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Modi Sarkar and The Farmer : The Achilles Heel

Published May 2, 2015 by vishalvkale

MODI SARKAR : THE ACHILLES HEEL

It has taken a long time to manifest itself, but at long last, we see a developing Achilles Heel in our famed Modi Sarkar; a sad development indeed, given that this is the best government we have had in the past several decades. The only good thing is that the Achilles Heel has manifested itself from a totally unexpected direction; not only that, it also holds serious potential of rekindling a genuine opposition on a national scale, which is a needed and vital component of a functioning democracy.

It has taken twin developments in two connected areas for the weakness to manifest itself : Farmers’ Suicides, and The Land Bill. Taken together, this has created a situation in which, if properly strategized, the opposition can rebuild itself, while simultaneously undermining the central government.

THE CONGRESS : AWAKENING
The sad part is that once again,  it is the Congress that has the opportunity to rise from the ashes. This is sad because it has yet again failed to democratize, and has placed its faith on Dynasty. I have nothing against Rahul Gandhi; he may be an excellent potential leader for all I know; then again, he might not. That is not relevant; what is relevant is the fact that The Congress does not have any leader it feels can connect with the people, despite having some good people on its roster.

Be that as it may, the  Congress has taken what seems to be the right step; change track from the all-too-familiar “communal politics” track to a far more sensible and development oriented focus : that of the farmer and their issues. This bodes well for our democracy, for our economy and for our society, as now there is a chance the real issues might get a much needed attention and focus.

The best way to tackle communalism is not to fan it; all the while building solid relationships within communities. A politically charged message has a polarizing impact, and if the community specific plank is being abandoned by all parties, this is a development worth celebrating. If all parties can abandon a community specific focus, the only way India can go is up and forward. Aag ko jitnaa tool doge, jitni hawaa doge, utni failegi.

And harping on the communal message, which was not making a connect with any definable voter base was always a suspect strategy. Besides, there has to be a provable base for such a strategy that can be directly traced back to your opposition; and this is clearly absent in the BJP.


THE BJP : SLEEPING!
The BJP, meanwhile, is basking in the glory of its rise to power, and ignoring these undercurrents, which might yet turn into a deluge. While it is doing excellent work in any number of areas, its approach and presentation to the people on these two issues is strange and more than a little disturbing, given the party’s admirable understanding of the pulse of India and the Indian people.

Please note my choice of words : in this article, I am taking no position on the Central Government’s Agricultural and Land Policies – that is the subject of another, research based and supported article/s that I shall take up a little later on the Agricultural challenges being faced by India. I am only analyzing the potential impact of the presentation in front of the people, and the angst among them.

It adheres to a top-down development ideology, counting on investment in infrastructure, amenities to drive rural upliftment and employment, while attempting to ensure good governance at all levels of Government. It has also taken a few good steps in the Agriculture sector {Analysed on my blog here : Union Budget Analysis}; these will require time to properly strategise and implement.

What is more pertinent that it has done little to meet head-on the anti-farmer label that is being leveled against it by some, beyond messages to the farming community by the PM. More and more parties and  groups are now coming into the open, calling its policies as pro-Urban India and anti-farmer. The most important aspect that the BJP seems to have forgotten is the population of India – the top 200 Urban Agglomerations account for only around 15.46% of population as per Census 2011

Thus, any message targeted at the rural community that is focused not on ideology, religion, regionalism but rather on their bread and butter is certain to get the attention of the people. That is a foregone conclusion; the needs of the stomach will take primacy; that is a primordial fear. The BJP is giving a message of development : how is this message being received by the population? Is it making a connect with the people?

THE HISTORY
For Urban India, it means investments, growth and jobs. What does it mean for Rural India? What have the prior experiences of Rural India been in this regard? It should mean the same for them : but is this the way it is being perceived in Rural India? Farmers stand to lose their lands; what will they get in return? Each piece of land further supports landless labourers, input vendors etc – we are talking of snatching an entire ecosystem.

What is the history, the prior experiences of the farming community in India? As This Article : Why Farmers Have Every Right to Feel Gypped explores in painful detail – there is a sad, almost terrifying history of governmental failure of monumental  proportions behind this rising tide of protests against the BJP Government with regard to the Agricultural Sector;  what is sad is that this Government has actually started a series of steps that drive some hope into the refurbishment of this sector in the budget, which makes this image of anti-farmer a real tragedy in itself.

And look at the third and recent case reported this month in The Times of India which makes you want to cry and laugh – both at the same time!
The gist of the case is: in 1998, the Railways acquired land from Mela Ram and Madan Lal to lay the Una-Amb track in Himachal Pradesh. As usual, the Railways adopted delaying tactics when it came to paying up. The farmers filed a case for enhanced compensation. After a fair amount of legal to-ing and fro-ing,  in 2013, the HP High Court directed the railways to pay the money within six weeks. “But the railways hasn’t deposited the amount until now”, the farmers’ advocate AK Saini said a few weeks ago. Typical.
So, on April 9, 2015, Mukesh Bansal, the additional district and sessions judge of Una ordered the attachment of the train if the railways failed to pay compensation to the two farmers!! The court said if Mela Ram and Madan Lal did not get Rs. 8.91 lakh and Rs. 26.53 lakh respectively, the train would be stopped at Una station at 5 am on April 16 and attached by it. The farmers were asked to select one out of four trains – and they selected The Delhi-Una Janshatabdi Express!


SUMMARY
My point is simple : the steps taken by the BJP Government have exposed a chink in their armoury, one that is now being exploited by the opposition. This is the Achilles Heel; their weakness. And there is nothing they can do about it; not over the short term. I have purposely taken an isolated case history above : the point is that there is a feeling of inadequacy and helplessness that is rooted in genuine truth and a terrifying history of crass incompetence on the part of successive central governments over the years.

And this atmosphere is giving rise to an opposition movement that is, for the first time in my memory {correct me if I am wrong}, focused on real issues that make a powerful connect with the target audience in Rural India as on solid whole. For the first time, we now have an issue-based discussion in Indian Politics, which is bringing this issue mainstream.

All it really requires to bring the BJP juggernaut to a grinding halt is a solid loss in a few upcoming state elections; were that to happen, coming on top of the shock in Delhi, things will get interesting, as the BJP will be forced to recalibrate and reassess its approach and its communication. Unless the BJP can get its house in order and connect with Rural India and its real issues in light of the historical experience and the on-ground realities and challenges in Rural India, they stand to lose ground…

Defence : Budget Brings No Cheers {Business Standard}

Published March 13, 2015 by vishalvkale

I normally carry my own articles and analysis; for the first time, please read an article on Business Standard on the Defence Forces {Business Standard}, which is self-explanatory, and is a factual analysis. This is a small attempt from my side in educating the people, at least those who may not be aware. The genuine needs of our Defence Forces cannot be put off; having said that, it is equally true that we are a developing country, and funds are always going to be extremely scarce. 

But does that mean we spend historical lows on defence in percentage terms? I am sure the Government can find space in the budget for a better allocation to the genuine needs of the security forces. I understand the difficulties faced by the government, and am not stating the Government doesn’t want to; they have to make some difficult choices in the governance of the nation, and are a democratic government. They have to meet the needs of a diverse set of requirements, all of which are genuine. 

That is why I appeal to the people – can we please allow and ask our government that we the people can make some sacrifices, and that please ensure proper allocation to the defence of the nation? I do not know what those sacrifices will be myself; but I am certain of one thing – if we empower our government, and build democratic pressure on them, they can easily find half-a-percentage point of GDP more to allocate to defence, or at the very least, a decided, definable, emphatic and firm increase in the allocations as well as other steps that may be needed to modernise and make our defence better than it already is. All it requires that we the people empower our Government, which is clearly one of the best we have had, with our support and voice for such a step enabling them to take the hard decision that will perforce be required. In true democratic fashion. Please keep in mind the challenges we as a nation face on the security of the nation, India!

The articles lists in detail the genuine requirements of the Armed Forces of India; I request all to read the article. The link to the original article is provided above. And please remember that no one can state with certainty that we will have to fight a war; then again, it is also true that no one can say for certain that we wont. It is better to be prepared; furthermore, we the people of India owe it to our protectors, The Armed Forces, to do something for them. They deserve our support, and more. 
THE ARTICLE:

For the armed forces, Budget brings no cheer : Ajai Shukla, March 9, 2015, Business Standard



The Budget presented on February 28 has disappointed the armed forces. With acquisitions in the pipeline worth almost Rs 20 lakh crore, military planners protest that the allocation of Rs 94,588 crore, not a rupee more than what was allocated in last year’s budget, is far less than what is required.


Over a period of 15 years, Rs 31 lakh crore worth of acquisitions are needed, say sources in the that carries out long-term planning of acquisitions for the three services.

Adding to the military’s disquiet is the repeated inability of the ministry of defence to spend the capital budget on new equipment. Year after year, chunks of the capital budget are surrendered unspent, or diverted to the revenue budget for funding running expenses like military salaries, and maintenance of equipment. (TIGHT PURSE STRINGS)

Walking a tightrope

A Business Standard analysis of equipment requirements over the next 15 years and the likely funds available finds a precarious balance between needs and means.

In the near term, there is precious little money to meet the three services’ requirement of Rs 20 lakh crore worth of equipment. However, as the years go by, especially in the next decade, an expected real increase of 10 per cent per annum will allocate Rs 22.5 lakh crore by the end of 2027-28 towards the military’s capital budget.

This includes a cumulative total of Rs 5 lakh crore for the army, Rs 5.65 lakh crore for the navy, and Rs 7.72 lakh crore for the air force. Another Rs 4.17 lakh crore will provide capital funding for Defence R&D Organisation (DRDO), Ordnance Factory Board, joint staff, railroads and military land and buildings.

Given the army’s requirements of Rs 5.29 lakh crore, that leaves a shortfall of Rs 30,000 crore. Thewill be short of Rs 1.75 lakh crore. The alone might have the money it requires.

These projections assume that the distribution of funds between the three services remains static. In fact, the share of the navy has steadily grown over the years, rising from barely 5 per cent of the overall defence budget to 16 per cent today. The military implications of a “Look East, Act East” policy might result in further increases for the navy, with some analysts predicting that the navy’s allocations might inch up to 20-23 per cent of total military spending.

Future budgetary projections are always uncertain, and Lieutenant General Anil Chait, who coordinated tri-service budgetary and acquisition planning until he retired as chief of the Integrated Defence Staff last May, points out that with 60 per cent of the military’s equipment requirements being sourced from abroad, any significant rupee devaluation would indeed buy less.

Battling for modernisation

While the army remains the service most in need of modernisation, land systems in general are significantly less expensive than aircraft and naval equipment. A large chunk of the army’s modernisation budget will go towards procuring, or indigenously building, modern howitzers, rocket launchers and various missile systems. There will be large expenditure on modernising the army’s mechanised forces, including the indigenous development and production of a main battle tank and infantry combat vehicle.

Also being developed indigenously is the digital backbone for a “networked force”, which will include communications and data networks like the tactical communications system, as well as soldier-specific networks like the battlefield management system which was kick-started last week.

Trouble at the seas

The navy’s maritime capability perspective plan envisages a 160-ship force that is centred on 90 capital warships like aircraft carriers, destroyers, frigates and corvettes. While there are currently more than 140 vessels, the navy has barely half the destroyers and frigates it needs. About five ships need to be inducted each year just to replace warships that are decommissioned after completing their 30-40 years’ service. Much of the navy’s modernisation budget, therefore, would go towards constructing new warships and submarines.

Submarines will form a thrust area. These include twelve conventional submarines, of which six Scorpenes would start rolling out of Mazagon Dock next year. Another six will be built in India along with a foreign shipyard. will build another two nuclear missile-carrying submarines of the Arihant class and develop and build six nuclear-powered attack submarines.

A hefty chunk of the expenditure will go towards developing a brand new naval base on the Andhra Pradesh coast at Rambilli, which will be the key operational base for the Eastern Naval Command. Money will also be spent on the Western Naval Command’s premier new base at Karwar, and on naval facilities in the Andaman & Nicobar Islands.

Air strike capabilities

With just 35 fighter squadrons against the authorised strength of 42 squadrons, and with another 11 squadrons likely to be decommissioned before 2022-23, the air force’s focus is on acquiring fighter aircraft. Besides the Rafale medium multi-role combat aircraft, it will buy six squadrons of Tejas light fighters, 80 more Sukhoi-30MKI fighters under an existing contract, and upgrade its fleet of 50 Mirage 2000 and 125 Jaguar fighters. There is under way an Indo-Russian programme for 144 fifth-generation fighter aircraft as well as another DRDO project for at least 150 advanced medium combat aircraft.

These procurements do not include a host of high-tech development projects that are planned for developing the battlefield capabilities of the future: space surveillance, launch-on-demand satellites, hypersonic vehicles, electronic warfare systems, cyber warfare capability, unmanned combat aerial vehicles and a range of drones that have precision strike capabilities. DRDO has programmes under way to develop high altitude long endurance and medium altitude long endurance drones, long range cruise missiles and an anti-ballistic missile shield to shoot down incoming nuclear-tipped ballistic missiles.

None of these have been budgeted for, except through the DRDO’s budget. However, in a 15-year perspective, some of these projects might reach fruition, but their introduction into service would require additional funds.

India – Bridging The Gap, and Facing Our Mistakes

Published March 6, 2015 by vishalvkale

It has taken a long time coming, but at long last some central government is at least talking about the right things – Defence, Education and Health. It is a separate matter that they aren’t doing anything about it, hemmed in as they are with issues, expectations and pressures from all sides, and with the attendant demands and needs of a myriad set of sub-groups and institutions that are present in a diverse and multicultural democracy such as India, especially given its income distribution and economic structure.
One of the reasons for this inactivity, or rather inadequate acrivity, is admittedly the lack of funds and the difficulty in generating excess funds, or allocating enough funds, or generating resources internally for the same. There are other issues – I shall deal with these in another article, as they are equally vexatious, dealing with implementation problems and tackling vested interests.
What amazes me is that people in India seriously believe that several hundred highly qualified and intelligent people {As are present in the Government} cant get together, rise above their vested interests and create some fiscal space for Defence, Health and Education expenses, the current demands and pressures notwithstanding. All it requires is a will, a determination, a clear directive, hard decision, and some sacrifice somewhere; in other words, setting the priorities and the direction
The directions of the Government, while speaking rightly, and passionately, in favour of these basics, are clearly towards an urban tilt, with infrastructure thrown in. Is it the contention of the Media, the people as well as the Government that the lot of the balance 80% – the people in the bottom 80% income profile – especially the bottom 40%, will improve by smart cities, IITs, IIMs, Infrastructure investments {which wont get implemented as too many structural hurdles are present. I can myself name 2 or 3 with detailed proof} and Corporate India – focus? 
Fine, Job generation may happen. How will people who are malnourished, and lack a decent education, partake in that job growth? That is a manifest impossibility. How will MNREGA and other social sector expenditure {which is essential, but how much is the question} ensure that the disenfranchised will be able to partake in that growth? That just ensures survival! Don’t these people – Indians like us – have the to grow and have a decent life? Or are we to condemn them to a slow and painful growth? How can they grow, if they do not possess the tools, the education for it, or are not healthy enough?  The result will be richer cities, richer Middle and Above classes – meaning you and me – and next to nothing for the rest of India,  as India continues to give low focus on Defence, Health and Education, and Agriculture
These classes – those who stand to benefit, people like you and me – make up less than 10% of India, and even that is a huge exaggeration. And as regards Corporate India, anyone here who thinks Corporate India drives the Indian Economy is advised to study the Indian Economy in detail. The contribution of the unorganized sector far outweighs the corporate sector. The contribution of Corporate India to any economic number is nothing to write home about., be it NDP, Savings, Employment – anything. Corporate India is not in the biggest contributors. 
What we are in effect saying is, the Poor can survive on doles from the Rich, and they have no right to self-development at the same rate as the rest of India. In order that people get greater income, they require better education, easier access to health, and solution to the main problems impacting their lives, not one of which is benefited too much by your IITs and Smart Cities, keeping in mind that a large majority of the people live in rural India, and are employed in agriculture. We are effectively throwing money after the Rich, who dont need it and can afford higher expenses
Next, Defence. What happens {God Forbid}, if we are pushed into a face-off? No less than 2 army chiefs have openly criticized the delays. Please read the works of General VP Malik, who stands as one of the most respected Army Chiefs in Indian History. Look up the leaked letter of yet another highly regarded chief, General VK Singh. A General has even openly stated that “we will fight with what we have”. 
Respect, Sir! To the entire Indian Armed Forces. None to the people of India, who are by and large too self-centred to even think of this matter. Respect even to the Government, who are trying to do a near-impossible task, given the scale of challenges, pressures and demands – most genuine and some ingenuine,  they face in other fields – and are yet spending 246000 Crores on the Armed forces, although it requires more. 
Why should the Government do more – when the people themselves dont care to tell them, we can take some more hardship, please focus on the Armed Forces first? The Government takes a hard call; it is not an easy decision to put off these expenses, Pressure distorts perspective, and the pressure is on them from all sides for economic growth jobs etc; and none for the upliftment of the Armed Forces, We are after all a democracy; the government is a mere reflection of the desires of the society.
Question is, can anything be done to find a way out? No easy answers – but yes, a lot can be done. Even a relative layman like myself can find ways, although none are easy. You have given 8% more to the states – you can take it out of that. How the states fund their budgets – perhaps they can look to being more fiscally responsible – like some states in South and East India have already done? Or reduce expenses. Or do any number of other tactics. Alternative, dont do anything. 
And then go on an emergency purchasing binge when a problem occurs, which means you lose your negotiating power, and close deals in a rush at the other party’s choice. 
A small example : you are giving crores in support to the Railways or PSUs as a budgetary support. Why? Why not increase rates? You can allocate that expense to the Defense, or to Education {hopefully defense}. Even 67 years after independence, PSUs, Railways {at times even banks} are dependent on the Central Government for support. Far better to tell them no, fund yourselves! Improve internal efficiencies, cut flab, get competitive strength. Tell them generate your own expenses through your own operations; Cut The Umbilical Chord! It is far better to throw them aside, and force them to compete and improve themselves, teaching them to fend for themselves.
Done properly, in a phased manner, with proper planning and thought, this is doable. These are unpopluar measures, but doable. Or reduce the size of your bloated Government- that is pure revenue wastage, given the levels of productivity. I could go on and on for a fairly long period of time.  All such measures are doable, but hard. And this is a majority government. They can pull it off. Let us see if they do… there can be only one reason for their reticence – the lack of numbers in the Rajya Sabha… I know I am clutching at straws, but at least this Government is saying the right words!
The problems related to agriculture are varied, serious and huge, and cannot be taken up as a sub-point; I shall look at these subsequently, as I shall have to look at Agricultural Inputs, Market Access and Legal points etc. Even in that, our current Government does have the right ideas, only the speed of execution is a matter of concern.

Is This Government On The Wrong Path?

Published March 3, 2015 by vishalvkale

I closed my previous article with these words  : 
What we are in effect saying is, Corporate India, Middle Classes can reap immediate benefit, while making no efforts to tackle the real problems beings faced by Rural India, like reducing middlemen, education, etc. This is a majority government, they can easily take hard decisions. And yet they are not doing so – as I had foretold much earlier. And that is what makes this budget completely unimpressive, and very UPA 3-ish. “
Given below are the problems that I consider to be the real problems that impact us as a nation, encapsulated in very short : 
A) DEFENCE : Dramatic increase in budgetary allocation to defence. The plain and sad fact is that The Indian Armed Forces are in dire need of funds infusion; we need Fighter Aircraft : Medium Role Combat Aircraft in particular; we need Artillery Guns to replace the ageing bofors; we need munitions; We need urgent infusion of Naval Craft in several categories and so on and so forth. We further need to the Eastern Army corps that is being planned as a defence against China. The status of the Armed Forces has been extensively documented in the books by Gen Malik, in Gen VK Singh’s leaked letter, and in numerous articles in newspapers and magazines 
B) EDUCATION : Major focus on Primary and Secondary Education, not higher education. India does not need any further higher educations institutions as yet; what it needs are the refurbishment of existing facilities, and major fund infusion in Rural India especially. In terms of budgetary allocation, we are among the lowest – which is sad for a developing country. 
C) HEALTH : A clear definable plan to counter malnutrition, and fund infusion in the Rural Health Sector, encompassing PHCs, Taluka, Tehsil and District HQ hospitals in terms of staff, medicines as well as facilities. We need an increase in budgetary allocation to bankroll this 
D) RURAL INDIA / AGRICULTURE : A clear shift in focus from Urban to Rural India in terms of infrastructure : easier access to nearest agricultural mandis, markets, rural facilities like digitisation of land and revenue records, connectivity of the village with the local district and state capitals, making it feasible for the farmer to sell his produce directly ensuring better price to him, amending APMC etc related acts and so on and so forth. What is required is a clear focus on forgetting Urban India for now, and focussing on Rural India; with the benefits from the above, Urban India stands to gain automatically given the productivity enhancements. This requires budgetary allocation of funds, and a workable plan for the same – and a clear implementation focus.
E) SUBSIDIES : Tackle wasteful subsidies. On Agriculture, streamline subisidy; remove undue focus on Nitrogen, and develop a more equitable and more logical subsidy plan. I do not recommend cutting back on Subsidies in this sector; farmers cannot afford it. That is a fact. What is needed is a rebalancing. This is a structural component, and cannot be so easily altered. Reduce subsidy even further on petroleum products for all IT payers; they can afford higher cost of petrol. The farms cannot. Alternatively, remove petroleum subsidy altogether; develop cash reimbursement through Aadhar for the poor and the rural sector. 
F) RAILWAYS : Increase fares across the board, period. Invest proceeds on modernisation and increased security. Stop cross-subsidisation of passenger with freight; be logical, consistent and transparent. 
G) EXPENDITURE : Curtail wasteful expenditure, and all non-productive expenditure; period. No explanation required, no justification need be given. It is our money you are spending. This does not include expenditure on social imperatives, and support causes, without which we may have a human tragedy, Those expenses are a priority; here I refer to Governmental expenses, making the states accountable, cutting back on wasteful non-productive freebies etc. 
This, in the order of priority, is what the nation requires. What I am a-b-s-o-l-u-t-e-l-y shocked is that few people thought of defence. Boss, they defend our lives, and their problems are serious! It is a shocker that no one – not one person here thought of the needs of the defence of India! And their needs have been documented by several authentic people, and in detail. Shame on you, India. Shame!
Now look at education. You first shout to all and then some – education is the focus, we need a school every so-and-so Kms… And then dont budget for it. And on top of it all, in a classic mark of crass stupidity, increase allocation to states – without ensuring a mechanism for extracting value of this excess fund flow to the states, quite a few of whom are known for fiscal profligacy of the worst kind. And then, you expect the states to implement what is in essence a centrally thought plan. While the plan to devolve to states is laudable, there is a dire need to pull up recalcitrant state governments. Interested people can go through this report : State Finances – RBI Report
What has been done to ensure buy-in by stakeholders at the state level? What has been done to improve efficiency of monetary utilization in the states, and ensure that the excess funds dont get spent in idiotic schemes, for which quite a few of our states are famous? If the states were so efficient, they would have already improved on-ground governance, which they havent. One look at state budgets is enough. What mechanism has been implemented – or is being planned to be implemented – to ensure that the states’ budgetary health improves, and that real value for money spent is obtained? This is what I expect a good PM to do, a good central government to do! 
The budget document is also a strategy document, it reveals your real priorities. If you are not putting your money where your mouth is, it clearly raises the suspicion that you are insincere in your words, or you have no idea what you are doing – or you have compromised. And dont have the guts to say so openly. And that is precisely what this Government’s actions in totality are stating to me as a worried and concerned citizen. I am already on record accepting that this is the best Government we have had in a long time – and if this is the best we can do, we had better get seriously worried!
Why the hell do we need more Engineering Colleges? That too IITs? And more management colleges? So that they can run away from India, rather than help solve the problems? And that too in a scenario where  thousands of Engineering graduates, management graduates and other graduates are running around from pillar to post jobless? That is being smart? The definition of smart has certainly changed, if that is the case. Why not upgrade existing colleges from D and C category? 
You know why not? Because it is hard to do. Because you will have to roll up your sleeves and really work! Because you will have to challenge vote banks; vested interests; etc. I feel jilted! I had high hopes from the BJP. I feel jilted! They are doing exactly what the Congress did – NOTHING!
Next, defence. “Already, more than 90 per cent of the defence capital allocation is pre-committed towards instalments for purchases made during previous years. While the exact figures would become clear only after March 31, it is already evident that no more than Rs 8,000-9,000 crore of the Rs 94,588 crore capital Budget for 2015-16 would be available for new purchases. A few percentage points of army revenue overspend (it overspent 5.5 per cent this year) would whittle that down to zero.” 
This is a brutal shocker – the nation’s armed forces are in dire need to refurbishment, and the best you can do is this? Add to that the zero action on health and education : the conclusion is inescapable : the priorities are wrong. The Government is wrong on this, demonstrably so.
The needs of Agriculture which have gone unattended for many years, have again been postponed. Agriculture needs subsidy rebalancing – not done. Ideal ratio – 4-2-1. Indian ratio – 6.5-2-1. QED. Largely due to the Subsidy imbalance. Why wasnt this attended to?
Next, APMC act. How do you intend to ensure that the farmer gets the right price- the government states it want to do this – without dismantling the credit scenario-mandi power and giving free market access etc? {This is not just a budget issue, but also a governance one} Why hasnt this been done? This isnt a good government, sorry. I feel jilted. And I can do a similar analysis for Health, Education etc. I feel jilted.
And we, the middle classes, we are all jumping for joy as rates were not increased in Rail budget. We travel with family once or twice a year, and earn Several Hundred Thousand every annum. Total additional expense to us taking 2 trips for 4, and a {huge} 15% rise : 2000 Rs.
Wow man, WE middle class can go bankrupt if we have to shell out 2000 Rupees extra. F-A-N-T-A-S-T-I-C! Keep it up!
What is required is a sense of balance : while the needs of growth and business are real, and vital – they will, after all,  generate the profits and the employment to solve our poverty problem – the needs of the people are also equally important, so that they are in a position to partake in the economic development in the form of an educated and healthy people of India. I am worried since this is a good government we have; but whose direction is as wrong as the previous ones!
India isn’t about the Middle and above classes alone; it is equally about the other 80-plus percent. What we are currently doing tantamount to giving them freebies, and alms, and not developing them so that they can stand on their feet. What they need is the ability of stand on their feet, and assistance in the form of support programs till the time they do. That is a fact – and the sooner India realizes this, the better for all of us.

The Union Budget 2015-2016 : Glaring Holes

Published March 1, 2015 by vishalvkale

For all the article my key resource is the complete text of the speech of the Finance Minister, available here : Full text of Budget 2015-16 speech, which I have perused in full before and during answering this question. 

Please click on the link and keep it open on another page, I have extensively referred to this document throughout the article

I am frankly surprised at the high-decibel coverage at this non-event, given that it does nothing that was not expected, as also it does nothing of import in most fields… I am more than a little disturbed to see a continuance of the status quo that we have been used to… and I am shocked that few commentators, a select few apart, have not noted the fine print of this budget. 

Before I rip into this budget {My focus is on the negatives} – let me place on record that the current Government is the best we have had in a long time… but democracy gives me the right to criticize what is wrong and disturbing. More than disturbing – it is stunning to say the least. And at no point do I deny the more than a few good points of the budget. Other people have covered them; the negative is however very disturbing. Let me also place on record that points nos 16{i-x111}, 18, 19, 20, 21 and 22 of the Budget document has done a great analysis of the problems being faced by the nation. 


DEFENCE
The defence budget is at 1.75%, continuing a steady decline. Furthermore, this now the lowest it has been since 1962, when it was around 1.5%. And this when we are surrounded by enemies and real threats on all sides.


The Indian Armed forces need major induction of Weapon Systems as well as ammunition on nearly all fronts. This has been a part of the public record for some time now. Further, the threat from Pakistan, China and the ISIS is growing every day. In this backdrop, this continuing reduction in percentage allocation to defence is deeply disturbing. Not only that, 10 months into this Government, there is again zero movement on procurement and allocation of weapon systems that are critically needed – like the MMRCA – beyond mere words that mean nothing. 

It is a given that compromises have to be made in a developing economy that is strapped for resources.  But the continuing bloated Government expenses, subsidy bills and lack of real action on Black Money places this in rather a different backdrop. How long can we put off the needed re-capitalisation of the Armed Forces? We ignore security needs at our own risk. It is sad to see few people pointing this out. Praise the good points – there are many – but dont overlook that massive errors!

This Government has passed over major decisions, while tom-tomming news like this : Narendra Modi govt clears defence projects worth Rs 80,000cr – The Times of India. The more vital projects are pending, and we can see no speed in implementing the re-arming of the nation’s protectors. Rather than compromise defence, the focus should have been on reducing expenses on some other aspects less vital so as to fund the Defence needs. And there are many that can be identified. 

The clincher : “Among the three services, the air force has been allocated the lion’s share of the capital Budget – Rs 31,481 crore, compared to the navy’s Rs 23,910 crore and the army’s Rs 21,574 crore. Even so, the air force allocation remains stagnant, indicating the government has not budgeted for buying the Rafale medium fighter, which would have required about Rs 15,000 crore as the signing amount.” 


What the hell is going on here????? This is deeply worrying! 


AGRICULTURE
Everything seems in place here, with one caveat : there is no plan to address the third critical problem : imbalanced fertilizer utilization, and the imbalance in the subsidy of the same. This is a much-needed and long-overdue reform that has been put off yet again. 

In another example, in point 33, the FM makes a clear reference to the prices commanded by the farmers, but neither in this document, or in any action of the Government, anyone has thought of the APMC Act, or scrapping it. The Base Panel had recommended scrapping or altering it way back in 2011 {Review APMC Act to check cartelisation: Basu panel}, and correctly identified it as a needed step to check cartelisation. Unless you free the farmer, how will he command prices? As on date, we are still discussing and passing the buck from State to Centre and back again, without doing anything practical. {CII panel to study impact of APMC Act in six states}


These are another big-bang change/s, that requires the Government to take on the vested interests and vote banks. Words are nice – how will you do it? It cant be done without taking apart your own vote-bank, and amending or scrapping APMC, Fertilizer Subsidies alteration, Re-visiting Urea Policy etc. Point 29, 30, 31, 32, 33 are only words, without a clear implementation roadmap. Perhaps, one may emerge : let us see. 


FUNDING THE UNFUNDED, JAN DHAN TO JAN SURAKSHA

The piece de resistance of the budget, respect sir – respect for the entire points nos 34, 35, 36, 37 and 38; as well as the next section – points 39, 40, 41, 42, 43, 44 and 45

Bankruptcy Laws, TReDS and MUDRA bank are much needed, given that the Indian Economy is driven largely by the Unorganised sector, contributing 57.3% of net domestic product, 34% in manufacturing NDP at factor cost, as well as nearly 40% of national savings . {Interested People can follow my blog, where I shall review India, Uninc by Prof Vaidyanathan on this sector of the economy}. 

Having said that, the statement in point 42 regarding unclaimed PPF deposits to be utilised will need clarity as well as a defined framework, let us see if this comes…


EDUCATION AND SKILL INDIA
This refers to point nos 75-89 of the budget document. 

Jaitley proposed to set aside Rs.69,074.76 crore for education in 2015-16, as against Rs.70,505 crore in the revised estimate in 2014-15. The revised budget for 2014-15 has reduced the education allocation to Rs.70,505 crore from Rs.82,777 crore as was pegged in the budget estimate. Of the total outlay for 2015-16, Rs.42,219.5 crore was pegged for the schools sector and Rs.26,855.26 crore for higher education. Allocations to the school sector was cut by around 10% in its planned outlay from Rs.43,517.9 crore in the last budget to Rs.39,038.5 crore in the year that begins on 1 April. In comparison, higher education has been given a plan allocation of Rs.15,8555.26 crore in 2015-16, as against Rs.13,000 crore pegged in the revised budget for 2014-15. In other words, the higher education sector saw an increase of nearly 22%.



What the hell is going on? I quote from the Budget document : 16-iii mentions employment for every house, 16-iv reduction of poverty, and 16-vii specifically mentions a school “. To ensure that there is a senior secondary school within 5 km reach of each child, we need to upgrade over 80,000 secondary schools and add or upgrade 75,000 junior/middle, to the senior secondary level“. And then, you CUT  the allocation to schools!!!!!!!

What the hell is going on????????


TAX PROPOSALS
Again, no mention of the best news to come to India for a long time in just about any Media : please refer to points I{1-8}, II{1-14}, III{1-4} in Customs section of the annexure; I{1,2,5,6 and 8} in Excise section of the annexure. 

This is a long standing demand for a correction that has now begun; the reversion of the inverted duty structure. The full import of this section will only be known after some time, as more analysis and experts go into the nitty gritty of the budget. But, as it seems now, a much-needed correction has begun. Respect, sir!

Point 109 : GAAR postponed, yet again. Recall Pranab Mukherjee? The General Anti-Avoidance Rules (GAAR), aimed at companies and investors routing money through tax havens such as Mauritius, had been scheduled to be implemented from April 2014. They will now come into effect from April 1, 2016. “The indication from the government seems to suggest attracting capital flows is imperative for the economy and to fund the current account deficit,” . {Controversial GAAR norms deferred to April 2016}. It is being claimed that all recommendations are now being critically appraised. What was happening for the past months and years? Were the people sleeping? 

Wow. What can I say? Will these ever see the light of day? Your guess is as good as mine!



CONCLUSION


This budget has been justifiably praised on any number of points; sadly, it has got no praise for the two biggest points in its favour : The focus on the unincorporated sector, and the change in the duty structures. But most critically, there has been little critical appraisal of its faults, which are numerous. 

This is a budget for Corporate India, and the top 20% of society. As I noted in my previous article on this budget {Vishal Kale’s answer to What are your expectations from the Union Budget of India (2015-16)?}, Defence, Education, Health and Rural India are the priority sectors for us.

If poverty is reduced, in addition to a growing economy, we also require an educated and healthy population, which means an effectively functioning primary and secondary school set up, increase in facilities and so on. We already have an excellent higher education set up. If on the one hand you are pitching yourself as pro-poor, and on the other, you are increasing focus on high education and cutting on schooling spends in terms of a percentage, this does beget the question : are the priorities correct? 

What we are in effect saying is, Corporate India, Middle Classes can reap immediate benefit, while making no efforts to tackle the real problems beings faced by Rural India, like reducing middlemen, education, etc. This is a majority government, they can easily take hard decisions. And yet they are not doing so – as I had foretold much earlier. And that is what makes this budget completely unimpressive, and very UPA 3-ish. 

My rating : 2 stars. As I expected….

Asia’s third-largest economy spends about 1 percent of its gross domestic product (GDP) on public health, compared with 3 percent in China and 8.3 percent in the United States. Indian states manage their health budgets separately. From : India keeps tight rein on public health spending in 2015-16 budget

We still dont have our priorities in place… and that is the most disturbing!


Jaago, Sonewaalon!