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Budgeting for growth with equity |
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The prevalence of low levels of human development is a paradox of India’s development experience. A substantial boost for the social sector in the next budget will, hopefully, ensure that the government will pursue the inclusive growth agenda effectively.
A budget for balanced growth and distributive justice represents the kind of budget the common man has been looking forward to for several years. Nobody seems to be sure if such a budget can ever be presented considering the projected growth at 6-6.5 per cent.
Besides that, fiscal deficit of 12-13 per cent in the GDP, sidelining of the Fiscal Responsibility and Management Act by the previous UPA Government, the huge farm loan waiver, increase in the salaries of the Government employees, cost overruns on infrastructure projects and now the dole out of subsidies to industrialists and businessmen will, it is feared, ensure that the common man will be in the same state for long time to come.
The President’s address to Parliament set out the new government’s agenda indicating that the government is keen on continuing with its inclusive growth agenda. There is a strong case for substantially increasing India’s public investments to bridge the glaring shortfalls in the provision of public goods that improve the quality of life. Although the link between human and social capital and economic growth has for long been recognised, public investments have fallen short of the growing requirements.
The forthcoming budget offers the UPA government an opportunity to step up the resources for key social sector programmes. Some of the critical areas in which it can intervene effectively, apart from its stated intention to expand its flagship National Rural Employment Guarantee Scheme, are basic social services, education, and economic infrastructure.
Substantial increase in resource allocation is also called for in rural electrification, which was one of the under-performers in the past few years, urban poverty alleviation programmes, skills development, and rural health. With nearly 77 per cent of the population still being deprived and vulnerable, a strong infusion of public expenditure in the social sector is essential to improve their capabilities.
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