On March 16, 2012, Finance Minister Pranab Mukherjee unveiled the new budget for fiscal year 2012-2013. Expectations were high: India has seen its growth rate slow, and analysts predict that this slowdown may last over the next two-to-three years. Indian businesses were clearly anxious to understand the government’s plans, but so were everyday citizens: what was being put in place to help them ride the wave of potential economic hardship?
The 2012-2013 budget prioritizes fiscal consolidation. The current Indian deficit is approximately US$20bn, and general consensus is that it needs to be brought under control. The budget identifies five key areas of focus over the next year. With these areas in mind, the government aims to:
- Focus on demand-driven growth recovery;
- Promote rapid revival of high-growth private investment;
- Find solutions for supply bottlenecks in the agriculture, energy and transportation sectors;
- Address the country’s malnutrition problem, especially in 200 high-burden districts; and
- Tackle corruption.
Political and public reactions to the new budget have been mixed. Though the governing Congress Party maintains that the budget is appropriate and balanced, private sector response has been lukewarm, and there is a greater feeling that more could have been done. Ravi Shankar Prasad, spokesperson for the BJP political party, noted: “It is a status-quo budget, it is a survival budget.” With inflation making necessities, like food, expensive for the average Indian, the new budget has very little relief to offer. The Chief Minister of Punjab has gone so far as to call the budget “anti-poor.”
Historically, when a government favors fiscal consolidation, public programs are the first to see their allocations shrink. The 2012-2013 budget effectively decreases social sector spending by 8%, so that its share of GDP remains at 2.2%. This is even more disappointing when compared to the increase in defense spending by 17%. Programs that fall under the social sector budget allocation include, for example, rural development, water and sanitation, urban and rural housing, poverty alleviation, woman and child welfare, nutrition schemes and employment generation. Lower overall funding to the social sector means that the government redistributed allocations to social programs. Spending on the country’s key rural development program, the Mahatma Gandhi National Rural Employment Guarantee Scheme, has been cut by INR7,000 crore (~US$1.38bn). The funds taken from rural development have been rechanneled towards healthcare and education spending, which respectively see a 14% and 18% increase.
The health sector has seen its budget allocation increase by 29.7% compared to its 2011-2012 allocation. Tackling malnutrition has a prominent place in the new budget with larger allocations towards schemes on healthcare, water and sanitation. India has seen tremendous success with its polio eradication efforts, and the government wants to invest more in national vaccine security by setting up vaccine units across the country. There is increased spending on the National Rural Health Mission, and soon the National Urban Health Mission will be launched to target the urban poor.
The BSP political party has declared the new budget “urban-oriented” because it will not be as focused on the millions of people who live below the poverty line. The position of this political party is unsurprising: since the majority of India is rural-based, most programs target rural areas. But with rapid urbanization expanding city boundaries and needs, the challenges of urban India are quickly growing. More national attention needs to be given to these challenges and to pragmatic solutions. The national government has stayed out of local decision-making regarding cities, but with traditional definitions of the modern city evolving, there may be a role for it to play yet. The Government of India needs to start including an urban focus to its budget; the new health initiative is just a start.
Municipal governments are left in-charge of urban problems. But as the not-for-profit Janaagraha points out: “City councils and municipal corporations in India have shown far lesser propensity for responsible financial governance than not just the [national] government, but even their respective state governments.” This lack of fiscal discipline and ensuing snowball effect of urban problems may demand assistance from higher tiers of government, but that intervention is not guaranteed. Janaagraha says: “…urban allocations in the [national] budget itself have a bearing on the infrastructure and quality of life in cities, but do not receive the same attention as tax proposals.” The national budget has made room for poverty alleviation on its docket, but the unique problems arising from urban poverty are untouched. Has the national budget neglected the urban poor?
The Ministry of Urban Development has measured the quality of civic services across India’s cities, and has found that the average coverage of sewage networks in India’s top 11 cities is 68%; the average household coverage of solid waste management is 61%; and the average coverage of storm water drains is 52%. These numbers indicate the proportion of household and commercial properties that have access to basic civic services. In an analysis of data, it was found that India’s largest cities do not meet standard levels for civic services in 88% of cases. Yet, cities like Mumbai and Pune claim 100% efficiency in solid waste collection, for instance, while Jaipur claims 114% efficiency. These numbers do not add up; local urban bodies need to be held as accountable for the reportage of their progress as the national government.
Better governance is badly needed in urban India, and that is not easy to capture in a budget. In fact, one very large problem with municipal governments is the lack of transparency of city budgets. An urban Indian will know more details about the national budget than about the details of her city’s budget. The irony is that changes at the city level can really only come about with citizen participation and an understanding of where city funds are going. Urban citizenry have the potential to affect change in their home cities, spanning from infrastructural needs to civic services. There are number of on-the-ground projects by NGOs working in the public engagement space, but their work cannot proliferate without government support.
The rural bend of the national budget has little to do with urban citizenry, and almost entirely overlooks the urban poor. The national government may not prioritize civic and social programs, but then it is almost implicit that local governance needs to take control in those areas and fill any gaps within their jurisdiction. The real question, then, is how to engage the wider public to promote better governance and change in urban areas. Budget allocations symbolize support on the national level, and on the local level, governments need to work on both supporting projects, as well as advocating for greater national priority.