Government of India: Post Budget Agenda

Riding on the media bandwagon the Union Finance minister presented budget on 28th Feb 2015 admist lot of hope as change maker. While increasing the scope for the insurance cover to the poor, there is chance to include poor in monitized economy. Whether the claim is granted and reclaimed by the poor as regards to insurance? Only time would tell the benefits it would do to the poor. Thats apart the budget curtail the spending on the social sector, including Panchayati raj, education, health, water resources has been reduced. As mentioned by one analyst as under;

"Many of the social sectors have experienced huge cut in allocation. The allocation for women and child development has been reduced by staggering 44 per cent, the reduction for school education and literacy has been facing a reduction of closer to 10 per cent. The allocation for environment and forest has been slashed by almost 5 per cent and for water resources the allocation was reduced by 29 per cent. Allocation on Mid-day meal scheme has been reduced by almost 22 per cent. Allocation for JnNURM has been reduced from Rs. 6, 2167 crore to Rs. 240 crore and the money would be transferred to the creation of 100 smart cities across the country. In the name of giving fiscal autonomy to the states, 12 schemes earlier funded by central government have been winded up and left to the states to use their additional resources. As a result, backward region grants fund, tourist infrastructure development scheme, model school at block level, part of agricultural development has to be taken care of by the state governments."

For detail :https://expldev.wordpress.com/2015/03/01/union-budget-2015-16-hopes-and-apprehensions-anjan-chakrabarti/

What can be expected from the government who has done wonders to facilitate the corporate by providing for the tax breaks, have been planning to disinvest from the public enterprise, facilitate new business  etc has been lack lustors in promoting the agricultural growth. With lots of hope on the 'niti ' ayog, this has been non starter with Rs.20000 crore seed capital alloted. The state are now left with the recommendations of the finance commissions for their share of central revenue. Most of the state are now made to look for their own resources. Right approach but state needs to be trained, monitored and supported for the planning excercise. The largest share of revenue from the centre now goes to the defence sector with over Rs.2.5 lakh crore expenditure allocation. 

With the objective of bringing the labour from the agriculture to the services sector the focus retains on the skill development. What skills? mainly to serve the service sector, which has seen the rise of service tax from 12 to 14 percent directly, and with addition proposed cess of 2 percent its going to rise above 16 percent. This can harmful for the growth of service sector it self. More or less it would effect the tourism, hotel and restaurant business in big way. The middle class households are largely effected, not only in urban India but also in rural. The development scenario would never receive investments as expected due to poor rise in income of households. There is poor chance of saving the money, thus where is scope for the investment in infrastructure or govt schemes. 

The arm twisting of the middle class has been opposite to the 'achhe din' slogan by the Modi Sarkar, promised on the eve of election. The net benefit to the poor would be lesser if the investment in rural infrastructure is declining, and the employment scope is declined due to poor service sector growth. The decline in crude prices have not helped the customers but it has helped the government and corporate to save the addition revenue and foreign exchange. The additional levies and taxes would burden on the common men and rich alike since many of them who consume these raw material would be hard hit by increasing price rise. 

The global competitiveness would decline since the delay in the major projects like Dholera SIR, GIFT city and DFC would take toll on the corporate expectation. Even with rise in government investment the projects on the ground are moving at slow pace. The first of the projects mentioned might be expected to finish by 2017-18, if the projects do not get the investors who are really interested in starting projects there is likely chance to even foresee employment generated on the ground. 

Though the governments abstain itself from being populist it attracted the attention of the market and corporate since it facilitated them for the want of investment and employment. As per the experience of Gujarat goes hardly 30 to 40 percent being realized even after facilitating the corporate in most of the manufacturing sectors. 

Upsetting the Planning Commission: Old Wine in New Bottle

The setting of the planning commission in year 1950, an about 54 years ago and up to 12th five plan it served the nation with advising the central government and directing the states from time to time. The planning commission established to promote and protect the rights of the citizens. The development planning emerges as science which was practiced and researched while we planned for our nation. The basis of planning commission was following;

The Constitution of India has guaranteed certain Fundamental Rights to the citizens of India and enunciates certain Directive Principles of State Policy, in particular, that the State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social economic and political, shall inform all the institutions of the national life and shall direct its policy towards securing, among other things:-
(a) that the citizens, men and women, equally, have the right to an adequate means of livelihood;
(b) that the ownership and control of the material resources of the community are so distributed as best to sub serve the common good; and
(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.

With new government elected in May2014, there is urge to change and new direction to be sought from the organisation which now is allowed to shut and become defunct. The new regime with eyes on the growth of economy, and post libralization effects give rise to capital and market based policy making. The rights based approach subsided by the economic and employment concerns of the urban India. The rising middle class and their hopes giving way to new thinking promoting greater participation from the enterprises. 

The so called 'think tank' based approach is not new, the guards changed with planning commission paid fitting obituary to its structure and planned era by going beyond the means by extending itself too much into the political economy. India has not achieved coordinated growth among the stakeholders like the states and centre, the federal structure needs to be strengthened with states taking more responsibility in planning.

The tiff between centre and state in earlier regime and emergence of Gujarat Model with more action towards inviting the private players and high stake of state in capital investment. The sector based growth in Gujarat, with more corporate segments of government, due to emergence of companies owned and sustained by Government. The model succeeded in reducing the government department to signing authorities and release of lumpsum financial support to new organisations. The improvised management techniques minus lack of government (middle level management) helped these government run corporate to functions. But none of the corporate (of government) was evaluated for its result except their contribution and zeal in signing the MoUs with limited companies. Public-Private partnership was done in true spirit with both the parties unshackled themselves from the government systems except receiving the financial aid and decision ability. The American dream of Gujarat government to establish the brand succeeded in making the model adaptable to wider use once the ruling party came to power in India.

Now, the model needs to be tested on India's economic fate yet, failing to recognize the need there is little doubt that the re-organised decision making body will not be planning commission. This would work as disinvestment commission on one hand when government departments would give birth to state run enterprises. Eventually, PPP model bringing out the change (financial control) to their own hand for quick decision making. It would be hard to replace the planning commission, by its nature but its easy to open a new way of governance with no government in place to decide the path to development. State and local bodies now need to compete among themselves to get the wider power and investment. It would be not long before they come together to demand more assistance and thus market playing its role.

Development: Must be removed from the shackles of Bad Economics

Election once again has started throwing data on the public forum, when the services of the economists are being used to measure the merits of the development. The key holed eyed economist are again judging using the time and variables which they only can define as the unit for the representation of their argument. The reinvention of the data takes place which even the original collectors of information like NSSO, RBI, WB, or others would have imagined to use. The deconstruction of the economy in the claim to be politically correct development jumps out of the economic boxes and does a shadow boxing for the political masters. The utility of the Nobel and ultra Nobel, elite economists thrown out of race of award often fight for the opposition whom this gentlemen represent. The representation of data in the favour of the parties who tries to disown the economic preferences of the ruling parties often treat the data from the government as farce and not to be quoted. In most of the cases they build the economic argument based on the political notion of the justification as if the data (if its so) can be manipulated to suit a political agenda.

In a way the political masters do not control the economic affairs as it is made to believe, they are not one who can feed the poor or even stop the down slide of the economy. They are no way responsible for the development status of the people, why the economists make us believe that what you are looking at is the outcome of the political gentlemen/women who tried very hard to save you from economic oblivion.

The international development forums have often rejected, economic indicators as true representative of the 'development' of the people and regions. What macro economy represents anyway..a state of health regarding the country. There are some who tries to overthrow the planning commission, who rather shall be strengthened for whatever they would have done in last 60 plus years. Is it so easy that for the sake of the political freedom the division of the nation should be accepted. Whether there is political nexus between a national and regional parties to weaken the development strategies from central organisation, for more federal power to the state in the name of financial autonomy. In the competition between the political parties, which in India is getting transformed into the state autonomy (which on the ground is not true) in the macro economic debates turns out to decentralization of power for the sake of political benefits. If at all the states transfers similar financial autonomy to the constituent districts.

Development in the election year have become a show game for the political parties often reflecting the feudal mindset with exclusive political strategies to corner maximum funds from the corporate. The deprived social class as always were granted little political mileage in the development  debate since they rather contribute little to the national and state domestic product. The growth charts cannot be filled while the poor are serviced by the state, the free education, land rights, rights to health, forest rights, creation of wealth at grassroots shows no insight from the popular economic theorists and thinkers who run after the political masters for the sake of intellectual acceptance. The realization of the development inputs cannot only be take if there is public-private participation where public means government and private means corporate. The sectors which were limited to the government departments mainly tribal, forest, irrigation, education, health etc were privatized by the government citing bad economics after the post liberalization. But these social change by installing the corporate partners did not help in improvement of social sectors. Most of the economically developed states are examples of giving not so good human development indicators. In fact HDI is common indicators where the economic development has lesser impact if the fundamental resources of the respective states remain intact.

In fact the economic principles practiced by many intellectual who often que before the political class are nurtured by desire to gain the power to have say in handling millions of rupees often at the cost of the common men. The idea of the projects and crores of rupees in the schemes gives immense satisfaction to such who are often not bothered to understand the outcome or forget about the social audit. Most the million rupee scheme are wasted on the lack of monitoring, where outcome is not the goal to which economists have worked rather they limit themselves to the funding.

Low Unemployment and Heavy Investment Strategy for Gujarat?

The latest reports of Ministry of Labour Government of India, projects Gujarat as least unemployment in country. This is also contrast to high investment opportunity being offered in the state. How sustainable would be investment in absence of labour shortage. Given the huge investment promises and related land utilization or intention to use 1000 ha of land for the projects in leiu of the employment where are the labour. There is feeling in the state that too much capital flow in absence of manpower, can spell disaster for the state. Given the migration flows, even declining from across the states in country, a huge rural-urban population shift has happened since 1991 till 2011 where is scope for further demographic adjustment in next decade. A urbanisation fueled by investment in infrastructure courtsey the JnNURM and UIDSSMT scheme the migration to cities from the rural hinterland has been rising high. Moreover there is talk of setting up the Special Investment Regions (12-13) in the state to serve the special economic zones and also to act as independent cities, where are the people? The government is invested a bit high on the much talked Dholera SIR, but prospects for the 'peopling' i.e., shifting of the people to these destinations seems to be weak. What than is the task ahead for the Government and industry investors given the shortage of labour as predicted by many? The over reliance on the external migratory tendency would be misjudged as too ambitious given the development projects, and investment happening in rapid pace in neighbouring Rajasthan, Maharashtra and Madhya Pradesh. Gujarat needs to look some where else to source labourer or the industry needs to be prepared for the high labour costs.

A big change in the income levels due to rise in investments and surplus for disposal in the developed districts of the state is indicator for the line of actions government should be ahering before its too late. Gujarat remains now less attractive given its falliability to eminent crisis in future. It would be interesting to revive the argument in the upcoming Vibrant Gujarat.