The Annual financial statement-the Union Budget, as stated in article 112 of the constitution of India, presented on the first day of February by the Finance Minister (FM), Mrs Nirmala Sitharaman. It was the first Budget of the third decade of the 21st century. The budget came amid global recession led by the novel coronavirus.
The budget, laying the vision of Atmanirbhar Bharat rests on six pillars- Health and Wellbeing; Physical & Financial Capital and Infrastructure; Inclusive Development for aspirational India; Reinvigorating Human Capital; Innovation and R&D; Minimum Government and Maximum Governance.
For the sake of designing policies, international organisations acclaimed indicators can be used as a proxy for measuring the progress of these pillars. These are Happiness Index released by the UN General Assembly, Inclusive Development Index introduced by World Economic Forum, Human Capital Index released by World Bank, Human Development Index by UNDP, Global Innovation Index by World Intellectual Property Organisation (WIPO) and Inequality Index by WID.World and Oxfam International.
To measure these indexes, the concerned International Organisation has defined a set of variables. In the Happiness Index, ranking is based on polling which looks at six variables- GDP per capita, social support, healthy life expectancy, freedom, generosity and absence of corruption. Inclusive Development Index has three pillars- growth & development, inclusion, intergenerational equity- sustainable stewardship of natural & financial resources. The Human capital index has five parameters- child survival, school enrolment, quality of learning in schools, healthy and safe environment for growth, adult survival for each of 157 countries it mapped. The Human Development Index has four major indicators- life expectancy for health, expected years of schooling, mean of years of schooling for education, gross national income per capita for standard of living. Global Innovation Index(GII) has 80 indicators exploring a broad vision of innovation; GII 2020 sheds light on the state of innovation financing by investigating the evolution of existing mechanisms and by pointing to progress and remaining challenges.
India’s position on these pillars reflected through various indicators; has been pathetic vis-a-vis the health of the economy. As per the latest available data; India stands at 144th position out of 153 countries in the Happiness Index, 62nd out of 74 emerging economies in inclusive development index; 116th out of 174 countries in the human capital index, 131st out of 189 in human development index, 48th in the list of top 59 innovating countries in a global innovation index, 129th out of 158 countries in inequality index. To improve India’s performance in these indexes, the government has allocated towards various pillars of the Budget.
The size of the budget for Financial Year 2022 (FY22) is Rs. 34.83 lakh crore (15.6% of GDP), which is Rs. 4.40 lakh crore more than the Budget Estimate (BE) of FY21. Meaning hereby, the government will spend 14.50 % more in FY22 than what it has planned to spend in FY21. The higher spending will support demand and help faster recovery. To boost investment, Rs. 5.54 lakh crore (about 2.5% of GDP) has been kept for capital expenditure (Capex) which is an impressive increase of 34.5% over the budget estimate for FY21.
The revenue receipts for FY22 have been estimated to Rs. 17.88 lakh crore, which is Rs. 2.32 lakh crore less than the budget estimates for FY21. Thus, the fiscal deficit-GDP ratio is estimated to 6.8% for FY22 against an estimated 3.5% and revised 9.5% for FY21. Thus, the government of India’s statement of account conveys a common message- more government expenditure and highly ambitious net tax revenue of about Rs. 15.45 lakh crore, which is 15% more than revised net tax receipts for FY21.
The first pillar, i.e. health and well-being covers the outlay of Rs. 2.23 lakh crore in BE 2021-22 as against the previous year’s BE of Rs. 94,452 crores, which is an increase of 137%. The major allocation made under this pillar was PM Atmanirbhar Swastha Bharat Yojana, Jal Jeevan Mission involving Rs 2.87 lakh crore for 5 years, Urban Swach Bharat Mission 2.0, Clean air and vaccine involving Rs. 35,000 crore. The second pillar- Physical & Financial Capital & Infrastructure covers the PLI scheme for 5 years involving Rs. 1.97 lakh crore. The other major allocation made under the pillar made to MITRA scheme, urban infra, power distribution sector scheme involving Rs. 3,05,984 crore for 5 years, solar energy corporation of India, recapitalisation of PSB bank involving Rs. 20,000 crore.
The third pillar- Inclusive Development covers the Rural Infrastructure development fund involving Rs. 40,000 crore, micro-irrigation fund and MSME sector. Under the fourth pillar- Reinvigorating Human Capital, the allocations are made to SC welfare past metric scholarship scheme Rs. 35,219 crore for 6 years and National Apprenticeship Scheme Rs. 3000 crore. The fifth pillar- Innovation and R&D covers the National Research Foundation allocation made of Rs. 50,000 crore for 5 Years, digitization and deep ocean mission. The last pillar outlines a plan for reforms in one of the government core principles of minimum government, maximum governance. The allocation of Rs. 3,678 crore has been made to the forthcoming digital census.
In budget 2021-22, the allocations made towards these index’s sub-indicators were Rural development involving fund Rs. 1,94,633 crore; agriculture and allied activities Rs. 1,48,301 crore; commerce & industry Rs. 34,623 crore and urban development Rs. 54,581 crore would help in improving the growth & development and inclusion in the Inclusive Development Index. The other major allocations made in the budget towards the index’s sub-indicators are health RS. 74,602 crore, education Rs. 93,224 crores, social welfare Rs. 48,460, which would improve the healthy life expectancy and social support in the Happiness index, child survival, school enrolment & quality of learning in school in the human capital index, life expectancy for health, expected years of schooling, mean years of schooling for education in human development index. The allocation made to IT & Telecom is Rs. 53,108 crore and Rs. 30,640 towards scientific departments; this would improve the global innovation index.
The fund allocation in the inclusive development pillar has reduced in various schemes such as the allocation BE 2020-21 in PM Kisan was Rs. 75,000 while in BE 2021-22 it is Rs. 65,000 crore. The allocation in PM Gram Sadak Yojana was 19,500 crores in BE 2020-21, whereas Rs. 15,000 crores in BE 2021-22. The allocation to DBT-LPG was Rs. 35,605 crores; it has been reduced to 12,480 crores. In the covid scenario, when farmers and migrant labourers are in distress, the allocation in agriculture and allied activities has been reduced from Rs. 1,54,775 crore in BE 2020-21 to Rs. 1,48,301 crore in BE 2021-22, also the allocation in social welfare has beenreduced from Rs. 53,876 crore to Rs. 48.460 crore in BE 2021-22.
In the demographic dividend phase, where India has the youngest population in an ageing world, where 35% of the population is under 19 years, the budget allocation in human capital development has decreased in education and skill development. The total allocation in education was Rs. 99,312 crores in BE 2020-21; it has been reduced to Rs. 93,224 crore in BE 2021-22. The allocation in jobs and skill development was Rs. 5372 crore, whereas Rs. 3482 in BE 2021-22. The allocation in National Education Mission was Rs. 39,161; it has been reduced to Rs. 34,300 crore in BE 2021-22. The allocation has been reduced in skill development & livelihood from Rs. 602 crore to Rs. 573 crore in BE 2021-22.
According to the world bank, India’s investment in Research & Development is 0.65% of GDP. The budget allocation in Research & Development has been reduced from Rs. 718 crore to Rs. 594 crore in BE 2021-22.
The budget of the Nation gives a clear picture of the government vision and mission. In the current scenario where India wants to be the permanent member of the UN security council, it is much needed to work on the indexes ranking. The present budget has allocated to the six pillars, which would improve India’s ranking, but there is still much needed to bring India as a global leader in all the critical dimensions of socio-economic conditions of human life.
