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Mainstream, VOL LII No 50, December 6, 2014

Arbitrary Budget Cuts in Social Sectors

Sunday 7 December 2014, by Bharat Dogra


Recently several reports in leading news-papers have drawn attention to the possibility of significant but arbitrary cuts in budgetary allocations for social sectors. On November 27, The Hindu reported: “To meet the fiscal deficit target for this year, the Central Government is brutally slashing social sector allocations... The Finance Ministry is currently in the process of revising the Budget estimates for allocations for 2014-15 across heads of expenditures and Ministries. In the revised estimates plan, the expenditure as education is proposed to be cut by Rs 11000 crores. Departments of Panchayati Raj, Rural Development and Sanitation are facing average cuts of about 25 per cent. The health sector plan expenditure’s revised estimate is proposed to be Rs 7000 crores lower than originally envisaged in the Budget.”

The Economic Times reported on November 27: “The Finance Ministry is believed to have suggested to some Ministries a deduction of up to 15 per cent in their annual budgets for the current financial year..... Social sector Ministries, which have the largest social spending on schemes like the MGNREGA, are uncomfortable with this move and a discussion is being held with the Finance Ministry, a source said.”

The Telegraph reported on the same day: “The Finance Ministry has decided to shave Rs 3000 crores, or about 9 per cent, of the rural job guar-antee scheme’s Budget allocations, government sources told The Telegraph.

To focus attention on the possibility of arbitrary denial of thousands of crores of rupees to social priority sectors, the Centre for Budget and Governance Accountability (CBGA), Jan Awaaz and other social organisations organised a press conference on November 29 in Delhi.

Subrat Das, Coordinator of the CBGA, said that the overall allocations for social sectors in terms of ratio to GDP have been much lower than what is needed. If on top of this there are significant cuts in the last months of the financial year, then this can be very harmful for the vulnerable sections. The tax-GDP ratio should rise significantly and the overall Budget size should rise so that assured adequate allocations are available for social sectors. He said that the usual excuses for such cuts, such as poor utilisation, are not valid now as fund utilisation has been improving and there’s demand for more NREGA funds.

Prof Jayati Ghosh said that arbitrary cuts in Budget allocations amount to an attack on democracy. For the Finance Bill the government has to get a majority vote in Parliament and any Budget cuts cannot be made without following a democratic process or without the approval of Parliament. Today Parliament, the media, citizens all are bypassed on this significant issue. Prof Ghosh said that when nominal allocations are maintained from one Budget to another, real allocations in fact decline due to the impact of inflation. Further, in the MGNREGA, actually there were heavy pending wages from the previous year so that actually the decline was even bigger. If on top of that, even more cuts are made, then this can destroy the priority pro-poor programmes. When people don’t get wages in time, they stop coming for work and then this is cited as evidence of lack of demand for work, while actually poor people badly need work.

Prof Pravin Jha said it was now clear that the projected revenue at the time of Budget presentation was highly inflated and if such trends continue or worsen, cuts for social priority sectors can be even higher.

Deepa Sinha from the Food Rights Campaign said that already the allocation for nutrition programme and anganwadi workers wages are very low, and if further cuts are made, these priority programmes can be very adversely affected. Kaushalya said that denial of medicines and medicare due to fund cuts can be a life and death issue for HIV patients.

Prof Prabhat Patnaik said that if the benefits of growth do not reach the poor and the meagre allocations for them are slashed further, then questions are bound to be raised regarding for whom is this growth taking place.

Prof Patnaik traced the roots of the employment guarantee law to the Constitution and its Directive Principles. “You can’t play around with such provisions,” he said, adding that such arbitrary cuts in priority social sectors amounted to an assault on democracy. When welfare funds for vulnerable sections are chopped to make available subsidies for corporate growth, then this “neo-liberalism with fangs bared” should be widely opposed.

A statistical table circulated at the press conference shows that tax revenue forgone to the gold and diamond industry amount to Rs 65,000 crores, while the total Budget for the NREGA is only about half of this.

While summing up the presentation Nikhil Dey said that representatives of many and diverse social organisations are firstly opposed to such arbitrary Budget cuts. He said that at a time when ten States (including some BJP-ruled States) are asking for more MGNREGA funds, slashing of Rs 3000 crores from the MGNREGA is completely unjustified.

Bharat Dogra is a free-lance journalist who has been involved with several social initiatives and movements.

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