Experts on Economy, Health and Education in India had anticipated different kind of budget this time because the pandemic had hit most of these sectors very hard. There was strong realisation that the government after serious introspection of the damage done will change its approach accordingly keeping in mind post-Covid challenges.
Many national and international experts were of the opinion that the pandemic will force the governments and the policymakers to redefine their policies, budgetary approach and pledge afresh to meet the post-Covid challenges. The pandemic has no doubt exposed the emergency preparedness of even the developed nations. It is therefore important to find out from our experts whether the budget is on their expected lines. Will the provisions formulated in the budget ensure quick recovery and help overcome the challenges we are facing on all fronts? Experts are of the opinion that a lot more was required to be done to revive the economy.
According to Prof Arun Kumar, who is the Malcolm Adiseshiah Chair Professor at the Institute of Social Sciences and a former professor of economics at Jawaharlal Nehru University, “The budget was expected to take care of the problems that were brought about by the pandemic and the lockdown and the collapse of the economy. During lockdown there was voluntary cessation of economic activities and therefore in the month of April and May the economy declined by about 75 per cent and it has been trying to recover since then. Even in the month of January a large part of the unorganised sector was still not able to recover and industries like, travel, trade and so on in the organised sector had not recovered. I believe the economy was down by at least 10 per cent compared to its level a year back.”
He added, “My argument is that the economy declined not by 7.7 per cent this year, as the government says, but by about 29 per cent. The demand in the economy is very short and because of this, businesses are not be able to run to full capacity and due to this investment is down. So, both employment and investment are down. This was the challenge before the budget, to ensure that the economy revives quicker. In the coming year also, the economy will not fully recover back to where it was in 2019. By taking correct steps budget could have improved the growth rate in the economy. This is where the budget is falling short.”
“First, the overall expenditure is slated to rise from Rs.34.5 lakh crore for the current year to Rs.34.8 lakh crore, which is a negligible increase. Thus, the overall demand will hardly increase due to government’s actions. Secondly, there are disagreements about the size of the fiscal deficit being 9.5 per cent but that is expected to fall to 6.8 per cent. So, the fiscal deficit which leads to an increase in demand in the economy will also not boost demand as compared to the current fiscal year. On both of these counts the budget is short and will not be able to increase demand in the economy. Therefore, the problem witnessed this year is going to persist. The role of the government in increasing demand is not going to be fulfilled,” Professor Kumar argued.
On employment, he said, “The Rural Employment Guarantee Scheme allocation has been brought down sharply. An increase was very much required since employment generation has been weak both in rural and urban areas and demand for work under this scheme has been high. So, another opportunity to boost employment and income is lost. Similarly, it was expected that the health sector will get much more additional allocation because there has been a health crisis. But, direct expenditure on health has been brought down as compared to the revised estimate of Rs.82,445 crore to Rs.74,662 crores. Similarly, allocation to rural development compared to the revised estimate has been brought down. Allocation to PM Kisan Samman Yojna has also been brought down. These are the areas where immediate employment generation and income support could have taken place which could have boosted demands.”
On capital expenditure, Prof Kumar said, “The government is saying that they are sharply enhancing capital expenditure by 26%. But this is also a mirage because we have to net-out from the government capital expenditures, the disinvestment because disinvestment means you are giving up your capital items and then you are using it to buy other capital items. So, we have to look at the net increase in the capital expenditure. When one nets out Rs.1.75 lakh crore of planned disinvestment then the capital investment does not rise.”
Dr. Amir Ullah Khan, Development Economist and former advisor to the Bill and Melinda Gates Foundation, while speaking on the budget, said, “As the FM spoke, it was clear that she was giving great deal of attention to the health sector, and rightly so. It has been a bad year for all of us, during which we have seen a large number of patients die waiting for hospital beds, ICUs and Oxygen cylinders. It was along expected lines therefore that the FM speaks of health being her biggest responsibility. She also announced a figure of Rs.2.4 lakh crores for the health sector, which was unprecedented. However, when we look at the details, we find that the figure is less than half of that. At a time when the healthcare sector needed a huge hike in expenditure, the FM decided to ignore the demands.”
He added, “The intent of the budget is to achieve GDP growth through growth in infrastructure investment which is academically correct. However, this has come with a jump in the fiscal deficit. The impact of this could be an increase in inflationary pressures in the economy, which could adversely impact the ability of the country to attract foreign capital. The budget has not addressed the needs of the MSME sector or the migrant labour issues. The philosophy behind the budget is academically correct but execution will remain a major challenge.”
“A number of academics have expressed their mixed feelings on the Union Budget tabled in Parliament on 1st February, 2021. A big push on infrastructural investments is welcome. Past trends in private corporate investments is any indicator to go by, it is very clear that unless public investment is initiated, corporate investment may not follow the suit. The projected “V” shaped recovery is appearing more exaggerated than ground realities which are depressing,” said Dr Khan.
“My overall view is that the Budget is pro-rich and dismantling public sector, said Dr. Pritam Singh, who is a Professor of Economics at Oxford Brookes Business School, Oxford Brookes University, Oxford, UK.
“It looked to me that the budget is based on two implicit assumptions. 1. Indian economy has a stable and well-developed agricultural sector with about 15-20% of the population dependent on it. 2. The vast majority of the people in India (80% or so) live in urban and semi urban areas with non-agricultural jobs.
There is no serious attempt to develop the economy with a green core in order to save the planet,” said Prof. Surajit Sinha, Professor of Economics, Department of Humanities and Social Sciences, IIT Kanpur.
On Budgetary allocation for educational sector, MM Ansari, former Indian government interlocutor on Jammu and Kashmir, Information Commissioner, member University Grant Commission (UGC) and Professor of Economics, said, “The Central Government has approved and adopted New Education Policy 2020 with a view to equalising educational opportunities and improving quality of relevant education and training. While the education sector needed higher level of allocation of budgetary resources to fulfil the mandate of NEP, the actual allocation for education sector has been reduced by over Rs 6000 crore, which may prove to be a major impediment in effective implementation of NEP; as the vacant teaching posts at all levels, nearly 40% of the total requirements, may not be filled and S&T education may not get the needed support for enhancing quality of teaching and learning.”
He added, “Moreover, NEP 2020 has reiterated the government’s promise to raise educational allocation to the level of 6% of GDP. Against this, the current actual allocation is merely 2.8% of GDP, as shown in the Economic Survey 2021. In effect, thus, Union Budget 21 is disappointing from the viewpoint of implementation of NEP and overall expansion and diversification of education and skills training, which in turn is critical for improving employability of youth and faster economic development. Lack of adequate government support, as evident, will further increase privatisation and commercialisation of education, which will unduly spoil the chances of the deprived communities to acquire quality education to participate in mainstream development activities.”
Dr. Wasim Ghori, an award-winning UK Alumni with an MBA in International Health Services & Hospital Management from London South Bank University where he spent considerable time studying the National Health Service (NHS, England), said, “The government’s increased allocation for the healthcare sector is a welcome move as it will provide access to medical care for all in the country, fuel job creation and boost economic momentum. The increased healthcare spending indicates the realisation of how a healthcare crisis like the current Covid-19 pandemic can quickly spiral into an economic crisis for the nation. The increase in budget outlay for health and welfare by 137% as compared to the previous year will boost the public health and pharmaceuticals sector too.
“The announcement of an all-inclusive approach through the launch of Mission Poshan2.0 to improve nutritional outcomes for children across 112 aspirational districts is a praiseworthy move. The decision to set up integrated public health labs in all districts and 3382 block public health units in 11 states along with critical care hospital blocks in 602 districts and 12 central institutions is creditable and rightly addresses the need to reach the last mile population. However, more might be required in a country where the patient-doctor ratio is abysmally poor. Lastly, Union Budget 2021 will set the precedent for future budgets which will use this year’s allocation as a baseline for future initiatives.”