Union Budget 2015-16: Bang for India, Regression for the North East

Amar Yumnam *

Finance Minister Arun Jaitley leaving office for Parliament :: Pix - TSE / Agencies

The Modi-led Union Government has just presented the first full-fledged Budget today. The confidence with which the Finance Minister presented the Budget was already visible in the Economic Survey of the outgoing financial-year presented only a day earlier. The Economic Survey writes: "A political mandate for reform and a benign external environment have created a historic moment of opportunity to propel India onto a double-digit growth trajectory. Decisive shifts in policies controlled by the Centre combined with a persistent, encompassing, and creative incrementalism in other areas could cumulate to Big Bang reforms. .... India has reached a sweet spot—rare in the history of nations—in which it could finally be launched on a double-digit medium-term growth trajectory.

This trajectory would allow the country to attain the fundamental objectives of "wiping every tear from every eye" of the still poor and vulnerable, while affording the opportunities for increasingly young, middle-class, and aspirational India to realize its limitless potential. The macro-economy has been rendered more stable, reforms have been launched, the deceleration in growth has ended and the economy appears now to be recovering, the external environment is benign, and challenges in other major economies have made India the near-cynosure of eager investors. Daunting challenges endure, which this Survey will not ignore, but the strong political mandate for economic change has imbued optimism that they can be overcome. India, in short, seems poised for propulsion."

It was with this prelude that the budget was presented today laying out "the roadmap for accelerating growth, enhancing investment and passing on the benefit of the growth process to the common man, woman, youth and child: those, whose quality of life needs to be improved." The budget also talks bold: "In respect of social and economic indicators, for seven decades now, we have worked in terms of percentages, and numbers of beneficiaries covered. It is quite obvious that inc! remental change is not going to take us anywhere.

We have to think in terms of a quantum jump." Besides the strong components for taking care of the black-money issue, the other avowed objectives of the Budget are:

"(i) A roof for each family in India. The call given for 'Housing for all' by 2022 would require Team India to complete 2 crore houses in urban areas and 4 crore houses in rural areas.

(ii) Each house in the country should have basic facilities of 24-hour power supply, clean drinking water, a toilet, and be connected to a road.

(iii) At least one member from each family should have access to the means for livelihood and, employment or economic opportunity, to improve his or her lot.

(iv) Substantial reduction of poverty. All our schemes should focus on and centre around the poor. Each of us has to commit ourselves to this task of eliminating absolute poverty.

(v) Electrification, by 2020, of the remaining 20,000 villages in the country, including by off-grid solar power generation.

(vi) Connecting each of the 1,78,000 unconnected habitations by all weather roads. This will require completing 1,00,000 km of roads currently under construction plus sanctioning and building another 1,00,000 km of road.

(vii) Good health is a necessity for both quality of life, and a person's productivity and ability to support his or her family. Providing medical services in each village and city is absolutely essential.

(viii) Educating and skilling our youth to enable them to get employment is the altar before which we must all bow. To ensure that there is a senior secondary school within 5 km reach of each child, we need to upgrade over 80,000 secondary schools and add or upgrade 75,000 junior/middle, to the senior secondary level. We also have to ensure that education improves in terms of quality and learning outcomes.

(ix) Increase in agricultural productivity and realization of reasonable prices for agricultural production is essential for the welfare of rural areas. We should commit to increasing the irrigated area, improving the efficiency of existing irrigation systems, promoting agro-based industry for value addition and increasing farm incomes, and reasonable prices for farm produce.

(x) In terms of communication, the rural and urban divide should no longer be acceptable to us. We have to ensure connectivity to all the villages without it.

(xi) Two-thirds of our population is below 35. To ensure that our young get proper jobs, we have to aim to make India the manufacturing hub of the world. The Skill India and the Make in India programmes are aimed at doing this.

(xii) We also have to encourage and grow the spirit of entrepreneurship in India and support new start-ups. Thus can our youth turn from being job-seekers, to job-creators." From all these stated objectives, and the orientation of the policy foci included in the Budget, three things are clear. First, the Union Government is really determined to endeavour to move towards elimination of the black-money related problems and loopholes in the country.

Second, the Budget has a strong support mechanism for enhancing investment by entrepreneurs, from small to the big. This is to give a framework to create a job-based support mechanism for enhancing the quality of life. Third, the macroeconomic administration in the country is being led towards a responsible and responsive governance system as is evident of the entry into an agreement framework between the government and the Reserve Bank of India.

Certain new characteristics of the Budgetary process this time are interesting. First, unlike earlier, the Economic Survey gave a clear indication of what the Budget likely to be, and even mentioned the term in the report. Second, the Budget Speech also contains a page of contents. But, despite all the commitment for a deepening the digital content of the Indian economy, the Budget documents available in the official website of the Ministry of Finance are absolutely marked by absence of required quality and presence of mistakes; even the packages used by the Ministry for the documents are dated.

Well, these things aside, we must say that the Budget is very clearly focused and achievement oriented for the economy of India sans the North East. The policy approaches contained in the Budget would go a long way in instilling character and direction to this economy. But the question with which we are also concerned relates to the scope and potential of the North East. The Budget indicates as if the Government has already agreed to the recommendation of the Fourteenth Finance Commission for abolition of the category of Special Category States.

Well, assuming that we have no qualms against this decision, the question arises as to what has been put in place to take care of the differential developmental challenges of the North East. The region is taken back to the beginning of the Fourth Five Year Plan when the recommendations of the Pande Committee and Wanchoo Committee Reports were altered at the advantage of the "major" States by a decision of the then National Development Council.

Despite the long efforts under the so-called Special Category States, no effort has ever been taken to contextualise the development interventions to the geographic and the institutional realities of the region. Under the new budget, there is not even an attempt to appreciate the development issues of the region in a way different from those in the rest of India and the imperative to go for contextualised interventions to genuinely take the region forward.

The new Budget has put in plain and clear terms, unlike any time in the past, that the development challenges in the region would be taken care of by the generalised approaches applied throughout the country.

This amounts to worsening of the development approach towards the region. Further, it also commits the biggest mistake of not realising the inequality of opportunity characterising the region vis-à-vis the rest of India. The region has lost out in terms of approaches and contextualised interventions despite the verbal commitments to the "mainstreaming" of the region; treating equally the unequal can never be a mainstreaming exercise.