Union Budget 2019 – Reasonable Expectations
Amidst the honco of high growth and reducing retail
inflation this pre-Election Budget has some just expectations. Tax-GDP ratio of
17.5% can be pitched up to 20% given the fact that the rich have been growing.
Domestic savings at around 30% has to improve and investments have to be less
volatile for which the foundation has been well laid by considerable acclaim in
EODB.
Demand stimulation and medium term employment have to
improve significantly. Farmers certainly have high hopes notwithstanding the
limitations of union government in this regard as Agriculture is a concurrent
subject. It is wise to give up the announcement of crop loan targets as it is
not related to the Budget per se. States like Telangana and MP have done well
in Income support schemes and Center would do well to support such initiatives
in some appropriate proportion.
Assurance of Basic Income may have to wait for the 15th
Finance Commission’s recommendations. One announcement can be setting up a fund
for Price compensation for farmers whenever the MSP and market prices have wide
divergence at the point of farmer reach.
All the tenant farmers and small and marginal farmers above
65years could be provided pension of Rs.5000 per annum as their ability to work
and earn their annual incomes is eroded completely by then. This can be done
through a pooled fund out of the 2% of income earned on commodity exchanges and
1% of agricultural insurance premium.
NDA did well in the cleanliness drive; but performed poorly
in providing safe drinking water. While the NDA spent 77% of allocation on this
score, still its reach to the poor is far too distant. If the reach improves,
expenditure on health may decline. Coupled with this, environmental clean up
providing for fresh air should be provided at least 2% of the Budget.
Education is in a big mess and Employment is in doldrums. It
is strategy rather than spending that requires attention in both the cases and
real time monitoring is the need of the hour.
Banking: Restructure NABARD by hiving off RIDF portfolio;
RRB and Cooperatives and Rural Development through Watershed, SHGs, FPOs and
finance to tenant farmers and agriculture marketing as 3 separate subsidiaries.
Similarly, SIDBI needs restructuring to provide assured lending to micro and
small manufacturing enterprises and revival of incipient sick and sick MSMEs by
way of external support mechanisms. Union Government would do well to announce
any compelling credit products only through a committee of select bankers.
Budget understandably is a best estimate. But outcomes are
important and they need effective monitoring.
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