The social face of Modi Budget
by Ashok B Sharma on 01 Mar 2015 0 Comment

The Modi Government has drawn up a roadmap for boosting public investments in infrastructure, facilitating ambitious programmes like Make in India, Green India, Skill India and as well as providing safety nets for the poor and the common man, despite the “squeeze” in the fiscal space.


The squeeze in the central government’s fiscal space has been caused due to implementation of the recommendations of the14th Finance Commission whereby 62% of the total tax receipts, including the divisible pool of taxes, grants and plan transfers, would be devolved to the States. Also the current scheme of transparent coal auctioning will accrue more benefits to coal-bearing States. Hence the Union government expects the States to assist in some of its welfare schemes in the spirit of cooperative federalism.    


The Union government, however, has not attempted much to phase out subsidies, as was expected. Subsidies on food and fertilisers have been increased marginally, factoring in the cost of production; so also subsidies on interest. The petroleum subsidy has been drastically reduced from Rs 60,270 crore in 2014-15 revised estimate to Rs 30,000 crore in 2015-16 budgetary estimate, while other subsidies have been reduced from Rs 1,631.55 crore to Rs 1,520 crore.


Union Finance Minister Arun Jaitley, while presenting the Budget, made his intention clear to use the Jan Dhan Yojana-Aadhar platform and Mobile phone (called JAM trinity by the Economic Survey) to facilitate direct transfer of benefits in a leakage-proof, well-targeted and cashless manner.


The government has not yet proposed winding up of any welfare scheme. It has identified two major factors critical to agricultural production, namely, soil health and irrigation. Accordingly Rs 5,300 crore has been allocated to support micro-irrigation, watershed development and Pradhan Mantri Krishi Sinchai Yojana. It has assured to create a Unified National Agriculture Market. For boosting job augmentation in rural areas Rs 34,699 crore has been allocated under Mahatma Gandhi National Rural Employment Generation Scheme (MGNREGS).


Further, for developing rural infrastructure Rs 25,000 crore has been allotted to the corpus of Rural Infrastructure Development Fund (RIDF), Rs 15,000 crore for Long Term Rural Credit Fund and Rs 15,000 crore for Short Term Regional Rural Bank Refinance Fund. Government has set an ambitious target of disbursement of loans to the tune of Rs 8.5 crore to farmers by banks.


Financial inclusion of the common man is government’s key agenda for creating safety nets. It boasts of the success of roping in over 12.5 crore families in 100 days under Prime Minister’s Jan Dhan Yojana, wherein one can open account against zero balance and also have insurance benefits. It plans to utilize the vast postal network with nearly 1,54,000 points spread across rural areas to further its plans for financial inclusion.


The Budget proposes setting up the Pradhan Mantri Suraksha Bima Yojana to cover accidental death risk of Rs 200,000 for a premium of just Rs 12 a year. Atal Pension Yojana will be launched to provide a defined pension, depending on the contribution and its period, and government will contribute 50% of the beneficiaries’ premium limited to Rs 1,000 each year for five years in new accounts opened before the end of 2015. The third social security scheme to be launched is Pradhan Mantri Jeevan Jyoti Bima Yojana which would cover both natural and accidental death risk to the tune of Rs 200,000. The premium will be Rs 330 per year for the age group 18-50.


There are unclaimed deposits in pension funds, such as about Rs 3,000 crore in PPF and about Rs 6,000 crore in EPF. The government intends to use these as corpus to set up a Senior Citizen Welfare Fund which will be used to subsidise the premiums of vulnerable groups such as old age pensioners, BPL card holders, small and marginal farmers. A new scheme for providing physical aids and assisted living devices for senior citizens living below the poverty line will be launched.


Allocation of Rs 30,851 crore has been made for welfare schemes of Scheduled Castes, Rs 19,980 crore for Scheduled Tribes, Rs 79,258 crore for women. Nai Manzil scheme will be launched to enable youths of minority communities not having a formal school education to seek employment.


For small businesses run by Scheduled Castes, Scheduled Tribes and other backward class, Micro Units Development Refinance Agency (MUDRA) Bank will be set up with a corpus of Rs 20,000 crore and credit guarantee corpus of Rs 3,000 crore. It will assist the beneficiaries through Pradhan Mantri Mudra Yojana. An electronic Trade Receivables Discounting System (TReDS) will be set up for financing of trade receivables of MSMEs from corporate and other buyers through multiple financiers. The non-banking financial corporations (NBFCs) registered with RBI and having asset size of Rs 500 crore and above will be considered for notification as financial institutions in terms of the SARFAEI Act 2002.


The government has selected infrastructure as a priority area for investment and has increased outlays for roads and gross budgetary support to railways by Rs 14,031 crore and Rs 10,050 crore respectively. It has increased the CAPEX of public sector units to Rs 3,17,889 crore. The total public investment in infrastructure is pegged at Rs 70,000 crore. National Investment and Infrastructure Fund will also be set up.


With such a broad paradigm for growth, the India story should take a flying leap. 

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