Two decades back, if the liberalization policy of Manmohon Singh brought cheers to the general public to earn and spend, the recent demonetisation, GST and lockdown has brought economic disaster for the common man in India. Presenting the India's first ever "paperless Union budget" for 2021-22, Finance Minister Nirmala Sitharaman banked on disinvestment and asset monetisation to increase government's revenue without introducing any new taxes or making an effort to curtail the black money. Decades of thoughtful investments in the public sector have come to the rescue of the Government for its infrastructure development and keep up the pace and face value.  

The infrastructure development for sure will bring in more job opportunities, funds in the market and a step closer to be with the developed nations. But what the economists fear is that the huge infrastructures like that of Bullet train project will comparatively bring in lower employment opportunities, with more of mechanised labour and technology, than the housing or industry engagements. Also, the sale of public sector units to crony capitalists will widen the gap between the rich and the poor in the country. This year's budget was in the midst of the pandemic, but stayed on the path of 'AtmaNirbhar Bharat Abhiyan' that supplements the Make in India vision of the government and India becoming a $5 trillion economy.  

The fiscal consolidation path also factors in government's receipts from sale of stake in public sector enterprises, or disinvestment. The government targets to get Rs 1.75 lakh crore from disinvestment with the sale of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited among others. The government had set an ambitious target of raising Rs 2.1 lakh crore through disinvestment in FY21. However, adverse market conditions because of the pandemic affected its plans and disinvestment in FY21 was revised to Rs 32,000 crore in the Budget. Experts ask, What’s the point in investing Rs 5 lakh crore on one hand, and selling off assets worth Rs 2 lakh crore on the other hand?

As per the Budget proposal, the government will transfer five operational roads, with an enterprise value of Rs 5,000 crore, to the Infrastructure Investment Trust (InvIT) of the National Highways Authority of India (NHAI). It will also transfer transmission assets of Rs 7,000 crore value to PowerGrid's InvIT. Indian Railways will monetise its Dedicated Freight Corridor (DFC) assets for operations and maintenance, after commissioning. Operational toll roads of NHAI, transmission assets of PowerGrid, oil and gas pipelines of GAIL, Indian Oil and Hindustan Petroleum, Airports Authority of India's airports in tier-II and tier-III cities, warehousing assets of central public sector enterprises (CPSEs), next lot of airports, among others, are the infrastructure assets that will be brought under the asset monetisation programme.

The government has also proposed privatisation of two public sector banks, other than IDBI Bank, and one general insurance company LIC in FY22. The Finance Minister announced to hike the FDI limit in Insurance from 49% to 74%. After pandemic, land cost has gone down, that means the value of assets will be minimal on sale. Private sector wants the public sector to lose out so as to increase their profit share. For Example, Ola and Uber charged only Rs 6 per km when they launched, which was less than an auto fare, attracted the general commuters, but went on to increase the fare later to Rs 16 and Rs 22 per km as per their choice.

A better philosophy would have been to encourage the private sector and retreat public sector, markets be promoted and state need to retreat. The solution lies in reducing black money to raise revenues. The ruling class is benefited of Disinvestment at the cost of a tax payer’s money invested in these public sector units. Crony capitalism needs to be discouraged tooth and nail for a healthy economic competition.

According to Prof Arun Kumar, an expert on Economics, MNREGA is nowadays providing only 45 days of work for the poor and needy labours. Instead, it should have been increased to 200 days and Rs 3-4 lakh crore be allotted, only then the earning will increase, leading to the rise in demand. The overall budget is almost same as that of 34 Lakh crore last year, whereas the MNREGA budget is reduced. Increase in infrastructure budget is at the cost of food subsidy, which will reduce the purchasing power. Short term employment generation is required. On the Agriculture front, Prime Minister Kisan scheme has been reduced to 65,000 cr from 75,000 cr. Farmers problem is that neither are they getting the reasonable price for their crops, nor are they getting any employment. It is turning out to be a disguise employment!

Economic packages were announced by the government last year to revive the economy. This included the product linked incentive (PLI) scheme that was introduced for mobile phones, electronic components and the pharma sector. Also, in November 2020 the government announced the PLI scheme for another 10 sectors (technology, pharma/drugs, automobiles and auto components, telecom and networking products, textile and food products etc.) with a total outlay of Rs 1.46 lakh crore making the total incentives to Rs 1.97 lakh crore.

The current budget focuses on rationalisation of custom duties to make India self-reliant by promoting domestic manufacturing and of becoming an economic superpower. The government eliminated 80 outdated customs exemptions last year and is now planning to review an additional 400 customs exemptions and bring in a revised customs duty structure from October 2021. In order to promote domestic manufacturing, basic customs duty (BCD) on various products such as certain mobile parts, automobile parts, chemicals, solar inverters and lanterns etc. has been increased. On one hand, the Government is imposing custom duty and other means to discourage foreign imports and on the other has opened up wide gates for the FDI up to 74 %.  

In order to finance agriculture infrastructure and other development expenditure, 'Agriculture Infrastructure and Development Cess' has been introduced on specified items such as apples, alcoholic beverages, crude edible oil, etc. with corresponding reduction in the BCD rates on most of the products, so that consumer does not bear additional burden.

A new healthcare scheme, the Pradhan Mantri Atma Nirbhar Swasth Bharat Yojana, with a Rs 64,180-crore outlay, has been announced. This scheme is expected to be used to develop capacities of primary, secondary and tertiary healthcare systems as well as existing national institutions over a period of six years. This is in addition to an unprecedented outlay for healthcare, Rs 2,23,846 crore, which is an increase of 137% over the 2020-’21 Budget.

In the last year’s Budget, health ministry was allocated Rs 67,112 crore just as the Covid-19 pandemic in India was taking off. Revised estimates, or the money estimated to have been spent, for the current financial year are Rs 82,928 crore. For 2021-’22, India’s health ministry has been allotted Rs 73,931.77 crore. This is up 10.16% from the budget estimate for 2020-’21, but down 10.84% from the revised estimate for the current financial year. 

Rs 11,756 crore has been earmarked for Covid-19 to the health ministry, from its overall budget. Rs 360 crore has also been marked for the process of vaccinating healthcare workers. The increased allocations are arrived at by adding the following budget heads: health ministry, AYUSH ministry, department of drinking water and sanitation, allocations by the finance commission for health, water and sanitation and a new allocation of money for Covid-19 vaccination.
 

Health and Wellbeing - Expenditure

( In Rs.Crores)

Source : Union Budget

According to Ms Alka Lamba of Congress Party, “40 % cut has been made in education budget, which is disheartening. A mere budget of Rs 15,700 crore has been earmarked for over 6.5 crore small scale industries, providing Rs 2500 to each units. A lot of money has been spent in the name of Smart Cities announced in 2015, but the present budget is silent on it, which is worrisome”.

In Russia, after USSR was dissolved, the public sector units were purchased by the private partners, who became billionaires but contributed manifolds to the public and in nation’s development. Whereas, privatization in the Indian context is to devaluate the public sector and then sell it at a loss. For example, BALCO had a value of over 5000 cr, which was devalued before it was sold out for 600 cr. 

India slipped to 53rd position (6.1 score) in 2020 from 27th rank (7.92) in 2014 of the Democracy Index’s global ranking, according to the Economist Intelligence Unit as a result of ‘democratic backsliding’ by authorities and ‘crackdowns’ on civil liberties. An alarm for the authorities in power! 

Experts feel that the pro-corporate media has projected the budget as overwhelming, but the reality is that 75% economy has come down during the lockdown and is slowly recovering. Only 1000 trains out of 14000 are plying as of now. The share market is on the rise as people with steady income are investing in shares of IT, Food and Beverage, Pharma industries, which is not a stable affair. 

Experts believe that the disinvestment and asset monetisation plan, if executed properly, can help the government in infrastructure creation and fiscal consolidation, provided the money is not goofed up in other activities.