We Are Wasting Money In The Name Of Budgetary Allocation

Social entrepreneur and CEO, Basix, Vijay Mahajan has worked in the social sector, particularly at the micro enterprise level for decades and feels that though previous governments allocated funds, they were either not spent or did not reach the targeted people. This budget, he says, has reduced outlays in key social sectors looking at the low spend, but has also not addressed the issue of implementation of social schemes and policies or found ways to spend the money properly. Excerpts from an interview with Arindam Mukherjee:

The budget is being termed as pro-rich and pro-corporate while social sectors have got a secondary treatment.

My impression of this is a bit different. What is being done for the corporates is mere policy reform. No money is actually being spent on them apart from the reduction in corporate tax which also will come in four years.

As for the social sector, they are just looking at the 75^th anniversary of independence in 2022 with issues like providing roof over the head of the poor and constructing toilets, and considering it a good way to look at helping the poor come out of poverty. There is nothing that Mr. Modi and this government have done that can be called its own initiative or policy. Every component of their policy and proposals existing before.

The budget has reduced outlays is several key social areas.

Comparing budget to budget will be meaningless. We have to consider the reduced outlays in context of what the actual expenditure has been in these specific areas. In most of the areas, the previous government was not able to spend what was allocated. So allocations have been scaled down further.

But key sectors like health, education and drinking water and sanitation which are key elements of the social sector have been ignored or had their outlays cut in this budget. Clearly, funds should have gone there.

Yes, but here again there is the issue of implementation and spending of the allocated funds which was not happening. That is one clear area that has not been addressed even now. The Indian middle class wants the government to give more but those benefits never reach them.

In education, this is even more pronounced as at the primary and secondary level, teachers just do not come to the school. On drinking water, it is the inexperience of Mr. Jaitley that has resulted in lower allocation despite making a resolve to construct 6 crore toilets.

So you agree with the low focus and low allocation to the social sector?

The problem is not of money or of allocation of funds. It is of implementation (of schemes and spending the money). If you see the allocation over the last several years, the rupee value of allocation has gone up but the capability to implement has gone down. That is what needs to be addressed but unfortunately, it is not being addressed.

Apart from NREGA, the only big announcement for the social sector and small enterprises seems to be the Mudra Bank. Will it be adequate to address the issues in this sector?

The details of the Mudra bank has much more ambit than what was announced in the budget. It will be the NABARD of the small sector. But there are doubts on how it will succeed specially with an allocation of just Rs. 20,000 crore. There are over 5.5 crore micro enterprises in India as per the census of 2011 and each one will need at least Rs. 1 lakh. That makes the Rs 20,000 crore grossly inadequate for it to function in any proper way. Its purpose may not be served at all.

So would you call this budget anti-poor and anti-social sector?

This is a budget where they are playing for 3-4 years and not looking at the immediate term. I think the PM and Arun Jaitley have lost a PR point where they could have stated that they are not cutting down the outlays but freezing benefits to ensure that it is reaching the right people. In the name of giving money to the social sector we have been wasting money which has been going to contractors and the wrong people while the actual beneficiaries have been deprived.

This web-exclusive interview does not appear in print magazine.