P Chidambram squeezes poor to balance books

Over Rs.31,000 crore were slashed from crucial spending on flagship schemes and other welfare programs in the year that is just ending, according to an analysis of the interim budget presented in Lok Sabha on Monday. Many believe that this was done in order to cut the fiscal deficit from 4.8 percent to 4.6 per cent. The wisdom of such squeezing of the poor on the eve of elections has left poll pundits puzzled.

As TOI had reported in December last year, rural development minister Jairam Ramesh had strongly protested against finance ministry pressure to slow down spending on social sector schemes, calling such cuts "completely unreasonable" and "savage" and "demoralizing" in a letter to Prime Minister Manmohas Singh. However, it looks as if finance minister P Chidambram has had his way.

The squeeze on spending is evident from comparing revised estimates for 2013-14 with the budget estimates. While budget estimates are the proposed spending decided at the beginning of the financial year through the Budget, revised estimates denote a rough tally of how much was actually spent. The final tally of actual spending takes another year to pin down. So, this year's interim budget for 2014-15 gives revised estimates for spending on various heads in 2013-14.

Several important functions of the government like delivery of health services, education, rural roads, rural housing, drinking water and sanitation have all suffered compression of spending. This will have a direct impact on lives of rural people.

In addition several other programs like mid-day meals for schools, nutrition for children and pregnant mothers through the ICDS, rural livelihoods and the Rashtriya Krishi Vikas Yojana (RKVY) for enhancing agriculture productivity have been scaled down. Specific programs for empowerment of women and support to dalits too have suffered cuts.

Total Plan Expenditure in 2013-14 had been projected last year as Rs. 5.55 lakh crore in Budget Estimates but it stands slashed to Rs. 4.75 lakh crore in revised estimates says Subrat Das, director of the New Delhi based think-tank Centre for Budget and Governance Accountability (CBGA).

"For 2013-14, the Budget Estimate for the department of rural development had been pegged at Rs. 74,478 crore but it has been slashed to Rs. 59,356 crore in revised estimate. Similarly, the budget estimate for the department of health and family welfare was Rs. 33,278 crore but it has been slashed to Rs. 27,531 crore in revised estimate," Das said.

It is often argued that states are unable to spend and so funds cannot be released from the Centre. But there is no reason why 2013-14 should see a contraction in state spending compared to the previous year, argues Das.

"2013-14 was not a year which saw major natural calamities or national elections which diverts personnel and typically leads to less expenditure," he explained.

So, it all boils down to squeezing the poor in order to stick to the fiscal deficit 'red line' and keep ratings agencies happy.