(Figures given in graph are based on Budget 2021 documents)
From the perspective of the common man, the relative importance given to various ministries in the budget allocation is an indication of the government’s priorities, and in turn reveals whether the allocations are people-centric.
President’s Blog
There are various claims and counter-claims related to Budget 2021. While the ruling party claimed that the budget will serve the poor, opposition parties criticised the budget as anti-people and pro-rich.
From the perspective of the common man, the relative importance given to various ministries in the budget allocation is an indication of the government’s priorities, and in turn reveals whether the allocations are people-centric.
The graph above provides a visual picture of the relative importance of various ministries in the budget.
The total allocation for the Ministry of Defence in this year’s budget is ₹4.78 lakh crore. It is more than the sum of the total allocation for all other ministries shown in the graph – that is, Health, Education, Agriculture, Housing and Rural Development.
If defence pensions, which are a recurrent revenue expenditure, re excluded, the budget allocation is still a mammoth ₹3.62 lakh crore. Of the total budget allocation, the capital allocation is ₹1.35 lakh crore for 2021-22.
With the stand-off against China, there has been an increasing clamour for increasing the defence budget. Due to this capital expenditure in the defence budget saw an increase of ₹21,326 crore, or 18.75%, from the Budget estimates of the previous year. Capital expenditures involve new purchases of defence equipment or new manufacturing facilities. This is the highest increase in capital outlay for defence in the past 15 years. The government has allowed private profiteers to enter defence manufacture. Border tensions have always been a justification for the drive towards building a world-scale military-industrial complex.
Last year, when India and China accused each other massive mobilisation along the Line of Actual Control (LAC), the armed forces got an additional allocation of ₹20,776 crore under capital expenditure for emergency procurements.
As the stand-off began with China in May last year, the Army deployed 50,000 troops and equipment along the LAC in eastern Ladakh. The Indian Air Force (IAF), too, forward-deployed its frontline fighters. The services also went in for a series of emergency procurements, including equipment and extreme weather clothing for the troops deployed in the high-altitude areas in peak winter. Last month, the Chief of the Army Staff, Gen. Manoj Naravane, said that 38 deals, estimated at ₹5,000 crore, were made last year through the “emergency and fast track” route and in addition, capital procurements for ₹13,000 crore were concluded.
In contrast, the Health Ministry expects to spend ₹71,269 crore in 2021-22, an increase of roughly 9% from budget estimates of last year. But this will be less than what the Ministry actually spent last year, with the expenditure increasing due to the COVID pandemic.
Only a few days before the Budget was presented, the Economic Survey had called for increasing the public healthcare spending from the present level of less than 1 per cent of GDP to at least 2.5-3 per cent so that out-of-pocket expenditure (OOPE) of people for healthcare reduces from the current 65 per cent to 35 per cent. Observing that India has one of the highest OOPE in the world, the Economic Survey had warned that life expectancy positively correlates with per capita public health expenditure.
According to the Stockholm International Peace Research Institute (SIPRI), India stood third in global defence expenditure overtaking Russia and Saudi Arabia. While India is far down in the human development index and fares very poorly in nutritional well-being and per capita income, successive governments have prioritised military expenditures over spending on basic necessities, citing border tensions and strategic moves of neighbouring countries.
Another major unproductive expense is the interest expense on accumulated borrowing of the central government. Over the years, because expenditures have always exceeded incomes, the government has resorted to borrowings. The per capita debt of the Indian people has been steadily rising.
A mere tinkering of budgets, renaming existing development schemes, or introducing new ones, without altering the basic principles of budget making, is not going to serve the vast majority of people. A country needs to be defended but not at the cost of impoverishing its people. The arms industry thrives on wars and border tensions. These merchants of death do not care about the well-being of our people. It is the peoples of neighbouring countries of the subcontinent who have to oppose the warmongering and military competition which are leading the region towards mutual annihilation. Only then can budget expenditures be productive and the budget exercise people-centric.
Although the Government claims that it carries out a wide ranging set of consultations while the Budget is prepared, on the ground there is nothing of this sort to be seen. Budget making is concentrated in the hands of the Finance Ministry and the Prime Minister’s Office. The debates in the Parliament on the Finance Bill are practically a sham, and the Treasury Benches have little difficulty in passing the Budget no matter how unpopular the provisions. One of the urgent tasks of the present is to find an enabling mechanism for the main stakeholders, namely the people of India, to play a central role in the most important annual exercise of the Budget. At no point in Indian history has the gulf between the people and their elected representative been so wide, as it is today, reflected in budget making. This is because people are thoroughly marginalised in the present political process. Other than voting in periodic elections, people are not allowed to play any role in determining the priorities for government expenditures. Unless a thoroughgoing transformation of the political process is done and people exercise power in their hands, budgets will serve only a minority of moneybags and not the vast majority of people.
