Budget 2021: The Covid-19 pandemic and the severe economic crisis presented a great opportunity to finance minister Nirmala Sitharaman to create history by rebooting the Indian economy. The pandemic gave her extraordinary powers to fix the battered economy. Sitharaman was expected to provide a visionary roadmap to make India a $10 trillion economy by 2030. But the effort seems to be coming in bits and pieces from the finance minister.
Sitharaman’s Budget 2021 speech raised hopes, but many of the figures do not match her words. The Atmanirbhar Swasth Bharat Yojana has an outlay of Rs 64,180 crore over 6 years. This means, roughly Rs 10,000 crore annually and it will be used to develop capacities of 17,788 rural and 11,024 urban health and wellness centres, integrated public health labs in all districts and 3382 block public health units in 11 states. It also envisages critical care hospital blocks in 602 districts and 12 central institutions, strengthening of the National Centre for Disease Control (NCDC) and its 5 regional branches and 20 metropolitan health surveillance units and many more.
Even if we add the Rs 37,130 crore allocated under the National Health Mission (a 5% hike from 2019-20 revised estimates), the amount won’t be enough to execute the ambitious plans Sitharaman announced in her Budget 2021 speech.
Healthcare budget 2021 falls short of expectations
The Covid-19 pandemic enlightened the world about the need to invest heavily in public health and community healthcare institutions and structures that include the ASHA workers. But the allocation is just Rs 74,604, which is only 17% higher than the revised estimates for 2019-20. If one factors in inflation, it would be just 10-12% increase at best. This amount also does not cover the Covid-19 vaccine cost that is expected to be more than Rs 50,000 crore. The government seems to be shirking off the responsibility to fight the pandemic that has affected people in all walks of life.
The Micro, Small and Medium Enterprises (MSME) sector that saw almost 30% of the 70 million units closing down and another 50% trimming the operations drastically, required a significant push for revival. Budget 2021 does not offer any help to this sector that employs more than 12 crore people. The total job losses in this sector alone might be around 2 crore.
A V-shaped revival of the Indian economy is not possible without a revival of the MSME sector, which needs access to credit and other critical inputs. Rs 10,000 allocated under a new scheme Guarantee Emergency Credit Line (GECL) facility to eligible MSME borrowers is the only initiative for the sector. This is grossly inadequate to put the MSME sector back on track. In a crisis year, the Narendra Modi government was expected to do much more.
Budget 2021: Nothing spectacular in education
The National Education Policy (NEP 2020) demands doubling of resources in the school segment as early childhood care will become part of the school system. The National Education Mission has not been given an increased allocation from 2019-20 actuals — from Rs 33,654 crore in 2019-20 to Rs 34,300 crore in 2021-22. In 2020-21, the revised spending is just Rs 28,243 crore. The overall education budget in the new education policy era does not reflect the allocations required to overcome the challenges. It is not just enough to meet the needs of the growing population, fall in employment generation and skill development. It rose from Rs 89,437 crore in 2019-20 (actuals) to Rs 93,224 crore in 2021-22, a meagre rise of Rs 5,000 crore.
The revised estimate for 2020-21 shows that during the lockdown period, the expenditure declined from the previous year. The actuals spending for the current year could be around 85% or less of the budgeted expenditure. The allocation pattern points to the piecemeal approach that has been a hallmark of India’s education policy.
Another confusing figure is related to the pensions outlay. In the last budget, the FM allocated almost 15% increase in the pension outlay from the previous year. The revised budget also shows an 11% rise in pension expenditure. However, the Union Budget 2021-22 expects only a 3% increase in pension funding from 2019-20 actuals. This is happening when the life expectancy and the number of pensioners are on the rise. The number of new pensioners will begin to decline only by 2025.
Roads outlay in Budget 2021
This being the assembly election year for Kerala, Tamil Nadu, and West Bengal, the finance minister gave due consideration to poll-bound states. There seems to be a big anomaly in the outlays. She has made an allocation of Rs 65,000 crore to construct 1,100 kilometer national highways in Kerala, a state that measures 618 kilometers north to south. The question is why so much allocation when the average cost of constructing one kilometer of 4-lane highway is just Rs 8-9 crore. One has to assume that the amount earmarked is for the next five years.
The numbers lose credibility when one considers that fact that the allocation for NHAI for the financial year is just Rs 57,350 crore. Even if NHAI starts highway expansion work in Kerala in 2021-22, it has to allocate at least Rs 13,000 crore for the state. Then what is left for Tamil Nadu that has been promised Rs 30,000 crore (total allocation is Rs 1.5 lakh crore for 3,500 kilometers of highway). When the FM talks about Rs 5.53 lakh crore outlay for roads, one needs to understand that it is for a period of five years.
This is not to say that the Budget doesn’t have any substance. Sitharaman has made some smart moves in the form of higher FDI limits and monetization of assets. These anomalies cast doubts over the lax homework by her team. When she made huge allocations for a number of sectors, she did not bother to tell people that it was for the next five years. It shows India still needs the Five-Year Plans and the Planning Commission.
Budget 2021 saw the finance minister, a votary of market economy, oscillating between the market economy and a planned economy. Had she followed her Economics lessons and the intuitions of a politician, Sitharaman could have done a far superior job. Her love for big numbers and big-ticket announcements seems to have cost her a big opportunity to rewrite the socio-economic development history of India.
(Dr Resmi Bhaskaran is a development economist based in Manipal, Karnataka. The views are personal.)