No finance minister, perhaps, has had it so good as Mr Chidambaram has it now. The Indian economy’s growth in robust and confidence is high. The government is stable, and most free market policies are accepted across the political spectrum. The FM may not be able to repeat the ‘dream budget’ of a decade ago, when direct taxes were reduced dramatically and liberalisation was given a fresh impetus. But he can certainly reshape the future with next week’s Budget.
But the good news is tempered by signs of uncertainty. Inflation is rising, even as the farm sector languishes. The power and transport sectors continue to be in serious crisis. With employment in manufacturing remaining low, the ‘demographic dividend’ can soon turn into a nightmare. Productivity remains low, with poor education and health holding back much of the population. As The Economist fears, there are enough portents of trouble to worry about.
What, then, could be the focus areas of this Budget, apart from the widespread expectation of reduction in import duties? Five areas need urgent attention, and this Budget could mark a radical departure in all these sectors and make 10% growth a reality.
First, the focus should be on education. It is sad that even now we only emphasise enrolment and literacy, and Sarva Siksha Abhiyan is our only flagship programme. Despite allocations in primary education, the outcomes are appalling. Enrolment has picked up; but recent surveys (ASER 2005 and 2006) indicate that most of our children have not gained. Some 28.5% of all rural children in the 11-14-years age group attending both private and public schools are not able to read a short story of grade 2 difficulty; 45% cannot do a simple arithmetic division. We need to invest in teacher training, inspections, random tests to measure outcomes and take midcourse correctives, and stakeholder empowerment. And we need to quickly put in place a massive programme for imparting quality secondary education. We cannot sustain a modern economy or a robust democracy with only a smattering of literacy. Every child must be guaranteed 12 years of school education which prepares her for productive work or higher education.
Second, our health care continues to be in shambles. The National Rural Health Mission is a modest beginning, but not good enough. Public investment must rise to at least 2% of GDP by 2011. Even more important, the incentives need to be altered by risk-pooling mechanisms, money following the patient, and local control and accountability. A nation which aspires to be a big economic power cannot allow 80% of children and 56% of women to be anaemic, and millions of people meeting untimely deaths and families facing economic ruin on account of sickness.
Third, the bulk of young people joining India’s labour force have neither skills nor opportunities to be productive workers. Our organised workforce in the manufacturing sector is still of the order of only 6 million, constituting 1.3% of the total labour headcount. About 100 million youngsters will join the labour force over the next decade. Most of these new entrants are eager to make money and a living, but lack the skills and opportunities. In the long-term, meaningful education should impart skills. But these youngsters are waiting today for work. Therefore, a massive national programme to impart skills to make them employable is vital. Its cost will be modest, and gains in social harmony and economic growth will be immense. Coupled with that, labour laws need to be liberalised, to stimulate small and medium enterprises and promote employment.
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| Despite allocations in primary education, the outcomes are appalling. Some 45% of all rural school-going children aged 11-14 cannot do a simple arithmetic division |
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Fourth, agriculture continues to be in crisis, even as a storm is raised over increase in prices of pulses and onions. Several steps should be initiated to stimulate the rural economy—effective market linkages to assure fair price to both farmers and consumers, an increase in import tariff on cotton to deny subsidised OECD farmers an advantage at the cost of our farmers, massive promotion of value-addition of agricultural produce along with infrastructure for storage and preservation, and improved credit through the rejuvenation of cooperatives. The FM should launch a massive programme to assist states, provided they come forward to liberate markets and cooperatives from bureaucratic clutches. Our agricultural market committees in most parts of India, except in Punjab and Haryana, where Sir Choutu Ram’s Mandi Act created robust markets, have become dens of corruption and patronage. The plight of cooperatives under stultifying state control is well known. The Vidyanathan Committee made practical recommendations, and the FM needs to act on them.
Finally, power and transport sectors need special attention. Decentralised distribution of power through the community or franchisees, metered power distribution with effective energy auditing and massive upgradation of the distribution network to prevent technical losses are vital to transform the power sector. Our cities are slowly getting paralysed by bad transport. High-cost public transport choices like tube rail (about Rs 150 crore per km) must not crowd out low-cost models like rapid bus transport systems, and integrated management of rail and road transport.
The current mood of optimism and robust revenues give the FM a priceless opportunity to accelerate growth and sustain it, while also promoting equity and harmony.
—Jayaprakash Narayan is the coordinator of Voteindia, a national campaign for political reforms; Email: loksatta@satyam.net.in
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