Wednesday, March 2, 2011

Budget gives a boost to the social sector

Union Budget has a renewed focus on continuing social sector reforms. It remains to be seen how proposals are executed so that benefits actually reach the targeted.

Amitabh Shukla / New Delhi

The Social Sector received a big boost in the Budget for 2011-12 with Finance Minister Pranab Mukherjee announcing that 36.4 per cent of the total plan allocation will be for this sector as the government was continuing its focus on inclusive development. Though several reforms have been kept pending and much more could have been done to address key issues of economy, the social sector is not complaining as it has got what it wanted.

While presenting the Union Budget, Mukherjee announced that the Food Security Bill will be introduced in the Parliament during the course of this year pointing out that the government was in the process of finalising the Bill after detailed consultations with all stake holders, including state governments. This Bill has been pending for a while and conflicting opinion has been expressed in the public domain, including that of a government committee, about the practicality of implementing it.

Referring to the schemes of Right to Work for rural people, Right to Information and Right to Education, Mukherjee said that the government has engineered a major directional change in public policy by its focus on inclusive development. The FM said that the allocation for the Social Sector in 2011-12 is being proposed to be Rs.1,60,887 crore, which is an increase of 17 per cent over the current year.

Budget allocation for spending on critical rural, infrastructure, and social security, schemes like the National Rural Employment Guarantee Act (NREGA), Bharat Nirman have been increased by Rs 10,000 crore to Rs 58,000 crore. Bharat Nirman includes the government’s flagship programmes such as Pradhan Mantri Gramin Sadak Yojna, Accelerated Irrigation benefit programme, Indira Awas Yojna, Rajiv Gandhi Grameen Vidyutikaran Yojna. Besides Planned allocations for Health and Education have also been stepped up by 20 and 24 per cent respectively.

For the farming sector, several proposals were announced. Sops to farmers include a 3 per cent interest subsidy. The credit flow to farmers has been increased from 3.75 lakh crore to 4.75 lakh crore. Promise was also made to raise the corpus of rural infrastructure development fund to Rs 18,000 crore as against Rs 16,000 crore earlier.

The move is likely to result in improvement in major areas of the social sector such as education, health, social justice and rural development, thus aiding in eradicating poverty.


High food inflation, responsible for denting the disposable income of the people, has been a major cause of concern for the government lately. Not surprising, Agriculture sector acquired utmost importance in the Budget 2011-12. The FM said that production and distribution bottlenecks for items such as fruits and vegetables, milk, meat, poultry and fish would be the focus area in the coming financial year. Various agro schemes such as Rashtriya Krishi Vikas Yojana, Accelerated Fodder Development Programme etc have witnessed considerable hike in allocations. Besides this, access to agriculture credit has also been made easier for the farmers.

Some other allocations have been made which is likely to help cut deficit in several items which have been pushing food inflation. All such schemes have been allocated Rs 300 crore each and include (1) promotion of 60,000 villages in rainfed areas to grow pulses, (2) to promote animal based protein production through livestock development, dairy farming, piggery, goat rearing and fisheries (3) for Accelerated Fodder Development Programme to benefit farmers in 25,000 villages (4) to bring 60,000 hectares under oil palm plantations (5) to promote higher production of Bajra, Jowar, Ragi and other millets, which are highly nutritious and have several medicinal properties (6) for implementation of vegetable initiative to provide quality vegetable at competitive prices and (7) to promote organic farming methods, combining modern technology with traditional farming practices.

To improve rice based cropping system in this region, allocation of Rs 400 crore has been made. Allocation under Rashtriya Krishi Vikas Yojana (RKVY) increased from Rs 6,755 crore to Rs. 7,860 crore. Allocation of Rs 300 crore has been made for government augmentation of storage capacity through private entrepreneurs and warehousing corporations which has been fast tracked.

Credit flow for farmers has been raised from Rs 3,75,000 crore to Rs. 4,75,000 crore in 2011-12. Interest subvention is proposed to be enhanced from 2% to 3% for providing short-term crop loans to farmers who repay their crop loan on time. In view of enhanced target for flow of agriculture credit, capital base of NABARD to be strengthened by Rs 3,000 crore in phased manner and Rs. 10,000 crore to be contributed to NABARD’s Short-term Rural Credit fund for 2011.

Nutrient Based Subsidy (NBS) has improved the availability of fertiliser and now the government is actively considering extension of the NBS regime to cover urea. In addition, there is a move towards direct transfer of cash subsidy to people living below poverty line in a phased manner for better delivery of kerosene, LPG and fertilisers. A Task force has already been set up to work out the modalities for the proposed system.

Education and Health

The government proposes to spend Rs 52,057 crore on education and Rs 26,760 crore on health in the year 2011-12 to ensure “inclusive growth” for all, Mukherjee announced. Calling education as the tool of empowerment to reap the benefit of India's demographic dividend of a young population, Mukherjee announced a hike of 24 percent in the budget spending for education to Rs.52,057 crore.

The allocation for health sector was also increased by 21 percent at Rs 26,760 crore. Calling Rashtriya Swasthya Beema Yojana an effective instrument for providing health cover to marginal workers, the FM announced extending its ambit to unorganised labour working in hazardous mining and associated industries.

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