PRESS RELEASE

With a continuation of the same fiscal policy stance as last year, Budget 2017-18 attempts to expedite utilisation and improve implementation of programmes

Delhi; February 1, 2017: The Finance Ministry’s attempt to push all spending ministries towards releasing funds to States and other implementing authorities right from the beginning of the new financial year, by advancing the presentation of Union Budget for 2017-18 by a month, is a step in the right direction; slow pace of fund flow has been widely cited as a major factor underlying poor results in several central schemes. Doing away with the distinction between Plan and Non-plan classification in expenditure budget of the Union Government is also meant to facilitate optimal allocation of resources with a holistic view of budget outlays for sectors and ministries. Likewise, a consolidated Outcome Budget, covering all Union ministries and departments, is being presented for the first time; this is aimed at strengthening the focus on results from public expenditure especially in the development programmes and schemes. These efforts by the Union Government to expedite fund utilisation and improve implementation of programmes are well-intentioned.

But these steps alone won’t be very effective in improving the results from government spending in social sectors, agriculture and rural development; States need to strengthen District Planning Committees and decentralised planning in various sectors and schemes, and, both State Governments and Union ministries need to address the problem of acute shortages of staff across sectors. Moreover, proactive disclosure of information at the district level, on budget flows and actual expenditure in development schemes, would generate public demand for timely and effective utilisation of public resources. Likewise, while the doing away of the Plan and Non-plan classification would help address the problem of Non-plan expenditures being neglected by most States (partly due to a misconception that only Plan expenditure is developmental expenditure), too much emphasis on the other classification of public expenditure, i.e. Revenue expenditure and Capital expenditure, could be problematic of important social sectors like Education and Health, where large proportions of government spending are reported as Revenue expenditure.

The total expenditure from the Union Budget is projected to increase to Rs. 21.46 lakh crore, from Rs. 20.14 lakh crore in the Revised Estimates for the current fiscal. This increase of Rs. 1.32 lakh crore is mainly on account of an increase of Rs. 35,000 crore in capital outlay across sectors and an increase of Rs. 40,000 crore in interest payments in 2017-18 (Budget Estimates).

What this indicates is the absence of any significant increase in Union Budget allocation in most of the sectors. The outlay for Sarva Shiksha Abhiyan is projected to increase only by Rs. 1000 crore in 2017-18, from the 2016-17 (RE) figure of Rs. 22,500 crore. The allocation for Rashtriya Madhyamik Shiksha Abhiyan too shows a marginal increase from Rs. 3,700 crore in 2016-17 (RE) to Rs. 3,830 crore in 2017-18 (BE). The allocation for Mid-Day Meal scheme witnesses a very small increase from Rs. 9,700 crore in 2016-17 (RE) to Rs. 10,000 crore in 2017-18 (BE).

The National Rural Drinking Water Programme too has witnessed a very small increase from Rs. 6,000 crore in 2016-17 (RE) to Rs. 6,050 crore in 2017-18 (BE); the outlay for Pradhan Mantri Gram Sadak Yojana remains stagnant at Rs. 19,000 core, and the budget for MGNREGA in 2017-18 (BE), at Rs. 48,000 crore, is nearly the same as its outlay of Rs. 47,499 crore in 2016-17 (RE). The outlay for National Social Assistance Programme (which covers old age pension, widow pension and disability pension schemes) remains at the level of Rs. 9,500 crore, which is the same as 2016-17 (RE) figure for this important programme. For Atal Mission for Rejuvenation and Urban Transformation (AMRUT), the allocation for 2017-18 BE at Rs. 5,000 crore is not much higher from the 2016-17 (RE) outlay of Rs. 4,883.5 crore. Thus, Union Budget for 2017-18 appears to have just retained the allocations for a host of social sector programmes at the same level as last year; given the push being made to expedite fund flow and improve utilisation of resources, the Finance Ministry should have increased the budgetary priority for these important interventions.

Among the few social sector programmes, which have witnessed a visible increase in the budget outlay in 2017-18 (BE) as compared to 2016-17 (RE), are – Pradhan Mantri Awas Yojana (up from Rs. 20,936 crore to Rs. 29,043 crore); Pradhan Mantri Krishi Sinchai Yojana (increased from Rs. 5,189 crore to Rs. 7,377 crore); Swachh Bharat Mission (from Rs. 12,800 crore to Rs. 16,248 crore); National Health Mission (Rs. 22,598 crore to Rs. 27,131 crore); Pradhan Mantri Swasthya Suraksha Yojana (Rs. 1,953 crore to Rs. 3,975 crore); National Nutrition Mission (from Rs. 175 crore to Rs. 1500 crore); and Maternity Benefit Programme (increased from Rs. 634 crore to Rs. 2,700 crore). However, in case of several of the programmes for which Union Budget outlays have been stepped up, even the increased allocations in 2017-18 (BE) would fall short of the resource requirements. For instance, the allocation proposed for Maternity Benefit Scheme seems to be based on an underestimation of the number of beneficiaries; also, similar to the last year’s budget, this budget too has prioritized rural sanitation, as the increase can be seen only in SBM (Rural) and allocations for urban sanitation have remained stagnant.

Thus, with the Union Budget for 2017-18, the Finance Ministry appears to be focusing primarily on improving public expenditure management while retaining the same level of allocations as last year’s in most of the social sectors.  Many would argue that, in the wake of sluggish demand in a number of sectors at present, an expansionary fiscal policy is the need of the hour; however, the Finance Ministry has chosen to maintain its conservative fiscal policy stance even for the next financial year.

For further details, please contact: Happy Pant at happy@cbgaindia.org  or 9015597917