Hope, Aspirations
and Disappointments
Nirmala
Sitaraman starts on Aspirational Note. The two hour forty minute long budget
speech creating record could perhaps prove the dictum: ‘if you fail in logic
resort to rhetoric.’ Let me deal with the hopes and aspirations first and then
with the disappointments later.
It has for
first time addressed the farm sector comprehensively providing end-to-end
solutions but leaves no assurance for income in the hands of the farmer. Allied
activities get a boost. If a farmer were to hold a few animals in the backyard,
a fishpond and a small poultry in addition to crop farming or horticulture, he
has everything in the budget to cheer. There is every chance to cross-hold
risks among the farming and allied activities.
States
should follow the intent and modify the Agricultural Marketing laws to make way
for the responsible aggregators and technology. Warehousing facilities in the
Agriculture Market Yards and cold storage facilities would insulate the farmer
from fluctuations in returns to the farm produce.
FM has
announced Rs.15lakh farm credit amidst unwelcoming banker in the rural areas
and banks that have learnt the art of showing up in figures that they do not
deliver to the intended customers. It is heartening to see the push for Primary
Agricultural Credit Societies that were almost forgotten for decades. NABARD
that has half of its fleet serving Mumbai Headquarters should have been
restructured for focused attention on farm credit. She should have forsaken
tolerance for not achieving priority sector targets to take the RIDF window.
This is a lost opportunity.
While the
erstwhile lost focus on Education, Health and Hygiene has been regained with
appropriate budget allocations and set a new direction through internships in
higher education, unless infrastructure for primary education and teaching
skills are enhanced the foundations will remain weak. Introducing internships
in higher education has potential to make education fit the employment bill. We
may hope for a correction through the National Education Policy the Government
is planning to introduce.
The
District Teaching Hospitals and para medical services planned will sow the
seeds for sustainable health interventions. This just marks only a good beginning
as the effect can be felt only after five years.
With the
measly allocation for MNREGS and not linking it to the farm sector the budget
left a void. It failed to kindle the appetite for consumption, the trigger for
growth. The consumer is not left with much surpluses either for increased
investment or consumption. Growth impulses are not generated significantly.
MSME sector
has got a new direction with the introduction of sub-ordinated debt or equity
funding but it remains to be seen whether the Banks that failed them in credit
would meet the new equity route and help scaling up process. TReDs and GEMs are
not new interventions to talk of. Unless all the government departments and
PSUs enroll on these platforms, MSM|E vendors would not get their due. For
those moving to organized way of doing business with just 5% in cash are exempt
from audit up to Rs.5cr turnover.
In the last
budget, the FM made a reference to U.K. Sinha Committee Report, but she skipped
it now. Neither Distressed Asset Fund to ensure that no viable manufacturing
MSME downs its shutters, nor Fund of Funds found allocation in the Budget. In a
slowdown, it makes lot of sense to ensure that no viable manufacturing MSME
exits so that the workforce engaged therein would not add to the
unemployed.
Economic
Survey 2020 made a very detailed analysis of the banking in the financial
sector. FM did not seem much worried over the increase in frauds and poor
credit risk of the Banks. Although it is heartening to see that no further
capital allocation is made cutting into taxpayer’s purse, it is disappointing
to see the absence of reforms in this sector. It would have been most
appropriate to reduce the Government equity in these banks and usher in better
governance than now. Bad banking and good economy are not good companions.
Banks
irrespective of their size, in the current status will pull down the growth of
the economy. The only solace is to the depositor whose Rs.5lacs is insured
instead of just a lakh of rupees thus far. NBFCs are empowered to recover their
bad debts through the SARFAESI Act provisions on par with Banks.
Extraordinary
push to the digital economy with District Cyber Parks, AI, MML and ITES in
addition to Travel and Tourism is likely to enhance the contribution of the Services
sector. Start up, Stand Up India and Make in India have not thus far led to
increase in the contribution of manufacturing sector and this budget also did
not make significant strides to reverse the negative growth. Telangana State
seemed to have provided inspiration on this count.
Agriculture
sector alone may not reverse the slow growth of the economy. Employment
intensity has little scope to increase. Unless 20% credit -GDP ratio is
attained with better risk appetite among banks, recovery from slow growth is
doubtful.
If both the
government and private entities depend on market for raising the resources as
indicated in the Budget, revised estimates of the budgeted revenues and
expenditure fall short of growth expectations. The Budget failed to institute a
monitoring mechanism for implementation of the ambitious projects. States
should be taken into confidence while formulating the Budget as it is the
States that should catch up and cooperate for the aspirational goals and
ambitious announcements to turn into actions.
Intention
of the FM to keep more money in the hands of the people did not result in
compatible actions. Overall on a ten-point scale the Budget scores a liberal six,
more due to comprehensive treatment to the farm sector than other sectors.
Published
in Telangana Today 5th February 2020.
