India: A budget fit for a Superpower!

A country where 30% of the population dies of malnutirition and medical issues can afford to spend $2.5 Billion on a Russian Ship?

A country where a million girls are killed during or after a pregranancy can afford to buy hundreds of planes?

Some estimates say that at current spending it will take Bharat three centuries to reduce proverty to human levels.

For all the attention that India\'s retail revolution, information technology prowess, and booming manufacturing sectors have garnered in recent years, agriculture, on which 70 percent of the population still directly depends, is in crisisFor all the attention that India\'s retail revolution, information technology prowess, and booming manufacturing sectors have garnered in recent years, agriculture, on which 70 percent of the population still directly depends, is in crisis

VIEW: India’s fiscal follies -Mira Kamdar

For all the attention that India\'s retail revolution, information technology prowess, and booming manufacturing sectors have garnered in recent years, agriculture, on which 70 percent of the population still directly depends, is in crisisFor all the attention that India’s retail revolution, information technology prowess, and booming manufacturing sectors have garnered in recent years, agriculture, on which 70 percent of the population still directly depends, is in crisis

India’s new budget for 2008-2009 says less about the country’s current financial health than it does about the irresistible tendency of Indian governments to use the national budget as a pre-election cudgel.

Every year, India struggles to reconcile the irreconcilable: stimulate economic growth and investment, alleviate endemic poverty, and feed a ravenous military appetite. The government must be seen to care about the aam aadmi, the common man (who votes), while satisfying the needs of businessmen (who keep the economy humming).

Indeed, the new budget is a pre-election bonanza for key constituencies: tax cuts for the middle class and perks for the country’s big corporations. There’s a little something for everyone, including a stunning $15 billion in loan waivers for small farmers. For all the attention that India’s retail revolution, information technology prowess, and booming manufacturing sectors have garnered in recent years, agriculture, on which 70 percent of the population still directly depends, is in crisis. Growth in India’s agricultural sector declined from a lacklustre 3.8 percent to an even more anaemic 2.6 percent last year.

Water tables are dropping where farmers are lucky enough to have wells, and rainfall has become increasingly unpredictable. Subsistence farming of traditional food grains, fruits, and vegetables is giving way to cash crops and monocultures dependent on high-priced inputs that small farmers cannot afford and water that they can’t provide. Farmers borrow money from usurious private lenders. Unable to repay their loans, they kill themselves.

Farmer suicides in India have raged unabated over the past decade, a period of much-vaunted rapid growth. These more than 100,000 deaths are a tragic indictment of India’s economic “miracle”, and an embarrassment for a government eager to promote India’s image as an up-and-coming global economic and military power.

While well intentioned, the new budget’s lavish loan forgiveness scheme will not help those farmers who most need relief: 80 percent of India’s farmers have no access to formal credit, and it is bank loans that are to be forgiven. Moreover, since farmers who do have access to formal credit will have less incentive to repay their loans, banks will become more reluctant to lend to any farmers at all.

A policy of expanding legitimate micro-lending schemes and prosecuting illegal loan sharks, not to mention the promotion of sustainable agricultural practices that require fewer expensive (and environmentally dangerous) inputs, would do far more to help India’s poorest farmers than this expensive and misguided measure.

The new budget, recognising the country’s acute water crisis, also calls for more money to expand irrigation. Most Indian farmers will benefit from greater access to irrigation, but if this means building more ill conceived dams and pursuing large-scale projects, the result will be more water for industrial agriculture, more damage to India’s damaged environment, and little improvement for poor farmers. Aggressive expansion of proven low-cost, high-impact micro-irrigation techniques would do more to help small-scale farmers.

The new budget is also likely to do little to improve India’s poor education and primary health-care systems. True, spending in these two critical areas is to rise dramatically (by 20 percent for education and 15 percent for health care). But, because these items amount to a pittance of India’s total budget, total spending remains low, especially relative to need.

Meanwhile, the lion’s share of the new budget, 63 percent, will go to the military, police, administration, and debt service. India’s defence spending will hit a new record of $26.5 billion as the world’s fourth-largest military embarks on an aggressive drive to modernise its capabilities in the face of the deteriorating situation in Pakistan and China’s military expansion.

Having performed poorly in a spate of recent state elections, the ruling Congress Party is betting that the new budget will swing voters its way if the national election, currently scheduled for April 2009, is moved forward to this autumn. The lesson of the 2004 election, when poorer voters, fed up with the previous BJP-led government’s “India Shining” policies and slogans, threw it out of office, has not been forgotten.

But the strategy of embracing “poor-friendly” policies that deliver little real relief could backfire. Poor voters may not associate the largesse with the Congress-led government in New Delhi, but rather with the state governments that actually hand out the goods. Moreover, there is nothing to indicate that the government aid proposed in the budget will reach those who need it with any more efficiency than the dismal record so far.

It is conceivable that Mayawati Kumari, the self-appointed “goddess” of the poor whose low-caste-based party, the BSP, swept to power last year with a clear majority in Uttar Pradesh, could be the biggest winner in an early election. This would represent a revolution in Indian politics, but it is hardly the outcome the champions of business-driven market reforms would welcome.

Whether a more populist government would be able to break radically with India’s flawed fiscal policies and create an environment favourable to a dramatic improvement in India’s shamefully poor human and physical infrastructure – which would give a solid boost to India’s economy over the long term – remains to be seen. -DT-PS

Mira Kamdar, the author of Planet India: The Turbulent Rise of the Largest Democracy, is currently a fellow at the Asia Society

 

12 Responses

  1. Garima,
    Hats off to your replies, I love the way you have put it.

  2. yes yes why not…you can very well congratulate yourselves for the superirity of your weaponry even when most of it is being used againt the citizens of your own country…..you may not have primary schools to educate your children but you sure have F-16s and all that you are so proud of. And your country certainly doesnt need education as you have enough terrorist camps in your country to teach your kids how to operate your “Superior Weapons”….you have some phoney government which is useless anyway coz nobody ever accepts any authority..a total anarchy and chaos but yes you can always blah blah about your weapons…..and do you really want the Indian forces to cross the border…you must be kidding..you are not in a position to take a war man just look at your economy..atleast our soldiers can afford to have picnic on border..you dont have the cheek to call your soldiers your own..after Kargil you didnt even accept the bodies of your gus saying it wasnt done by your army….So much for superiority!!!!!!!!!!!

  3. Even your nuclear bomb..you borrowed from west..

    poor A.Q. Khan

    • And where did you get that information from “Computer collie college”? It is assanine to think that one man can build a bomb from some pieces of paper. Pakistan has 40,000 scientists working on the nuclear bomb since 1958 on several nuclear facilities. If one could make a bomb from a piece of paper the Venezuelsn, Libyans, the Iranains and others.

      Sure believe what you must.

      BTW: Wasn’t the Indian bomb based on the basic Russian design?

      Read the NDRC report publsihed on this site on the superiroty of Pakistani nuclear and missile designs.

      Begged, borrowed or stolen…Bharati forces can never cross the international border..they can huff and they can puff..but that’s it..two years ago 300,000 had a nice picnic on the border and they they left..and so it will be

  4. Whatever the statistics about India ..let it be..so be it.

    There is no point in comparing India (a civilized state) and Pakistan (ahem..) sort of states.

    We must keep our focus on civilized world (such as G10 and so on).

    Enough of such futile comparisons.

  5. OMG this guy does his research on some 2nd generation computer which was probably loaned to him by some 100 yr old chinese or maybe he was in coma since 1947 and has just opened his eyes (desparately looking for jinnah to purr him)..
    Go check your statistics buddy…the total amount of capital traded on the Indian Stock exchanges will put you to shame compared to the chicken feed that your pathetic Karachi stock exchange does…The total wealth of the Ambani brothers put together will surpass the Pakistani treasury…and you talk about budgets and education…oh PUHLEASEEEEEEEEEE…How many world class education Institutions does does pakistan have…do you even know the quality of education in the IITs and IIMs…India is an IT superpower and Pakistan will be a super failure..with the kind of infighting going on between the Jehadi groups active in pakistan and the government there beleive me brother your country will end up like the Afghanistan under Taliban where all you will talk about is how to please your god and will kill you r own people for the same..Pathetic

  6. India very bad…..no civilization…only fascist oppression on minority, dalit, chirstian, seven sister people, naxalites, tamil…they all want independence so that they can have better budget. All new states will banish poverty and make people very happy. They will have nuclear missile and will send people to moon too. Not advani is not letting this happen..he will surely pay for this in afterlife.

  7. Moin,

    Very poor article.You need get the facts correct by going thru the journals regarding Indian medical facilities and budgets for health & education in India.May be you are harping on the issue of 1960/70’s or prior.
    Check this article you can understand ..if something happens to you or any affordable pakistani ..he has to come to India for most of the high end medical treatment & operations.

    http://ibnlive.in.com/news/terror-chills-ties-but-indian-docs-save-pak-lives/80675-3.html

    If you want to prove your pints taking street beggars or some BPL people in India..maybe you are the one who sees the emptyness in the water bottle.

  8. HEHEHEHE
    poor pakistan, cant help go and make a bomb.

  9. India spends only 2% on defense compared to pakistan 4.5%

    india Railway budget will be as big as pakistan total budget:

    wanna see??

    http://www.indianrailways.gov.in/budget-0809/budget0809-highlights.htm

    Budget 2008: Highlights on Education

    The General Indian budget 2008 has been presented today by the honorable finance minister Mr. P. Chidambaram. Education has been one of the main issues in the Indian budget 2008. The Union Budget of 2008 has brought about the following beneficial changes in the educational sector of India:

    * Education has been at the center of the social reforms
    * The allocation for the health and educational sectors has gone up by 20%.
    * The budget allocation for the Mid-day Meal Program has been worth Rs. 8000 crores.
    * Three new IITs would be set up in Andhra Pradesh, Rajasthan and Bihar
    * The Indian budget has provided Rs. 34,400 crores to the educational sector in India
    * 16 new central universities would be set up
    * The Sarva Shiksha Abhiyaan has been provided Rs. 13,100 crore in the budget
    * Now the upper primary classes would be able to get mid-day meals
    * 410 new Vidyalayas would be set up in the villages
    * Three new IIScs would be set up in Trivandrum and Bhopal.
    * There would be Navodiya Vidyalayas in 6000 districts.
    * Rs. 4,554 crores has been allocated for the secondary education scheme
    * 6000 new model schools would be established.
    * The 22 Sainik schools would receive Rs. 44 crores
    * There would be scholarships for science and research

    The money spent on sarva shikha abhiyan is separately counted :

    total money spent:

    46000 crore:11.5 billion$

    how much pak spends on education??

    450 or 500million $

    and that 2 bcoz of ur katora bhikh which u get from west!!

    Keep begging !!!

    India produces 50 times more engineers than pakistan!!

    Regarding inflation and poverty:

    pak is worse for everything:

    1)inflation @15+%

    2)Raw material cost highest in sub continent except cement

    3)cost of wheet/sugar/ and all essential items at peak

    4)Medicine cost 5-20 times more than India

    5)And runs of western and chinkies aid!!

    500 million $ from japan
    300 million$ from chinkies
    1+billion $ from usa for surrendering to taliban and for harboring taliban(recent peace treaty :)
    1 billion$ from UK in form of budgetaryt support

    6)india bailed of 15 +billion $ of loans???

    7)cost of diesel and petrol in pak is double of india’s

    8)in pak hardly few 2% are enjoying economic prosperity!!

    9)how many jobs can pak create or have created???

    india has created max no of jobs in last 10 years

    http://economictimes.indiatimes.com/South_Asia_creates_28_global_jobs_ILO/articleshow/2728481.cms

  10. http://www.thenews.com.pk/daily_detail.asp?id=104488

    “. External debt rose by another $2.5 billion in the first half of FY2008 as a consequence of the rising current account and fiscal deficits, while foreign currency reserves were also depleting.

    http://www.thenews.com.pk/top_story_detail.asp?Id=14028

    “He said external debt has climbed to $42.5 billion from $37.5 billion in 1999 despite receiving significant inflows. He also said the credit rating of the country could also be downgraded.He said the growth in money supply (M2) is fuelling inflationary pressure as it is projected to grow by 19% till June 2008, resulting into CPI inflation exceeding 10% and food inflation 14%.”

  11. India spend 25 times more than pak on education and 16 times more on health

    so no comparison with third world pak

    btw i forgot to mention about :

    indian debt:

    75 % of indian debt are owned by Indian MNC’s

    and i picked up the article frm your grs paki website”Dailytimes………..”

    http://in.rediff.com/money/2008/mar/31debt.htm

    “The share of government debt in total external debt stood at 26.3 per cent or $ 53 billion, while private debt was 73.7 per cent or $ 148.5 billion.”

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