Recovery of stressed economy

Mahesh Chander Sudan
We, the people of India, have witnessed presentation of Economic Survey for year 2018-19 and General Budget for year 2019-20 by our Finance Minister, Nirmala Sitharaman. Let us first talk about Economic Survey that conveyed the health of our economy. It is noted with concern that basic fundamentals of the economy are stressed like the growth rate of GDP has lowered to five years low, industrial, agriculture, manufacturing and service sectors have not shown healthy trend. Unemployment has surged to a 45 years high and it is affecting the purchasing power of people. However, it is expected that we would achieve 7% GDP in the current financial year with an aim to achieve 5 trillion economy by 2024. Looking at the present state of growth for last five years and its resultant rise in the size of economy to 2.97 trillion, the road ahead seems very tough to achieve the target of 5 trillion economy to acquire fifth position in the world economies. No doubt, long term growth perspective of the Indian economy is positive due to its young population and continuing economic liberalization that has moved the country towards market based economy. The serious cause of concern is lack of employment opportunities for young population and stressed agriculture sector. Indian economy by and large depends on agriculture sector as it accounts for 18% of GDP and provides employment to 50% of our total work force.
Going over to general budget, it was a maiden budget for both finance Minister and NDA-II government and as such has been presented in a unique manner by replacing briefcase with Bahi Khatta (a book of accounts used by shopkeepers) and speech of Finance Minister did not have data representation with regard to Income and Expenditure of the proposed budget. Besides, it is also essential to note that BJP regained power with large mandate exercised in their favor by farmers, youth of India, and women voters across religions, retired defense personnel and voters from majority community due to the ideology propagated by BJP during their election campaign. It therefore enabled them to secure around 22.6 Crore votes out of 60 crore votes cast in the general election in their favor and form government with 300+ MPs of their own. A large mandate exercised in their favor expected them to be more responsive and it staked high expectations from the elected government. However, the budget presented by NDA-II seems directionless and contains no thrust for providing any relief to farmers, unemployed youths, retired defense personnel, and voters of community specific or otherwise. More so, the rise in the price of petrol and specially diesel discouraged low income groups to feel alienated and thereby consider this budget to be rich and super rich friendly. A critical look at the income and expenditure data shows that increase in allocation where ever made is not corresponding to the expected level. Let us first analyze allocation made to agriculture sector that would hardly cater for direct transfer of money to farmers on quarterly basis and no fund is available for capital investment to boost the ailing agriculture sector. An advice made with regard to zero input cost to farmers also appears more bookish than practical. Another area of concern is education where again we expected more thrust to work for not only improving our crippled government schools for primary, secondary and college education system across the length and breadth of the country but also work for achieving status of Vishav Guru as propagated by BJP. Budget speech of FM did mention about creating higher education institutes of international standards to attract foreign students for earning valuable foreign exchange. However, no word/concrete plan for improving existing/proposed IITs/ IIMs/ Institutes of sciences either in terms of their capacity or content is noticed in the budget. An allocation of 400 crores for proposed higher education institutes/universities appears inadequate comparing it with the present budget of JNU and other similar institutes. Another critical area facing us today is unemployment which reached its lowest edge for last 45 years. There is apparently no extra effort made to generate more employment avenues either through private or government sectors to break the vicious circle of unemployment to destress our youths who form a large part of our population. Another area which affects general masses is health care service. The allocation to this sector has though been raised as compared to last year by 15.4% but it shall hardly meet added expenditure of Ayushman Bharat Scheme leaving no scope for fresh capital investment to meet new challenges whereas the condition of primary and divisional health centers is deplorable across the country. We therefore can hardly envisage any change, and the sector is ultimately left to private enterprises for exploitation. Poor people from country side can hardly access or afford for good medical care provided in corporate hospitals.
Most critical area is defense of the country and it actually guided the electoral campaign of the BJP which motivated voters to their side. Allocation on defense budget remained unchanged from the interim budget. A budget of 3.19 lakh crores excluding defense pensions has been earmarked for defense. She highlighted the immediate requirement of defense modernization and upgradation in her budget speech. Major share of the budget goes on revenue expenditure and 1.03 lakh crores is available for capital component of defense expenditure which is considered meagre hike after factoring inflation and currency fluctuations. Therefore, it is a worrisome scenario for much needed military modernization. Keeping in mind defense deals signed by India with several countries during last few years and current capital allocation, it would hardly cater for payments to the committed liabilities. This will leave no money for new procurements lined up that causes worry for the services.
We expected our government to present a budget that would convey a clear cut path for sustained development of the country, providing for more social welfare schemes and creating people friendly environment to reach the last man in the queue. We extended absolute mandate to Mr. Modi to form strong government to usher in new era of development so that our nation revives its stressed economy and lays sound foundation for future.
(The author is Wg Cdr (Retd)