File photo of Nirmala Sitharaman | Photo by Praveen Jain
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When the Narendra Modi-led BJP won power in the summer of 2014 and presented its first Union Budget weeks later, the annual financial statement was a reflection of the promises the ruling party had made in its election manifesto. So, it shouldn’t come as a surprise if the first budget of the second term of the Modi government reflects promises the BJP made in its Sankalp Patra, the 2019 election manifesto, and gives a big push to programmes for farmers, schemes on piped water, housing for all and welfare schemes for traders.

In the tradition of expenditure policy in India in recent decades, we may first see small allocations for some of these schemes, which increase over the five-year term for the schemes that are successful. Others may not take off, or stay small. Announcements of small schemes are the initiation of a pilot, where a bigger roll-out depends on the implementation, popularity, political salience and budgetary allocations for the scheme. The team that runs the pilot has to prove itself, and then the scheme is scaled up.

The fiscal envelope is quite limited, owing to weak tax revenue collection, committed expenditure, and the risks that come from announcing large fiscal deficits. Hence, initiating new schemes with small sums of money is pragmatic. It will be possible to keep election promises while maintaining fiscal control.

Such a two-pronged path, of initiating new schemes at modest levels of expenditure, maintaining fiscal soundness, and augmenting resources for more proven schemes, is what was done from 2014 to 2019. While there were some deviations, there was an effort in all of previous finance minister Arun Jaitley’s budgets to stick to the path of fiscal consolidation.


Also read: In Modi’s first term, economic surveys came with big ideas but few saw light of day


NDA’s first budget marked a change

In the UPA years, the number of central government schemes were reduced and there were a few mega expenditure schemes with large budgetary outlays. Legal rights that entitled citizens to food, work, education, etc., were allotted thousands of crores. High leakages in schemes meant limited effectiveness and much dissatisfaction.

The July 2014 budget, the first budget after the NDA came to power, had a very different strategy compared to the UPA budgetary allocation for schemes. Many promises in the BJP election manifesto were sought to be fulfilled after being launched as new schemes — Namami Gange, Beti Bachao Beti Padhao, price stabilisation fund, career centres, good governance, National Rural Internet and Technology Mission, textile megaclusters, war memorial, ghat development, mission on low cost affordable housing, rural housing scheme, Pradhan Mantri Krishi Sinchayee Yojana, smart cities, start-up village entrepreneurship, young leaders programme, mobile soil testing laboratories, national adaptation fund, Kisan TV, national industrial corridor, new AIIMS, technology centre networks for agro industries, ultra-modern super critical coal-based thermal power technology, National Heritage City Development and Augmentation Yojana (HRIDAY), National Mission on Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD) etc. In later years, not all of these schemes were successfully sustained or saw an increase in budget allocations.

Hence, we should look at the BJP manifesto of 2019 to gain insights into the schemes Finance Minister Nirmala Sitharaman could announce. Two, in particular, are emphasised by Prime Minister Modi in his introductory note to the manifesto — doubling farmers’ income and housing for all by 2022. Budget 2019 will likely contain some of the initiatives proposed. In addition, a new emphasis on Jal Shakti, or piped water, and credit for retail traders may be on the cards.


Also read: Budget is Modi’s big chance to boost India’s waning economy


What the manifesto promised

The BJP’s Sankalp Patra promised:

– Pension for small and marginal farmers so as to ensure social security on reaching 60 years of age.

– Interest-free Kisan Credit Card loans, which mean short -term new agriculture loans up to Rs 1 lakh at a zero per cent interest rate for 1-5 years on the condition of prompt repayment of the principal amount.

– A new Oilseed Mission to achieve self-sufficiency in oil seeds and other agri-products.

– A National Warehouse Grid to build an efficient storage and transport mechanism for agriculture produce.

– A new Village Storage Scheme, to enable farmers to store the agri-produce near their villages and sell at remunerative prices at an appropriate time, as well as loans to farmers at cheaper rates on the basis of storage receipt of the agri-produce.

– A National Bee-keeping and Honey Mission to ensure additional returns for farmers.

– Expansion of Pradhan Mantri Krishi Sinchai Yojana to realise 100 per cent irrigation potential within a defined time-frame. The plan is to bring one crore hectares of agricultural land under micro-irrigation, to be supplemented with ‘fertigation’ to promote the judicious use of fertilisers.

– Establishment of a network of mobile veterinary dispensaries to provide doorstep service to farmers, to augment the Kamdhenu Aayog established to conserve indigenous species of cattle.

– A National Feed and Fodder Mission to eliminate the shortage of fodder.

– Housing for all by 2022 — pucca houses for families either living in kuchcha houses or without access to housing.

– Launch of a ‘Jal Jivan Mission’, under which a special programme, ‘Nal se Jal’, will be introduced to ensure piped water for every household by 2024.

– A ‘Matsya Sampada Yojana’ with an allocation of Rs 10,000 crore to ensure availability of storage and marketing tools and infrastructure like ice-boxes, cold storages, ice-plants etc. for small and traditional fishermen.

– A new National Traders’ Welfare Board, and creation of a National Policy for Retail Trade for the growth of retail businesses.

– Accident insurance of Rs 10 lakh to all traders registered under GST, to protect interests of small traders.

– A merchant credit card scheme on the lines of the Kisan Credit Card.

– Expansion of the Pradhan Mantri Shram Yogi Maandhan scheme to cover all small shopkeepers.

The author is an economist and a professor at the National Institute of Public Finance and Policy. Views are personal.


Also read: Finance Minister Nirmala Sitharaman is new to the job – but faces age-old problems


 

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