On Monday, Jan 7 the union budget was presented by the Finance Minister(FM) Nirmala Sitharaman. So most editorials were centered around the budget. Henceforth, a collection of points will be presented from all the budget editorials. Before that, please read the defination, terms and some constitutional provisions of union budget. Also read the budget speech presented by the FM in which she emphasised on the six pillars of the budget. It is firmly suggested to read the Hindu paper dated 1/2/2021.
Overall, the Budget seems to carry over the fiscal conservatism witnessed during 2020-21. In that fiscal year, when the crisis called for hugely enhanced spending, total central government expenditure increased by just 13.4%, relative to what had been originally budgeted, when the pandemic had not been factored in. Since expenditure on the MGNREGA programme and on food subsidies had to be increased as minimal support measures in the context of the economic disruption, spending elsewhere had clearly been reduced. Despite the extraordinary crisis, falling revenues had led to the government holding back on its aggregate spending to rein in the fiscal deficit and its debt.
During the current fiscal, expenditure on the MGNREGA programme touched an estimated ₹1,11,500 crore (RE) as compared with a budgeted ₹61,500 crore and an actual expenditure of ₹71,687 crore in 2019-20. Many deprived of jobs and livelihoods were supported by the programme. Yet, allocations for the MGNREGA programme are, going by Budget figures, to be drastically curtailed, from the ₹1,11,500 crore spent in 2020-21 to ₹73,300 crore in 2021-22. The picture is the same with food subsidies, which are to be reduced from as much as ₹4,22,618 crore in 2020-21 to ₹2,42,836 crore in 2021-22.
The Budget incorporates a package for “health and well being” that would take spending on its constituent items from a budgeted ₹94,452 crore in 2020-21 to ₹2,23,846 crore in 2021-22. An increase in health spending, of 137%,is presumably influenced by the lessons from the pandemic.
Domestic output or GDP, net of inflation, is expected to decline by 7.7% in the current financial year (FY2020-21), compared to the previous year (FY2019-20). The decline in per capita income is by 8.7%. The contraction is one of the worst among the world’s major countries.The government’s additional public spending to cope with the unprecedented crisis has been a little over 1% of GDP.
The present Budget’s focus on stepping up public investment by 34.5% in the coming fiscal year (compared to the current year) is a welcome sign. The FM speech said the government will borrow an additional ₹80,000 crore for the purpose in the next two months. The estimated fiscal deficit for FY 2021-22 is 6.8% of GDP for the central government. And States are allowed a higher fiscal deficit, if the expenditure is on capital investment.
The proposed Development Finance Institution (DFI) is also welcome. One of the reasons for poor industrial and infrastructure investment during the last decade was a lack of long-term credit for infrastructure, which by definition yields low rates of return spread over a long period of time. Commercial banks, whose deposits are for short to medium term, find it difficult to lend for long term (more than five years) for the fear of maturity mismatch.
The estimated contraction in revenues in 2020-21 was almost 23% from the Budget estimates. The tax revenue shows a decline of 17.8% and non-tax revenues are lower by 45% from the Budget estimates. Despite this, contrary to expectations, the government has not compressed expenditure. The Budget shows a higher growth of revenue at 15%. The tax revenue is expected to be higher by 14.9% over the revised estimates of 2020-21 and non-tax revenue is expected to increase by 15.4%. The disinvestment proceeds are placed at ₹1,75,000 crore as against the estimate of ₹32,000 crore for the year. However, the budgeted increase in expenditure for the next year is just 0.95%. As a ratio of GDP, next year is likely to see lower expenditure by two percentage points. Interestingly, the revenue expenditure is expected to be compressed by 2.7% whereas capital expenditure budgeted is 26.2%. The increased revenues and disinvestment proceeds have helped to finance higher public expenditure and the fiscal deficit for 2021-22 remains elevated at 6.8% which is lower than the current year, but higher than the expectations.
In the context of the direct nutrition programmes such as the anganwadi programme and school mid-day meals make a crucial contribution to the diets of children and pregnant and lactating women. The 2020-21 revised estimates for anganwadi services is ₹17,252.3 crore, compared to a Budget estimate of ₹20,532.4 crore, which was itself less than the projected demand of ₹24,810 crore.In the current Budget, different schemes have been clubbed together and anganwadi services are now part of something called ‘Saksham Anganwadi and Poshan 2.0’ which has an allocated budget of ₹20,105 crore. The total budget allocation of the schemes that were included in Saksham in 2020 was higher at ₹24,557.4 crore.The allocation for the mid-day meal scheme for 2021-22 is ₹11,500 crore which is lower than the revised estimate of ₹12,900 crore for 2020-21. Two other important nutrition-related interventions of the Ministry of Women and Child Development also saw major underspending with the revised estimates for the national nutrition mission (Poshan) for 2020-21 being only ₹600 crore compared to a Budget estimate of ₹3,700 crore. For maternity benefits under the Pradhan Mantri Matru Vandana Yojana (a cash transfer of ₹5,000 for pregnant women), the revised estimate is ₹1,300 core compared to the Budget estimate of ₹2,500 crore.
The idea was to show that the economy was moving along a fiscal consolidation path, with a fiscal deficit of 3% of GDP as the eventual target.All we have is a commitment in the Finance Minister’s speech to lower the fiscal deficit to 4.5% of GDP by 2025-26. For well over a decade-and-a-half, we have kept up the pretence of attaining the deficit targets set out in the Fiscal Responsibility and Budget Management (FRBM) Act (2003). The Finance Minister has promised to introduce an amendment to the FRBM Act to formalise the new targets.
There are no radical reform proposals for the agriculture sector, with no announcements with regard to bringing urea under the nutrient-based subsidy regime or rationalising the Public Distribution System issue prices of foodgrains. In fact, the recent growth performance of the sector has led the Finance Minister not to have any increase in cash transfers under the Pradhan Mantri Kisan Samman Nidhi Scheme (PM-KISAN) from the existing ₹6,000 per year.
The creation of a development finance institution addresses one the three issues that infrastructure provisioning faces in the economy. While the financing part can be addressed to some extent by this new entity, the other two — execution risk and regulatory issues — are still left wide open. This new institution can be seen as the first step toward cleaning up the financial sector as the amount set aside for the recapitalisation of public sector banks looks short of the requirement. Given the emphasis on start-ups and one-person companies, the stress on the financial system in the coming years is likely to increase as these firms are more prone to the cycles in the economy.
The growth push of the Budget subsumes the welfare implications, which is the hallmark of the ‘new welfarism’ model of the present government. Both employment and demand generation are left largely to the vagaries of growth cycles. While extending the social security benefits to gig economy workers is a welcome move, the lack of a concerted plan to tackle urban unemployment might prove costly, given the demographic profile and pace of urbanisation of the country. The route for reducing fiscal deficit, from 9.5% to 6.8% of GDP, rests on three components: the benefit of a stronger denominator because of better nominal growth, total revenue might get some boost from better tax revenue and compared to last year, there is a renewed hope for better divestment revenues. All of these are hypothetical at the moment.
Towards sustainable growth
The pandemic has resulted in huge economic losses. Globally, the GDP is expected to contract 2.4% to 8% in 2020. The World Economic Forum (WEF) estimates that the global cost of dealing with the pandemic could be from $8.1 trillion to $15.8 trillion. Preventing such pandemics will cost only a fraction of this amount, estimated at $22.2 billion to $30.7 billion a year, and this is without factoring in the human suffering.
We have to recognise that there would not be an economy without the natural environment. Global studies documenting human ecological footprint, the decline in wildlife populations, and the conversion rates of natural ecosystems for other uses, place India among countries experiencing the highest rates of negative change. This increases our vulnerability towards catastrophes, including pandemics. Additionally, there is a strong correlation between human density, richness of biodiversity, and the emergence of zoonotic pathogens of wild origin, which renders India particularly vulnerable. With high human densities — among the highest diversity of mammals in the world — and a saturated interface between humans and wildlife, India is considered to be among the hotspots for zoonotic emerging and re-emerging infectious diseases.
The WEF’s Global Risks report for 2021 states that environmental risks continue to threaten the global economy. The top five risks are extreme weather, climate action failure, human environmental damage, infectious diseases and biodiversity loss. In terms of impact, infectious diseases top the list, followed by climate action failure. The top two risk response blind spots are climate action failure and biodiversity loss.
Our models of development and our notions about them have to change. Destruction of environment should no longer be justified in the name of development. Rampant destruction of natural habitats, especially due to mining and infrastructure development, continued expansion and intensification of agriculture and animal husbandry as well as unrestrained consumption have disrupted nature, increased contact between wildlife, livestock, pathogens and people, setting the stage for the pandemic to take hold of our lives. Pandemic risk can be significantly lowered by reducing human activities that drive the loss of biodiversity as it will help prevent the spillover of new diseases.
A study by Swiss Re Institute published in 2020 introduces a new biodiversity and ecosystem services index. It found that globally, 20% of countries, including India, have fragile ecosystems. It also states that 55% of the global GDP depends on high-functioning biodiversity and ecosystem services.
It is evident that policymakers should factor biodiversity and ecosystems into their economic decision-making. This will accelerate the transition from a fossil fuel-based economy to sustainable, equitable, inclusive and just development models. The Economics of Biodiversity: The Dasgupta Review, commissioned by HM Treasury and released on February 2, 2021, highlights the grave risks faced by the world because of the failure of economics to take into account the rapid degradation of nature. The review stresses the need to find new measures for growth and development to avoid a catastrophic breakdown.
A National Mission on Biodiversity and Human Well-Being has been approved by the Prime Minister’s Science Technology and Innovation Advisory Council. The overarching objectives are to restore and enhance biodiversity, strengthen its sustainable use, generate thousands of green jobs and encourage the Indian public to appreciate the natural and associated cultural treasures that we have collectively inherited. This initiative has the potential to enable India to play a global leadership role in linking conservation with tangible human well-being outcomes.
Missing the Gandhian imprint
A complex legacy
A dialogue between Gandhi and Nehru during the non-cooperation movement of the 1920s. On hearing about a violent incident in the Chauri Chaura village of Uttar Pradesh, Gandhi decided to withdraw the first all-India movement he had led. Jawaharlal Nehru asked him, ‘Must we train the 300 and odd millions of India in the theory and practice of non-violent action before we (can) move forward?”
Gandhi’s reply was short and unequivocal: ‘Yes.’ Gandhi’s rigour did mellow with age and experience, but some of his tall contemporaries remained sceptical of his strategy of mass mobilisation. Tagore foresaw that Gandhi’s legacy might prove tough to follow in the absence of his leadership.
However, Gandhi’s legacy is complex and evokes some fundamental issues embedded in the theory of peaceful settlement of conflicts. It is useful to visit these issues today when we are in the middle of a mass movement focused on a subject of Gandhi’s deep concern: rural economy. Those in the forefront of this movement are farmers. The questions their protest brings into public attention go well beyond the validity of their apprehensions and doubts. Gandhi is highly relevant to these questions. His legacy for India, and the rest of the modern world, is not confined to the culture of protest. It also involves an interpretation of peace: its logic and the method of inquiry it demands. Can a conflict be peacefully resolved? A satisfactory answer to this question requires that we understand peace more precisely in the context surrounding the present mass protest.
Persuasion and inequality
If persuasion is what this conflict requires for resolution, let us examine its nature. Along with mediation, persuasion ranks high among the means of achieving a peaceful resolution in a conflict situation. However, there is a condition attached to the use of persuasion in this context. The condition is that both sides, i.e. the persuaders and the ones to be persuaded will be equal partners in the act. It is not enough to say that during the negotiation they will behave as if they are equal. For persuasion to work, the two sides must be equal to begin with. They must feel equal. If there are mediators, their job is to make each side realise that they are equal. This condition is clearly difficult to apply in the present conflict.
Inequality between farmers and the state has deep historical roots. It is reflected in the rural-urban gap. As a professional community, farmers suffer from the common stereotypes that the urban educated classes carry with regard to villagers. According to these stereotypes, farmers cannot be expected to know their own good — especially the benefits that are somewhat distant — on account of general ignorance and lack of education. The poor spread of education reinforces this stereotypical perception of the farming community as being simple-minded, and therefore prone to being misled.
Education is, in fact, quite crucially responsible for widening the hierarchical divide between the rural and the urban, and for portraying the latter as the engine of change in the former. The view that farmers’ opposition to the new laws is merely a reflection of certain “doubts” which can be removed in the course of further discussion is reminiscent of the stereotype that the villagers are like children who do not understand the complex decisions made to benefit them in the long run. Teachers in India typically conclude their class lecture by asking “Any doubts?” The assumption is that children can only have doubts, but no real questions.
The kind of protest the farmers have launched — and have done their best to sustain — carries unmistakable traces of Gandhi. Indeed, the very idea that a mass protest must remain peaceful is a legacy of Gandhi. His faith in non-violence has an unstated, hidden view of the adversary. While the one who protests is expected to shun violence, the other side must also fulfil an expectation. In Gandhi’s frame, the protester endures great suffering, and thereby arouses the deeper human instincts in the adversary’s heart. To see this as a strange, romantic idea is to miss its moral vision and where it comes from.
Tradition to political use
Gandhi did not invent this vision; he spotted it in tradition and put it to a new, political use. The value system he used and modernised can still be witnessed in certain settings and contexts. For instance, when an irksome neighbour falls ill or meets with an accident, a few people do ask if the family needs help. A similar customary value covers hospitality. Teachers ask children not to take advantage of an injured member of the rival team. Internationally maintained modern norms for warring nations have their origins in similar old ethics sustained by tradition in several cultures. Gandhi used this old value system to develop his ethic of non-violence in oppositional politics. It was rooted in the belief that an adversary has human instincts which can be activated by demonstration of self-inflicted suffering. Gandhi saw the protester’s willingness to endure physical discomfort as a means of awakening the adversary’s saner instincts.
The struggle versus values
The farmers’ struggle and suffering have failed to achieve this psychological goal. Neither the government nor the privileged urban middle classes seem to have felt a sense of unease over the physical suffering the farmers have endured in Delhi’s severe winter. Many among the protesters have lost their lives and their deaths have been ignored. Over the past few decades, a few lakh farmers have committed suicide. Their despair has not moved many in metropolitan centres and other cities. Apparently, India has gone through a sea change in values, both at personal and collective levels. The charade one routinely hears that education must inculcate moral values, overlooks the broader social context and direction of change. It is a romantic idea that education can compensate for psychological losses incurred in the pursuit of lopsided goals. It is hardly surprising that a farmers’ movement is reminding us of the legacy we inherited from Gandhi’s social experimentation.
Beating down critical journalism, creative freedom
Rioting in India’s capital city on a day reserved for the celebration of the Republic, was a new low in unravelling political concord. Within days of that trauma, points of entry into Delhi were barricaded with layers of concrete and steel, interwoven with vicious spools of concertina wire. Some locations had lethal iron nails embedded into the road and trenches dug deep to prevent the ingress of farmers long encamped around the capital city, protesting recent legislation that goes by the title of “agricultural reforms”.
A few days after the riots, nine senior journalists were charged under the law of sedition, for reporting the ambiguous circumstances of the sole fatality in the riots. A young freelance journalist was arrested and charged with lacking appropriate media credentials. Even as he was granted bail, in a rare exception to what is becoming the general rule of denial, the Home Ministry decreed that only journalists with press credentials granted by the central government could legitimately report on the farmers’ agitation.
A number of social media pages run by newspapers and websites were blocked by executive order. For media platforms that did not relent, the legal process of securing injunctions began, along with an unsubtle threat that employees of the social media company, Twitter, could face arrest for failure to comply.
Imperfections made worse
Events since Republic Day constitute an unprecedented assault on three of the “rights to freedom” granted under Article 19 of the Constitution: free speech, free movement, and peaceful assembly. Like several other Articles in the Fundamental Rights chapter, Article 19 includes a non obstante clause: notwithstanding all its promises, each of the rights comes with certain conditions attached.
These clauses were in most part inserted by the First Amendment to the Constitution, when the government of a fledgling nation sought to negotiate the fine line between freedom and necessity. It was a manifestly imperfect job of resolving a conundrum that has defied the most determined philosophical inquiries. And those imperfections have been compounded by decades of judicial default and executive caprice.
The Supreme Court has spoken up in its lucid interludes, but often retreated rather than face down obvious abuses. In matters of sedition, the first impulse of the judiciary in the afterglow of the Republic’s emergence, was to strike the law down. Article 13 of the Constitution annulled every law that was inconsistent with the fundamental rights chapter and the Patna High Court was on solid ground when it held the sedition clause in criminal law unconstitutional. A few years later, in a milieu more sensitive to possibilities of disorder, the Supreme Court reinstated the law, but held it applicable only to “activities as would be intended … to create disorder or disturbance of public peace by resort to violence”.
In 2012, the Gujarat High Court upheld this precedent in a matter involving the country’s largest English language newspaper, The Times of India, after sedition charges brought by the Commissioner of Police in Ahmedabad city. It also added that the Constitution protected strong commentary on “measures or acts of the Government, or its agencies, so as to ameliorate the condition of the people or to secure the cancellation or alteration of those acts by lawful means”.
State’s new weapon
The nine journalists charged after the violence at the Red Fort have been spared arrest, but that possibility will hang heavy over their practice for years, potentially inducing a “play-safe attitude”. The State government in Uttar Pradesh, inattentive to even these niceties, has used arrest as literally the first recourse against critical journalism.
Siddique Kappan, who works with a number of news organisations and is a member of the Kerala Union of Working Journalists, was arrested by the police while on his way to Hathras early in October, to report on the death after alleged sexual assault, of a young girl of the Dalit community. He was charged with sedition and other offences, and the statutes invoked, including the Unlawful Activities (Prevention) Act, could potentially result in indefinite detention.
Angle of religion
Politics of religious offence constitute another clear threat to freedom of speech and expression. The arrest of a stand-up comic, Munawar Faruqui, in Indore, for jokes that he did not crack, represents a particular depth of absurdity. He was denied bail in successive hearings and the Madhya Pradesh High Court was particularly severe in its strictures about an intent which remained unexpressed. He finally was granted bail after over a month in detention, by the Supreme Court.
In deciding the S. Rangarajan versus Jagjivan Ram case in 1989, the Supreme Court declined to embrace a doctrine of censorship. The benchmark for judging the potential for offence had to be a “reasonable” person and not someone of “weak and vacillating” mind. Yet, in the case of the TV serial, Tandav¸ whose producers and cast face charges despite multiple apologies, the Court has now chosen to underline the conditional nature of the free speech right. An actor seeking exemption from arrest because he was only a paid professional, was told that he should not “play a role which hurts religious sentiments”.
In the matter of regulating the right to freedom of movement, the Supreme Court has encountered unanticipated turbulence. Last year, while hearing a petition seeking the dispersal of protests against the Citizenship (Amendment) Act in Delhi’s Shaheen Bagh area, the Court ruled that expressions of dissent should take place in “designated places only”.
When called upon to apply the same principle to ongoing farmers’ protests, the Court baulked. A ruling that the protests were unconstitutional would have been the legal basis for a coercive dispersal of the farmers. Hesitant about that, the Court sought to play problem solver, nominating a team of mediators to find the solution the government had set its face against. It did not end well for the parties involved, and least of all, for public perceptions of the integrity of judicial institutions.
Asymmetry in the application of the law, when charges are brought against partisans of the ruling party is another feature, widely commented on. While hearing a recent matter involving hate speech, the Chief Justice of India observed that the Court is trying to discourage litigation under Article 32, which enables any citizen to invoke the writ jurisdiction of the higher judiciary when fundamental rights are threatened. This ambivalence towards an article that B.R. Ambedkar called the “heart and soul of the Constitution”, and the curious judicial deference to the political executive, are central parts of the story of how precarious the rights to freedom are today.