Fiscal Deficit and Welfare Programs – Myth and Reality

1. Part One: Overall budget of the government.

The Present UPA government has prepared budget to execute State Policy with a

budget size of Rs 1665297 Cr in the 2013-14 and estimated fiscal deficit is Rs 542499

Cr. In the year 2011-12 size of the fiscal deficit is more than the plan budget and this

trend is continuing in the revised budget of 2012-13. In the current budget it is slightly

less. It is definitely a serious concern for all of us because government needs money to

plan for development and sustenance of the citizen‟s growth.

Table – 1 : Central Government Budget at a Glance

All figures are in Rs. Cr

Particular 2011-12 (AE)

2012-13

(BE) 2012-13 (RE)

2013-14

(BE)

Total Budget 1304365 1490925 1430825 1665297

Plan Budget 412375 521025 429187 555322

Non Plan Budget 891990 969900 1001638 1109975

Fiscal Deficit 515990 513590 520925 542499

Source: Budget at a glance, Govt of India

But we must also consider other facts while looking into fiscal deficit. The projected

revenue foregone during the year 2012-13 is Rs 573626.70 Cr which is higher than the

Revised Plan Budget (Rs. 429187 Cr) and Fiscal Deficit (Rs 520925 Cr). It is important

to note that the allocation for plan budget is for the entire population of India 124 Cr

where as the revenue forgone is for the companies.

This is not exception but a trend followed every year. Revenue forgone for four

consecutive years from 2009-10 is given in table 2. The average revenue exemption per

company is approx Rs 1 Cr per year. Meaning government is paying them Rs. 1 Cr

every year in one or other ways. This does not include the subsidized land and other

resources.

Table -2 : Structure of Revenue Foregone

Source: Figures are taken out from the Statement 12 - Revenue forgone under the

Central Tax System for the year 213-14, 2012-13 and 2011-12

The parliamentary standing committee on finance has already recommended1 raising

the tax bar for companies and phasing out exemptions given to them rather than

burdening the salaried class and the smaller tax payers. But this recommendation has

not been noticed by the Finance Minister. Perhaps the Finance Minister is more

convinced by the companies and not by the citizens, honorable parliamentarians of the

house and the standing committee. The intension of the government towards the

1 Business Line, March 2, 2012, New Delhi

Exemption of Tax and duties to Corporate Sector

Year 2009-10 (Actual) 20010-11 (Actual) 2011-12 (Actual) 2012-13 (BE)

No of

companies

427811 459270 494545 494545

Amount

% to

Total Amount

% to

Total Amount

% to

Total Amount

% to

Total

Personal

Income Tax 45142.00 9.36 36826.00 8.01 39375.40 7.38 45464.10 7.93

Corporate

Income Tax 72881.00 15.11 57912.00 12.60 61765.30 11.58 68007.60 11.86

Excise Duty 169121.00 35.06

192227.0

0 41.82

195590.0

0 36.66

206188.0

0 35.94

Custom Duty 195288.00 40.48

172740.0

0 37.58

236852.0

0 44.39

253967.0

0 44.27

Total 482432.00

100.0

0

459705.0

0 100.00

533582.7

0

100.0

0

573626.7

0

100.0

0

Revenue

foregone per

corporate 1.13 1.00 1.08 1.16

companies and its‟ citizens is clearly reflected in three columns Plan Budget, Fiscal

Deficit and Revenue Forgone of the Budget.

Disbursement of Budgeted Fund

To understand the kind of expenditure and disbursement to the citizens, we need to see

the trend of expenditure which directly benefits the targeted social and vocational

groups. We need to see that how many schemes are designed in manners which

directly benefit them?

2. Budgetary allocation for Handloom Weavers

The Ministry of Textiles has allocated total Rs. 4631 Cr in the Plan Budget with a

provision of Rs 425.50 Cr for Handloom Weavers. This allocation is continuation of the

trend where major direct benefiting schemes are being discontinued and total plan sizes

are turned down year after year. We can see the examples in table:

Ministry of Textiles, Demand no. 83

Sr.

No.

Heads Actual

2011-

12

Budget

2012-

2013

Revised

2012-

2013

Budget

2013-

2014

Plan Budget

Total Ministry

4207.80 7000.00 4500.00 4631.00

total Handloom 607.62 2898.00 974.00 425.50

Village and Small Industries

Handloom Industries

1 Comprehensive Handloom

Development Scheme

107.00

2 Integrated Handloom

Development Scheme

219.34 170.00 131.00

3 Revival Reforms and

Restructuring package for

Handlooms

200.00 2205.00 550.00 157.00

4 Marketing and Export Promotion

Scheme

53.44 48.00 40.00

5 Diversified Handloom

Development Scheme

12.37 20.00 25.00

6 Handloom Weavers

Comprehensive Welfare

Scheme

68.21 105.00 105.00 65.00

7 Yarn Supply Scheme / Mill Gate

Price Scheme

54.26 350.00 123.00 96.50

Non Plan Budget

8 Weaver Service Centre 28.67 32.50 32.31 35.00

9 Scheme for grant of special

rebate at the rate of ten percent

on sale of accumulated

Handloom stock

0.01

10 Others 19.86 30.00 30.49 32.99

Textile industry contributes 2% to GDP2 at 1999-00 price. In Textile industry handloom

is the largest sector providing employment and production. This sector gives

employment to more than 43 lakh3 handloom weavers and allied workers and is second

to the Agriculture sector in terms of providing employment. Handloom is the cultural

heritage of our country and hence it is imperative to protect and promote the sector.

This is the case where the trust on government data, the one which normally people

believe, are presented to make the good report of the concerned responsible bureaucrat

2 Press Information Bureau 5

th May 2010 15.36 IST

3 "Handloom, A Rich Heritage of India" by Monika S.Garg (IAS), Manoj Jain, B.B. Paul, S. Ulaganathan Dated -

16.7.2012

/ political party / ministry and pubic interest and reality remains unattended and

diminished.

It is not only 43 lakh handloom weavers but the families. In India number of members in

a typical family is 6-8 persons4. This means that handloom sector provides livelihood for

a population minimum 2.5 Cr.

But the sincerity of the government, reflected in the budget, tells a different tale.

“Integrated Handloom Development Scheme” is turned down in previous year and in the

current year the allocation is completely stopped. It is not a single case but there are

many schemes as shown in the Table 2 above. Their representation, agitation,

demands and all other efforts are null and void to the government.

3. Budgetary Allocation for Fish Workers

Under Ministry of Agriculture; the Department of Animal Husbandry, Dairy and Fishery

has plan budget of Rs 2025 Cr and in this budget the allocation for fisheries is Rs. 317

Cr. The fishery sector contributes 0.7% to the GDP5. It means this sector is entitled for

0.7% of the Union budget i.e. Rs. 3887.25 Cr in Plan Budget and Rs 7769.82 in Non-

Plan budget and hence, the allocation is clearly proved to be insufficient.

Table – 3 : Ministry of Agriculture (Fishing)

Ministry of Agriculture, Demand 3 - Dept of Animal Husbandry, Dairy and Fisheries

Sr.

No.

Heads Actual

2011-

2012

Budget

2012-

2013

Revised

2012-2013

Budget

2013-

2014

Plan Budget

Total Budget 1230.01 1910.00 1800.00 2025.00

Fisheries 305.60 299.70 273.25 317.30

4 Indian Express, News Paper dated Wed Mar 14 2012, 03:16 hrs (http://www.indianexpress.com/news/the-

houses-that-india-lives-in/923311) 5 Economic Survey of India 2011-12, Page 193 Paragraph 8.57

1 Marine Fisheries 120.29 120.00 111.30 110.00

2 Inland Fisheries 34.12 30.80 21.35 35.80

3 National Institute of Fisheries

Post Harvest Technology &

Training (NIFPHT&T)

1.76 2.20 2.40 2.35

4 Fishery Survey of India 33.10 37.00 32.43 40.00

5 Central Institute for Fisheries

Nautical Engg. & Training

8.33 15.00 14.26 15.15

6 National Fisheries Development

Board

108.00 94.70 91.51 114.00

Non-Plan Budget

Total-Fisheries 32.09 34.42 33.38 38.58

7 Central Institute of Coastal

Engineering for Fisheries

2.17 3.75 3.4 3.75

8 National Institute of Fisheries

Post Harvest Technology &

Training (NIFPHT&T)

4.71 5.76 5.21 5.55

9 Fishery Survey of India 8.64 10 9.7 10.03

10 Central Institute for Fisheries

Nautical Engg. & Training

8.69 9.5 9.91 10.7

11 Other Fisheries Program 4.38 4.41 4.16 5.05

12 National Fisheries Development

Board

13 Package for Replacement of

Fishing Vessels seized by

Pakistan

3.5 1 1 3.5

To the understanding of fish workers the entire allocation under plan is dedicated to

institutional mechanism. The questions of institutional performance in supporting fish

workers are not the subject matter of research in this paper. Even if we presume that

these institutions perform well and their efficiencies are beyond the question, the

budgetary support reflected in the budget gives a real picture that how much they are

able to convince the government to allocate justified amount.

Keeping all critics aside it is presumed that perhaps there are two schemes namely

“Other Fisheries Program” and “Package for Replacement of Fishing Vessels seized by

Pakistan” targeted for direct benefit to the fish workers under Non Plan Budget. But in

these two schemes total fund allocated is Rs. 8.85 Cr. The “Package for Replacement

of Fishing Vessels seized by Pakistan” scheme is performing worst. Rs. 3.5 Cr was

spent in the year 2011-12 and it was reduced to the level of 1 Cr in 2012-13. Again it is

increased to Rs. 3.5 Cr. Fish workers are of the opinion that this amount is only for the

administrative expense of the bureaucrats and nothing in actual is directly spent for

replacement. And also „Budget‟ only includes replacement of fishing vessels seized by

Pakistan where as the replacement of vessels seized by Srilanka, Bangladesh and

other Countries in the borders of Tamilnadu and West Bengal are not taken in to

consideration in the so called „Central Budget‟.

Fish workers feels that government is considering neither GDP nor the livelihood of fish

workers, at least in terms of support system reflected in the budgetary allocation. The

budget presented by the Finance Minister is made only for the benefit of big companies

and the country is on sale for companies.

4. Budgetary allocations for Scheduled Castes and Scheduled Tribes

For SC/ST budget is allocated under the component plans called Special Component

Plan (SCP) for Scheduled Castes and Tribal Sub Plan (TSP) for Scheduled Tribes. The

first lapse is - funds are not allocated as per the population. As per the decision taken

by the National Development Council (NDC) dated 27th June 2005, the allocation under

SCP/TSP is non-divertible and non-lapsable and should be at least in proportion of

SC/ST population and has to be used to bridge the Social and Economic Gap between

SC/ST and General in a period of 10 years. This is in consistent to the value of

constitution India Article 38, 39 and 46.

The Honb‟le Finance Minister stated in his statement on 31st Aug 2010 that “……….I

can confess to you that I spent a considerable amount of time trying to understand what

went on. I think, we must first understand as to what had happened. And, then, we can

make a judgement. After all, we are the supreme legislative body we can make a

judgement whether what had happened was right or wrong. If it is right, the matter ends

there. But, if it is wrong, we will take corrective action. I had expected a hard criticism.

……….” It seems that he has already spent a considerable time and he need not spent

his „considerable time‟ any more on this topic. Perhaps because of this reason the

allocations under SCP/TSP could not match to the population of SC/ST (16.2 + 8.2 =

24.4%). The amount denied to SCs and STs are Rs 48401.03 Cr and Rs 20938.01 Cr

respectively.

Allocations made under SCP / TSP for SCs and STs

Census 2001 SC Population 16.2% ST Population 8.2%

Particular 2011-12 (AE) 2012-13 (BE) 2012-13 (RE)

2013-14

(BE)

Allocation under SCP 28535.1 37113.03 33085.04 41561.13

SCP in Percentage 6.92 7.12 7.71 7.48

Due SCP 66804.75 84406.05 69528.29 89962.16

Denial under SCP 38269.65 47293.02 36443.25 48401.03

Allocation under TSP 17453.61 21710.11 18721.33 24598.39

TSP in Percentage 4.23 4.17 4.36 4.43

Due TSP 33814.75 42724.05 35193.33 45536.40

Denial under TSP 16361.14 21013.94 16472.00 20938.01

It requires no more proof that allocations are not in the proportion of the population of

SC/ST. With regard to GDP, the Work Participation Ratio (WPR) of ST in rural area is

576 and highest in the country and WPR of SC is lowest 54%. In urban sector the WPR

6 NSS Report No. 531: Employment and Unemployment Situation in India: July, 2007-June, 2008 NSS Report No.

531: Employment and Unemployment Situation in India: July, 2007-June, 2008

(http://mospi.nic.in/mospi_new/upload/nsso/531_533_Highlights.pdf)

of SC is highest 56 % and that of ST is lowest 51. Traditionally the WPR of SC and ST

has always been highest. This is evidence of their commitment and investment for the

national development. Their time and lobour to the country is highest. But in

contradiction to investment, allocation for their welfare and development is largely

diversion. The Hon‟le Finance Minister has not made any exemption for this community,

instead he diverted fund for the general programs. The examples are as follows:

STATEMENT 21 - Special Component Plan for SCs

Demand Item Head / Department

2011-

2012

2012-

2013

2012-

2013

2013-

2014

Actual Budget Revised Budget

1 16 National Horticulture Mission 210.00 350.00 244.40 300.00

31 7 National Afforestation Programme 20.00 20.00 13.00 20.00

47 2

National Programme for Prevention &

Control of Diabetese, CVD & Strokes 15.07 45.60 26.60 73.75

47 7 Infrastructure Maintenance 713.57 978.11 1012.04 995.70

47 22 NRHM-RCH Flexible Pool 0.00 0.00 0.00 2579.66

47 24

Flexible Pool for Communicable

Diseases 0.00 0.00 0.00 282.08

47 25

Flexible Pool for Non-Communcable

Diseases,Injury &Trauma 0.00 0.00 0.00 173.75

47 26 Human Resources for Health 0.00 0.00 0.00 232.68

50 1 National AIDS Control Programme 0.00 258.40 267.45 271.32

59 3

Strengthening of Teacher Training

Institutions 68.42 100.00 58.40 100.00

59 4 Mahila Samakhya 10.00 12.00 12.00 12.00

59 5

Support to NGOs/Institutions/SRCs for

Adult Education & Skill Development

(Merged schemes of NGOs/JSS/SRCs) 19.16 21.00 16.09 20.00

59 6

Adult Education & Skill Development

Scheme 94.16 118.40 84.30 114.40

59 11 Navodaya Vidyalayas Samiti 240.00 250.00 250.00 250.00

59 12 Kendriya Vidyalayas Sangathan 70.00 70.00 70.00 70.00

59 16

Rashtriya Madhyamik Shiksha Abhiyan

(RMSA) 512.26 624.80 625.80 796.60

59 17

Scheme for setting up of 6000 Model

Schools at Block level as Benchmark of

Excellence 216.34 216.00 161.36 200.00

60 3 IITs 180.60 180.00 199.80 360.00

60 7 NITs 144.00 150.00 199.80 195.00

84 1

Integrated Watershed Management

Programme (IWMP) 259.99 494.10 470.37 872.69

STATEMENT 21A - Tribal Sub Plan for ST

Demand Item MINISTRY/DEPARTMENT / Head

2011-

2012

2012-

2013

2012-

2013

2013-

2014

Actuals Budget Revised Budget

1 9 Support to State Extension Services 24.92 50.00 44.94 40.00

1 12

Horticulture Mission for North-East and

Himalayan States 70.17 100.00 105.14 200.00

1 15 National Horticulture Mission 75.00 160.00 100.00 150.00

10 2 Detailed Drilling Ministry of Coal 9.95 12.30 12.30 14.40

14 1 E-Governance - Tele communication 54.45 92.42 48.92 84.64

47 2

National Programme for Prevention &

Control of Diabetese, CVD & Strokes 9.91 24.60 14.35 39.78

47 7

Infrastructure Maintenance (Ministry of

Health) 395.36 527.64 536.30 537.13

47 21 NRHM-RCH Flexible Pool 0.00 0.00 0.00 1391.68

48 8 National Mission on Medical Plants 0.76 1.00 1.00 2.00

50 1 National AIDS Control Programme 0.00 139.40 144.28 146.37

59 11 Navodaya Vidyalayas Samiti 128.40 133.75 133.75 133.75

59 12 Kendriya Vidyalaya Sangathan 37.45 37.45 37.45 37.45

59 17

Rashtriya Madhyamik Shiksha Abhiyan

(RMSA) 273.73 334.27 342.81 426.18

59 18

Scheme for setting up of 6000 Model

Schools at Block level as Benchmark of

Excellence 109.11 115.56 80.25 107.00

60 1 UGC 434.00 504.58 462.10 439.03

60 3 IITs (incl.OSC) 90.30 90.00 99.90 180.00

60 7 NITs 72.00 75.00 64.72 97.50

60 63

Rashtriya Uchcha Shiksha Abhiyan

(RUSA) 0.00 0.00 0.00 41.50

60 72 Support to IISc and IISER 0.00 0.00 0.00 64.46

60 80

Support for The Polytechnics in The

States 0.00 0.00 0.00 52.50

82 1

Special Programme for Development of

Road Connectivity in Naxalite Affected

Areas 374.00 500.00 500.00 800.00

84 1

Integrated Watershed Management

Programme (IWMP) 230.82 305.00 290.35 538.70

106 6 Sports Authority of India 20.00 25.00 20.00 31.00

These are few examples which serve as evidences that welfare and development funds

of SC/ST are allocated majorly to the Institution. There are almost 80% of such

allocations. This is in contrary to the mandate of SCP / TSP. The government is very

specific and efficient in exempting taxes and supporting larger companies but not its‟

own citizens. This is the economics defined in the budget of Honb‟le Finance Minister.

The purpose of currency is to bridge between commodity exchanges. But slowly and

steadily Government has prioritized currency over everything through the

corporatization. Be it the understanding (education), breathing (carbon credit), water

(privatization of rivers), retrenching food supply (cash for PDS) or any other issue

currency has been put in priority against human needs. Grains and ration can be poured

in sea but can‟t be distributed among the poor because they don‟t have currency to give

as corruption. Land can be acquired and sold to the corporate sector but can‟t be given

to the landless. Money for carbon credit can be given to TATAs and others but not to

the people. No doubt the SC/ST, Handloom Weavers, fish workers are victimized and

massively hit by the Union budget 2013 and larger companies are rewarded for the

reasons well known to the Honb‟le Finance Minister.