Fiscal Deficit and Welfare Programs Myth and Reality

1. Part One: Overall budget of the government. The Present UPA government has prepared budget to execute State Policy with a budget size of Rs 1665297 Cr in the 2013-14 and estimated fiscal deficit is Rs 542499 Cr. In the year 2011-12 size of the fiscal deficit is more than the plan budget and this trend is continuing in the revised budget of 2012-13. In the current budget it is slightly less. It is definitely a serious concern for all of us because government needs money to plan for development and sustenance of the citizens growth. Table 1 : Central Government Budget at a Glance All figures are in Rs. Cr 2012-13 Particular Total Budget Plan Budget Non Plan Budget Fiscal Deficit 2011-12 (AE) 1304365 412375 891990 515990 (BE) 1490925 521025 969900 513590 2012-13 (RE) 1430825 429187 1001638 520925 2013-14 (BE) 1665297 555322 1109975 542499

Source: Budget at a glance, Govt of India

But we must also consider other facts while looking into fiscal deficit. The projected revenue foregone during the year 2012-13 is Rs 573626.70 Cr which is higher than the Revised Plan Budget (Rs. 429187 Cr) and Fiscal Deficit (Rs 520925 Cr). It is important to note that the allocation for plan budget is for the entire population of India 124 Cr where as the revenue forgone is for the companies.

This is not exception but a trend followed every year. Revenue forgone for four consecutive years from 2009-10 is given in table 2. The average revenue exemption per company is approx Rs 1 Cr per year. Meaning government is paying them Rs. 1 Cr every year in one or other ways. This does not include the subsidized land and other resources.

Table -2 : Structure of Revenue Foregone Exemption of Tax and duties to Corporate Sector Year No companies Personal Income Tax Corporate Income Tax 72881.00 15.11 57912.00 192227.0 Excise Duty 169121.00 35.06 0 172740.0 Custom Duty 195288.00 40.48 100.0 Total Revenue foregone corporate per 1.13 1.00 1.08 1.16 482432.00 0 0 459705.0 0 100.00 37.58 41.82 12.60 61765.30 195590.0 0 236852.0 0 533582.7 0 44.39 100.0 0 36.66 11.58 68007.60 206188.0 0 253967.0 0 573626.7 0 44.27 100.0 0 35.94 11.86 45142.00 9.36 36826.00 8.01 39375.40 7.38 45464.10 7.93 of 2009-10 (Actual) 427811 % Amount to Amount 20010-11 (Actual) 459270 % Total to Amount 2011-12 (Actual) 494545 % to Amount 2012-13 (BE) 494545 % to

Total

Total

Total

Source: Figures are taken out from the Statement 12 - Revenue forgone under the Central Tax System for the year 213-14, 2012-13 and 2011-12 The parliamentary standing committee on finance has already recommended 1 raising the tax bar for companies and phasing out exemptions given to them rather than burdening the salaried class and the smaller tax payers. But this recommendation has not been noticed by the Finance Minister. Perhaps the Finance Minister is more convinced by the companies and not by the citizens, honorable parliamentarians of the house and the standing committee. The intension of the government towards the

Business Line, March 2, 2012, New Delhi

companies and its citizens is clearly reflected in three columns Plan Budget, Fiscal Deficit and Revenue Forgone of the Budget.

Disbursement of Budgeted Fund

To understand the kind of expenditure and disbursement to the citizens, we need to see the trend of expenditure which directly benefits the targeted social and vocational groups. We need to see that how many schemes are designed in manners which directly benefit them?

2. Budgetary allocation for Handloom Weavers The Ministry of Textiles has allocated total Rs. 4631 Cr in the Plan Budget with a provision of Rs 425.50 Cr for Handloom Weavers. This allocation is continuation of the trend where major direct benefiting schemes are being discontinued and total plan sizes are turned down year after year. We can see the examples in table:

Ministry of Textiles, Demand no. 83 Sr. No. Heads Actual 201112 Plan Budget Total Ministry 4207.80 7000.00 4500.00 4631.00 Budget 20122013 Revised 20122013 Budget 20132014

total Handloom Village and Small Industries Handloom Industries 1 Comprehensive Handloom

607.62

2898.00

974.00

425.50

107.00

Development Scheme 2 Integrated Handloom 219.34 170.00 131.00

Development Scheme

Revival Restructuring Handlooms

Reforms package

and 200.00 for

2205.00

550.00

157.00

Marketing and Export Promotion 53.44 Scheme

48.00

40.00

Diversified

Handloom 12.37

20.00

25.00

Development Scheme 6 Handloom Comprehensive Scheme 7 Yarn Supply Scheme / Mill Gate 54.26 Price Scheme Non Plan Budget 8 9 Weaver Service Centre Scheme for grant of special rebate at the rate of ten percent on sale of accumulated 28.67 32.50 32.31 35.00 0.01 350.00 123.00 96.50 Weavers 68.21 Welfare 105.00 105.00 65.00

Handloom stock 10 Others 19.86 30.00 30.49 32.99

Textile industry contributes 2% to GDP2 at 1999-00 price. In Textile industry handloom is the largest sector providing employment and production. This sector gives employment to more than 43 lakh3 handloom weavers and allied workers and is second to the Agriculture sector in terms of providing employment. Handloom is the cultural heritage of our country and hence it is imperative to protect and promote the sector. This is the case where the trust on government data, the one which normally people believe, are presented to make the good report of the concerned responsible bureaucrat

Press Information Bureau 5 May 2010 15.36 IST 3 "Handloom, A Rich Heritage of India" by Monika S.Garg (IAS), Manoj Jain, B.B. Paul, S. Ulaganathan Dated 16.7.2012

th

/ political party / ministry and pubic interest and reality remains unattended and diminished.

It is not only 43 lakh handloom weavers but the families. In India number of members in a typical family is 6-8 persons4. This means that handloom sector provides livelihood for a population minimum 2.5 Cr.

But the sincerity of the government, reflected in the budget, tells a different tale. Integrated Handloom Development Scheme is turned down in previous year and in the current year the allocation is completely stopped. It is not a single case but there are many schemes as shown in the Table 2 above. Their representation, agitation, demands and all other efforts are null and void to the government.

3. Budgetary Allocation for Fish Workers Under Ministry of Agriculture; the Department of Animal Husbandry, Dairy and Fishery has plan budget of Rs 2025 Cr and in this budget the allocation for fisheries is Rs. 317 Cr. The fishery sector contributes 0.7% to the GDP5. It means this sector is entitled for 0.7% of the Union budget i.e. Rs. 3887.25 Cr in Plan Budget and Rs 7769.82 in NonPlan budget and hence, the allocation is clearly proved to be insufficient. Table 3 : Ministry of Agriculture (Fishing) Ministry of Agriculture, Demand 3 - Dept of Animal Husbandry, Dairy and Fisheries Sr. No. Heads Actual 20112012 Plan Budget Total Budget Fisheries 1230.01 305.60 1910.00 299.70 1800.00 273.25 2025.00 317.30 Budget 20122013 Revised 2012-2013 Budget 20132014

Indian Express, News Paper dated Wed Mar 14 2012, 03:16 hrs (http://www.indianexpress.com/news/thehouses-that-india-lives-in/923311) 5 Economic Survey of India 2011-12, Page 193 Paragraph 8.57

1 2 3

Marine Fisheries Inland Fisheries

120.29 34.12

120.00 30.80 2.20

111.30 21.35 2.40

110.00 35.80 2.35

National Institute of Fisheries 1.76 Post Harvest Technology &

Training (NIFPHT&T) 4 5 Fishery Survey of India 33.10 37.00 15.00 32.43 14.26 40.00 15.15

Central Institute for Fisheries 8.33 Nautical Engg. & Training

National Fisheries Development 108.00 Board

94.70

91.51

114.00

Non-Plan Budget Total-Fisheries 7 Central Institute of 32.09 Coastal 2.17 34.42 3.75 33.38 3.4 38.58 3.75

Engineering for Fisheries 8 National Institute of Fisheries 4.71 Post Harvest Technology & 5.76 5.21 5.55

Training (NIFPHT&T) 9 10 Fishery Survey of India 8.64 10 9.5 9.7 9.91 10.03 10.7

Central Institute for Fisheries 8.69 Nautical Engg. & Training

11 12

Other Fisheries Program National Fisheries Development Board

4.38

4.41

4.16

5.05

13

Package Fishing Pakistan

for

Replacement seized

of 3.5 by

3.5

Vessels

To the understanding of fish workers the entire allocation under plan is dedicated to institutional mechanism. The questions of institutional performance in supporting fish workers are not the subject matter of research in this paper. Even if we presume that these institutions perform well and their efficiencies are beyond the question, the

budgetary support reflected in the budget gives a real picture that how much they are able to convince the government to allocate justified amount.

Keeping all critics aside it is presumed that perhaps there are two schemes namely Other Fisheries Program and Package for Replacement of Fishing Vessels seized by Pakistan targeted for direct benefit to the fish workers under Non Plan Budget. But in these two schemes total fund allocated is Rs. 8.85 Cr. The Package for Replacement of Fishing Vessels seized by Pakistan scheme is performing worst. Rs. 3.5 Cr was spent in the year 2011-12 and it was reduced to the level of 1 Cr in 2012-13. Again it is increased to Rs. 3.5 Cr. Fish workers are of the opinion that this amount is only for the administrative expense of the bureaucrats and nothing in actual is directly spent for replacement. And also Budget only includes replacement of fishing vessels seized by Pakistan where as the replacement of vessels seized by Srilanka, Bangladesh and other Countries in the borders of Tamilnadu and West Bengal are not taken in to consideration in the so called Central Budget.

Fish workers feels that government is considering neither GDP nor the livelihood of fish workers, at least in terms of support system reflected in the budgetary allocation. The budget presented by the Finance Minister is made only for the benefit of big companies and the country is on sale for companies.

4. Budgetary allocations for Scheduled Castes and Scheduled Tribes For SC/ST budget is allocated under the component plans called Special Component Plan (SCP) for Scheduled Castes and Tribal Sub Plan (TSP) for Scheduled Tribes. The first lapse is - funds are not allocated as per the population. As per the decision taken by the National Development Council (NDC) dated 27th June 2005, the allocation under SCP/TSP is non-divertible and non-lapsable and should be at least in proportion of SC/ST population and has to be used to bridge the Social and Economic Gap between SC/ST and General in a period of 10 years. This is in consistent to the value of constitution India Article 38, 39 and 46.

The Honble Finance Minister stated in his statement on 31st Aug 2010 that .I can confess to you that I spent a considerable amount of time trying to understand what went on. I think, we must first understand as to what had happened. And, then, we can make a judgement. After all, we are the supreme legislative body we can make a judgement whether what had happened was right or wrong. If it is right, the matter ends there. But, if it is wrong, we will take corrective action. I had expected a hard criticism. . It seems that he has already spent a considerable time and he need not spent his considerable time any more on this topic. Perhaps because of this reason the allocations under SCP/TSP could not match to the population of SC/ST (16.2 + 8.2 = 24.4%). The amount denied to SCs and STs are Rs 48401.03 Cr and Rs 20938.01 Cr respectively. Allocations made under SCP / TSP for SCs and STs Census 2001 SC Population 16.2% ST Population 8.2%

2013-14 Particular Allocation under SCP SCP in Percentage Due SCP Denial under SCP 2011-12 (AE) 28535.1 6.92 66804.75 38269.65 2012-13 (BE) 37113.03 7.12 84406.05 47293.02 2012-13 (RE) 33085.04 7.71 69528.29 36443.25 (BE) 41561.13 7.48 89962.16 48401.03

Allocation under TSP TSP in Percentage Due TSP Denial under TSP

17453.61 4.23 33814.75 16361.14

21710.11 4.17 42724.05 21013.94

18721.33 4.36 35193.33 16472.00

24598.39 4.43 45536.40 20938.01

It requires no more proof that allocations are not in the proportion of the population of SC/ST. With regard to GDP, the Work Participation Ratio (WPR) of ST in rural area is 576 and highest in the country and WPR of SC is lowest 54%. In urban sector the WPR
6

NSS Report No. 531: Employment and Unemployment Situation in India: July, 2007-June, 2008 NSS Report No. 531: Employment and Unemployment Situation in India: July, 2007-June, 2008 (http://mospi.nic.in/mospi_new/upload/nsso/531_533_Highlights.pdf)

of SC is highest 56 % and that of ST is lowest 51. Traditionally the WPR of SC and ST has always been highest. This is evidence of their commitment and investment for the national development. Their time and lobour to the country is highest. But in contradiction to investment, allocation for their welfare and development is largely diversion. The Honle Finance Minister has not made any exemption for this community, instead he diverted fund for the general programs. The examples are as follows:

STATEMENT 21 - Special Component Plan for SCs 2011Demand Item Head / Department 2012 Actual 1 31 16 National Horticulture Mission 7 National Afforestation Programme National Programme for Prevention & 47 47 47 2 Control of Diabetese, CVD & Strokes 7 Infrastructure Maintenance 22 NRHM-RCH Flexible Pool Flexible Pool for Communicable 47 24 Diseases Flexible Pool for Non-Communcable 47 47 50 25 Diseases,Injury &Trauma 26 Human Resources for Health 1 National AIDS Control Programme Strengthening of Teacher Training 59 59 3 Institutions 4 Mahila Samakhya Support to NGOs/Institutions/SRCs for Adult Education & Skill Development 59 5 (Merged schemes of NGOs/JSS/SRCs) 19.16 21.00 16.09 20.00 68.42 10.00 100.00 12.00 58.40 12.00 100.00 12.00 0.00 0.00 0.00 0.00 0.00 258.40 0.00 0.00 267.45 173.75 232.68 271.32 0.00 0.00 0.00 282.08 15.07 713.57 0.00 45.60 26.60 73.75 995.70 210.00 20.00 20122013 Budget 350.00 20.00 20122013 Revised 244.40 13.00 20132014 Budget 300.00 20.00

978.11 1012.04 0.00

0.00 2579.66

Adult Education & Skill Development 59 59 59 6 Scheme 11 Navodaya Vidyalayas Samiti 12 Kendriya Vidyalayas Sangathan Rashtriya Madhyamik Shiksha Abhiyan 59 16 (RMSA) Scheme for setting up of 6000 Model Schools at Block level as Benchmark of 59 60 60 17 Excellence 3 IITs 7 NITs Integrated Watershed Management 84 1 Programme (IWMP) 259.99 494.10 470.37 872.69 216.34 180.60 144.00 216.00 180.00 150.00 161.36 199.80 199.80 200.00 360.00 195.00 512.26 624.80 625.80 796.60 94.16 240.00 70.00 118.40 250.00 70.00 84.30 250.00 70.00 114.40 250.00 70.00

STATEMENT 21A - Tribal Sub Plan for ST 2011Demand Item MINISTRY/DEPARTMENT / Head 2012 Actuals 1 9 Support to State Extension Services Horticulture Mission for North-East and 1 1 10 14 12 Himalayan States 15 National Horticulture Mission 2 Detailed Drilling Ministry of Coal 1 E-Governance - Tele communication National Programme for Prevention & 47 2 Control of Diabetese, CVD & Strokes Infrastructure Maintenance (Ministry of 47 47 48 7 Health) 21 NRHM-RCH Flexible Pool 8 National Mission on Medical Plants 395.36 0.00 0.76 527.64 0.00 1.00 536.30 537.13 9.91 24.60 14.35 39.78 70.17 75.00 9.95 54.45 100.00 160.00 12.30 92.42 105.14 100.00 12.30 48.92 200.00 150.00 14.40 84.64 24.92 20122013 Budget 50.00 20122013 Revised 44.94 20132014 Budget 40.00

0.00 1391.68 1.00 2.00

50 59 59

1 National AIDS Control Programme 11 Navodaya Vidyalayas Samiti 12 Kendriya Vidyalaya Sangathan Rashtriya Madhyamik Shiksha Abhiyan

0.00 128.40 37.45

139.40 133.75 37.45

144.28 133.75 37.45

146.37 133.75 37.45

59

17 (RMSA) Scheme for setting up of 6000 Model Schools at Block level as Benchmark of

273.73

334.27

342.81

426.18

59 60 60 60

18 Excellence 1 UGC 3 IITs (incl.OSC) 7 NITs Rashtriya Uchcha Shiksha Abhiyan

109.11 434.00 90.30 72.00

115.56 504.58 90.00 75.00

80.25 462.10 99.90 64.72

107.00 439.03 180.00 97.50

60 60

63 (RUSA) 72 Support to IISc and IISER Support for The Polytechnics in The

0.00 0.00

0.00 0.00

0.00 0.00

41.50 64.46

60

80 States Special Programme for Development of Road Connectivity in Naxalite Affected

0.00

0.00

0.00

52.50

82

1 Areas Integrated Watershed Management

374.00

500.00

500.00

800.00

84 106

1 Programme (IWMP) 6 Sports Authority of India

230.82 20.00

305.00 25.00

290.35 20.00

538.70 31.00

These are few examples which serve as evidences that welfare and development funds of SC/ST are allocated majorly to the Institution. There are almost 80% of such allocations. This is in contrary to the mandate of SCP / TSP. The government is very specific and efficient in exempting taxes and supporting larger companies but not its own citizens. This is the economics defined in the budget of Honble Finance Minister.

The purpose of currency is to bridge between commodity exchanges. But slowly and steadily Government has prioritized currency over everything through the

corporatization. Be it the understanding (education), breathing (carbon credit), water (privatization of rivers), retrenching food supply (cash for PDS) or any other issue currency has been put in priority against human needs. Grains and ration can be poured in sea but cant be distributed among the poor because they dont have currency to give as corruption. Land can be acquired and sold to the corporate sector but cant be given to the landless. Money for carbon credit can be given to TATAs and others but not to the people. No doubt the SC/ST, Handloom Weavers, fish workers are victimized and massively hit by the Union budget 2013 and larger companies are rewarded for the reasons well known to the Honble Finance Minister.