Falling Between Two Stools by Dr. Mohammad Manzoor Alam (March 14, 2015)

The reverberations on Modi government’s first general budgets are still being heard, more clearly with the passage of time. In hindsight it looks like a feeble attempt to please everybody, but has ended up pleasing nobody.

Champion of free trade and limited government are fulminating over the government’s failure to step away from big government. One highly influential editor has complained that the Modi government did not show the courage in Railway budget that was seen in its overtures to PDP in Kashmir.

This writer made the point that “the business of Railways is to run trains, not fill Rail Neer bottles, make tracks, sleepers, coaches and engines. In that case, what held it back from selling off those side businesses and invest the proceedings on rail network. Doing all this would have required political will which was found lacking in the government.

On the other end of the political spectrum, people championing social causes are aggrieved at cuts in social spending, the most grueling being cuts in health and education budget. A fast growing economy particularly needs substantial investments in these two areas.

The general budget has reduced spending on education by 16 percent and on health by 15 percent. Even otherwise, spending on education has been low in India. Compared to 4.9 percent of GDP average global spending on education, India spent only 3.3 percent of the GDP in 2010.

This shows up in literacy rate figure. Among the BRICS nations India’s literacy rate is 74 percent, while the figures for the other countries are similar to the developed world.

Nobel laureate Amartya Sen has emphasised the crucial value of health and education in economic development. In their electioneering BJP had promised healthcare allocation of 3 percent of the GDP, but the allocation has to be reduced by 8 percent and funds for National Health Mission is reduced by 20 percent.

Indiaspend.org a reliable website on the issue, remarks: “While India is on a stable growth trajectory, we still lag behind in human capital and overall human development where India ranks 136 among 186 countries”.

 

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