental problem of providing employment has been given a miss. Employment is needed not only for its own sake, but also to create demand in the economy. The Budget has missed taking steps towards meeting this fundamental requirement.
The country is on the boil over the farmers’ issue. The finance minister has rightly drawn attention to the fact that the purchases under the MSP programme have increased 1.5 times between 2013-14 and 2019-20. However, the Capital Gains Index increased from 220 to 289—or 31 per cent—in this same period, according to figures published by the finance ministry. Thus, the “true” increase in the purchase price was a meagre 19 per cent in six years. Even this does not translate into a 19 per cent increase in income of farmers because the cost of inputs such as diesel, labour and seeds has gone up. Let us assume the increase in farmers’ income was 10 per cent. This is pittance compared to the avowed objective of the finance minister to have it doubled by 2020. There was a need to implement strong steps to secure this. That will be difficult to obtain by enhancing the MSP because the production of the supported crop increases disproportionately leading to overproduction. The finance minister then has to spend further money in storage and the disposal of the surplus stocks at low prices.
The finance minister should have taken steps to diversify agriculture towards high-value crops. Large-scale cultivation of crops like mangoes, flowers, walnuts and bananas for export should have been encouraged. Our research establishment has failed to develop the strains for the international market and the system has shown no interest in developing the infrastructure such as cold chains for exports. The finance minister should have given contracts to NGOs and corporate houses for undertaking research and extension, developing cold chains and then exporting the produce. The contractor, for example, should be given the responsibility to bring the desired strains of cocoons, spread it among farmers, get silk produced and export it from Mandya in Karnataka. That would have led to higher incomes for farmers. The minister has missed the bus. The minister has allocated `35,000 crore for research on vaccines. This is in the right direction. However, we have not overcome the pandemic on the strength of vaccine. We have succeeded on the strength of our lifestyle, that is, consumption of turmeric, ginger, giloy and other immune-boosting spices and by the practice of yoga and the like. Therefore, the need was to undertake research on the immune-boosting properties of these spices and other lifestyles and then globalise that knowledge. Further, a number of researchers have suggested that the low prevalence of Covid infection in India could be due to the poor cleanliness and health conditions under which our people live. Our bodies are more used to living with bacteria and viruses. Having said that, our people deserve clean drinking water and sanitation facilities. Therefore, the outlay of `2,87,000 crore made for providing clean drinking water and improving sanitation in the next five years is welcome.
The third area is that of education. A large number of our youths are entering and will enter the job market in the coming decade. The number of jobs in agriculture and manufacturing are declining due to mechanisation. A number of studies show that total employment in organised manufacturing sector has been declining. The informal sector too has been blown away by the triple whammy of demonetization, GST and lockdown. There is no hope for these millions. These youth will take to crime and other destructive activities in absence of productive employment. It also will not be possible to absorb these large numbers in agriculture because the share of agriculture in the GDP is seen to decline as a country develops. The only path towards providing productive employment to our millions was to develop our services sectors. The finance minister, therefore, has moved in the right direction in establishing institutes of translation to make available government documents in regional languages. But there was a need to go much further. It was necessary to establish institutes in every district, for example, to train the youth in undertaking translations in foreign languages, making music, movies and computer apps, and in running portals for providing online tutorials and medical advice. The Budget has failed to take any steps in this direction.
This is an ordinary Budget. The increased investment in infrastructure and the resolve to jump-start privatisation are most welcome. However, they fail to address the pressing problems of employment. I expect social tensions to increase as we are seeing in the ongoing farmers’ agitation because of the underlying increase in unemployment.
The writer is a former Professor of Economics at IIM Bangalore.