Budget 2021 must administer decisive push to social sector
January 27, 2021 1:55 PM
This year’s union budget, which Ms. Nirmala Sitharaman has promised will be like “never before”, must put people above all else, serving the underserved
As per current macroeconomic outlook, India is on the fast road to recovery, compared to other countries. (File Image)
By Sudha Srinivasan
Budget 2021 expectations: The budget is always a tightrope walk between intent and math. This year’s union budget, which Ms. Nirmala Sitharaman has promised will be like “never before”, must put people above all else, serving the underserved.
2020 mandated large fiscal support measures from the government on subsidies, welfare schemes, livelihoods and of course, healthcare. The special circumstances also emphasized the need for a robust Social Sector, which played a critical role in containing the adverse impact of lockdowns and economic disruption. As Amitabh Kant, CEO-NITI Aayog, pointed out, “The situation at hand called for stakeholders to come together, work side by side, channelize efforts, and support each other.” The fight against Covid-19, since its start has benefited from collectivised solutions and Public-Private Partnerships, which have and will be our foundational source of strength.
Budget 2021 expectations from social sector: Fast road to economic recovery
As per current macroeconomic outlook, India is on the fast road to recovery, compared to other countries. Consumption and investments are regaining lost ground, almost reaching pre-pandemic levels according to the Nomura India Normalization Index (NINI). Yet, the recovery is largely driven by corporates whose profits have gone up by an extraordinary 32% (CMIE), while small companies are going bankrupt, resulting in massive livelihood losses. The economic fallout has inexorably hit the informal sector (90% Indian workforce). Women account for a mere 11 per cent in total employment but have accounted for 52 per cent of the job losses. The United Nations estimates the size of the ‘pandemic poor’ – vulnerable populations pushed back into poverty, at 400 million. The first to be impacted by the pandemic are likely to be the last to recover lost ground, and no economic recovery is complete until they achieve erstwhile levels of income and livelihood security.
Reviving the informal economy and low-income populations who have been disproportionately impacted requires a protracted period of conducive policies for the Social Sector.
Budget 2021: Promote startup-innovation to accelerate recovery
The new breed of social entrepreneurs and non-profit startups are today accelerating the pace of solutions in ed-tech, healthcare, agri-tech, land and property inclusivity, and livelihoods to serve basic human needs at the base of the pyramid. Nonprofit startups like Intelehealth, Aaroogya, Khushi Baby have innovated low cost and scalable solutions for pandemic management in some of India’s most underserved communities. Madhi, Saarthi, and Rocket Learning have ensured continuity in education for children in public schools. These innovations have mitigated the blow of the pandemic on communities on the other side of the digital divide and will continue to play a crucial role in accelerating recovery in critical areas of development.
The Prime Minister’s recent announcement of the Rs. 1000 Cr Startup India Seed fund is a positive step in reviving the economy, with principles of inclusion at the core. The stated goal to promote innovations that “help in generating jobs and improving lives of people” holds promise for additional measures in the budget to unlock early-stage capital and create a nurturing environment for social enterprises.
Budget 2021 expectations: Unlock the potential for digital transformation and inclusion
The pandemic has exacerbated the digital divide in India, just as it has widened the wealth, gender and income divide. India has the world’s second-largest pool of internet users, about 600 million, yet half its population lacks internet access, and even if they can get online, only 20% of Indians know how to use digital services, according to government data.
The new budget should actively address access to the internet and information as a development priority. The PM Wani scheme announced in December 2020 proffers an architecture for 10 million small Wi-Fi hotspots in the country, anchored in low-income areas. If the FY21-22 budget backs up the roll out successfully, the scheme would enable high-speed internet availability in these areas, ensuring better Direct Benefits Transfer and welfare access. This, in conjunction with a nurturing startup ecosystem can create income opportunities for millions of small business owners. The potential for technology to create greenfield opportunities in the farm and nonfarm rural sectors is immense, and the budget needs to provide timely impetus to digital access, education and adoption.
Budget 2021 expectations from social sector: Calibrated Plan to improve human development
There’s a huge gulf between India’s Human Development Index (we rank 131 out of 189 countries) and GDP growth. Education expenditure has been stagnant around 2.8-3 percent of GDP from 2014-2020. Budget 2020 allocated INR 99,300 crore for skill development and quality education but the demand in these areas have surged through the pandemic. Per CMIE, the steepest fall in employment has been among the young (20-35). Graduates had a 13% share in total employment in 2019-20. Their share in the loss of jobs was 65%. Gender disparities have widened, as women’s participation in the workforce has plummeted, predominantly in the domestic and wage workers segment. Increased investment in education and vocational training for women and youth is imperative as it can lead to higher labour force participation in the formal sector, in the long run.
Housing, especially for migrant labour, is another area that needs attention. The government’s ‘Housing for all’ initiative has prioritized this focus. Regulations such as the Pradhan Mantri Awas Yojna and the GST rate cut from 8% to 1% for the affordable housing segment- should be aggressively followed to help the economically weaker sections.
The budget needs to honor the key lesson from the pandemic – which is to go where the puck will be. Investment in long term infrastructure and public goods are key to building resilience against future shocks. Just as the existence of the Jan Dhan-Aadhar- Mobile trinity set India up for the economic recovery we are witnessing, continued investment in the India stack, improvement of public health and education systems and structures for empowered communities will prepare us for giant strides in human development.
Budget 2021 expectations: Improving the ease of doing good
The Corporate Social Responsibility policy amendment rules unveiled by the Ministry of Corporate Affairs on Jan 22, 2021 have brought clarity and transparency to funding in the social sector. Additional policy changes are required to the GST Act, to standardize the treatment of Companies registered under Section 8 at par with the Income Tax Act and provide necessary exemptions that enable nonprofit organizations to serve economically disadvantaged sections underserved by markets and governments. The budget should also enable ease of access to debt and additional pools of impact financing.
The Social Stock Exchange (SSE) recommended by Nirmala Sitaraman in the 2019 budget speech set in motion a series of deliberations on creating foundational structures to sustain the financial needs of the social sector. We’re hoping to see action on this initiative that creates a platform for discovery of high potential models for change, and brings together funders and social enterprises to collaborate towards sustainable development.
The Social Sector will be the backbone of economic revival post pandemic, addressing the most vulnerable sections of society. Social sector policy and spend need to be ramped up, for recovery and resilience. The sector hopes to be a high-priority area for FY21-22 Budget.
(The columnist is CEO, The/Nudge Centre for Social Innovation. Views expressed are the columnist’s own.)