Budget 2018 impact: No radical policy or strategic shift in most sectors

The finance minister has put the thrust on effective implementation by making allocations on the basis of actual expenditure incurred

Social sector

Far from what was widely anticipated, the Union Budget for the social sector has continued with earlier policies, schemes and extent of allocations without any radical policy or strategic shift in most sectors. By not making too many changes in most programmes, the finance minister (FM) has given a thrust to effective implementation by pegging allocations based on the actual expenditure incurred and has tried to optimise resources.
 
The addition of multiple schemes into a convergent action agenda is also a welcome step, as achieving individual SDG targets would need multiple ministries and departments to work together to address multiple interdependent issues.
 
Rural water and sanitation
 
The ministry of drinking water and sanitation has seen increasing allocations for the last three years for the flagship programmes on rural sanitation and drinking water. However, the allocation for 2018-19 is seven per cent lower despite the current year’s spend being higher than the Budget allocation. The ministry, with an overall budget of Rs 223.57 billion, continues to contribute a higher share of 69 per cent to the rural sanitation programme.
 
Swachh Bharat Mission-Gramin (SBM-G)
 
For the final year of SBM-G implementation, Rs 153.43 billion has been allocated. Although lower than the 2017-18 revised estimate, this may be sufficient, considering the convergent approach and private sector allocations filling the gap.
 
Over the last four years, SBM-G has reported construction of over 60 million household toilets, declaring over 300,000 villages and 11 states to be open defecation free. Despite the scheme’s focus on behavioural changes for toilet usage, the allocation for information, education and communication continues at less than two per cent of the total provision.

 
National Rural Drinking Water Mission (NRDWM)
 
The allocation for NRDWM has dropped by one per cent over the 2017-18 revised estimate. The mission aims to provide safe drinking water to over 28,000 arsenic- and fluoride-affected habitations through the NRDW Programme. The National Water Quality Sub-Mission was proposed to be launched in 2017, though no specific budget allocation has been made for it.
 
Women and children
 
Over the last three years (since 2015-16) the allocation for the Gender Budget has increased by about 50 per cent. More ministries are earmarking separate budgets for a gender component in their demands.
 
The target beneficiaries under the Ujjwala Yojana have been increased by 60 per cent to 80 million, from the current 50 million, focusing on access to clean cooking fuel and thereby reducing women’s susceptibility to chronic respiratory deaths. The Budget has also allocated Rs 99.75 billion to the National Social Assistance Programme, which will help enhance social security for widows and orphans.
 
An increase in the corpus fund for women SHGs is a bid to enhance the low women’s workforce participation rate of around 30 per cent. The Rs 3-trillion allocation under the Mudra scheme is expected to aid small women entrepreneurs, with 76 per cent of beneficiaries being women. Women employed in the formal sector will benefit from the reduction in their EPF contribution to eight per cent for the first three years.
 
While measures such as the Mahila Shakti Kendra with an allocation of Rs 2.8 billion towards “one stop convergent support service” affirms the government’s commitment, a more gender-responsive and convergent approach is needed to reduce gender inequality.
 
Nutrition
Integrated Child Development Scheme
 
With India accounting for 50 per cent of the global burden of under-nourished children, strengthening the National Nutrition Mission (NNM) is a laudable step. The NNM aims at reducing stunting, under-nutrition and low birth weight by two per cent each year. The quantum jump in allocation to the NNM at Rs 30 billion in 2018-19, from the earlier Rs 9.5 billion, demonstrates the importance attached by the government to nutrition.
 
While the allocation to Anganwadi Services has remained stagnant, interventions like digitisation of Anganwadi Centres (AWCs) and ICT-enabled monitoring of the scheme are novel concepts expected to improve effective monitoring.
 
Increasing focus on convergence has been an essential element of the government’s approach towards improving the people’s nutritional status.  For instance, both the Economic Survey and Union Budget put emphasis on provision of toilets and safe drinking water facilities at every AWC, in line with the SBM.

 
Public health care
 
“Swasth Bharat - Samriddha Bharat” was an apt slogan in the FM’s speech. A recent report from WHO and the World Bank on Tracking Universal Health Coverage (UHC) indicates that 100 million people are pushed yearly into extreme poverty due to catastrophic health expenditures. At an UHC index of 56, India is behind the global average of 64, and far behind developed countries with indices of 70 or above.
 
The National Health Protection Scheme, originally announced in 2016-17, has moved beyond the drawing board. It aims to provide an annual cover of Rs 500,000 to 100 million vulnerable families, a significant jump from 35 million families currently covered by the Rashtriya Swasthya Bima Yojna. This laudable initiative has been allocated Rs 20 billion, which is four times that of 2017-18.
 
Another notable announcement under the Ayushman Bharat Programme is the allocation of Rs 12 billion for creating 150,000 Health and Wellness Centers (HWCs) by 2022 to provide comprehensive primary health care services. While the financial allocation is adequate, the task seems daunting, with a huge jump over the 2017-18 target of 3,871 HWCs.
 
Despite these announcements, the overall allocation to the ministry increases by only two per cent over the 2017-18 revised estimates.
 
The implementation of health care programmes has suffered owing to lack of skilled human capital. The upgradation of select district hospitals to 24 new medical colleges is a welcome move. However, the budgetary allocation for this has been reduced to Rs 28.87 billion, compared to the 2017-18 revised estimate of Rs 33 billion.
 
Livelihoods
Mahatma Gandhi National Rural Employment Guarantee Scheme
 
The overall allocation for rural employment schemes along with the earmarked extra-budgetary resources is impressive. However, the target of achieving 3.21 billion employment person-days is a daunting task, considering past trends and the current achievement of only 1.88 billion person-days.
 
While the 2018-19 allocation for MGNREGS remains stagnant at Rs 550 billion, it must be noted that the 2017-18 budget was revised by 15 per cent over the original allocation of Rs 480 billion. This could be attributed to the accrued payment of wages and pending liabilities.
 
At the policy level, the government’s consistent focus on convergence and productive asset creation for farmers through the MGNREGS will yield positive results in the medium and long term.
 
National Rural Livelihoods Mission (NRLM)
 
The allocation for NRLM has increased by 32 per cent over the 2017-18 revised estimate. While laying thrust on rural entrepreneurship and women’s empowerment, the Budget rightly addressed the critical issue of credit linkages for SHGs. It promised a quantum jump from the current Rs 5.61 billion bank-linked credit accessed by SHGs to an ambitious Rs 400 billion in 2018-19.
 
Tribal welfare
 
Another notable feature of this Budget is the increased focus on mainstreaming tribal development. An allocation of Rs 18 billion as grant under Article 275(1) of the Constitution will help finance the establishment of Eklavya Model Residential Schools across tribal-dominated blocks. Further, the allocation for tribal education programmes has been increased by 18 per cent over the 2017-18 revised estimate.
 
The marginal allocation (Rs 4.2 billion) to the Vanbandhu Kalyan Yojana seems to suggest a shift in approach towards main-streaming the tribal population from holistic livelihood development to a specific focus on education.
 
Textiles
 Livelihood and employment in textile and apparel
 
The textile and apparel sector is estimated to account for about 23 per cent of employment in the country. The significance of the sector is reflected in the doubling of the allocations for the Integrated Skill Development Scheme from the revised estimate for 2017-18 (Rs 1 billion).
 
While there is continued support for the traditional sectors, with allocations of Rs 3.96 billion for handlooms, Rs 1.98 billion for handicrafts and Rs 12.15 billion for khadi, the allocations have declined when compared to the 2017-18 revised estimate. The government’s focus seems to have shifted towards much-needed technological upgradation, with an 18 per cent increase in financial outlay for the Amended Technology Upgradation Fund Scheme.  This move will promote value addition and further enhance competitiveness in the sector.
 
Education
 
The Budget has tried to perform a balancing act between access and quality. The allocation of Rs 850 billion to education marks an increase of four per cent over the 2017-18 revised estimate. The allocation for school education and literacy has been increased by six per cent; however, the major schemes (Sarva Shiksha Abhiyan, Mid Day Meals, Rashtriya Madhyamik Shikha Abhiyan) have not seen any significant increase.
 
An increase is noted in the budget for higher education (12 per cent) and for the Rashtriya Uchhatar Shiksha Abhiyan (eight per cent) on a year-on-year basis. The allocation for the Higher Education Financing Agency has increased to Rs 27.5 billion, a significant jump of over 11 times towards upgrading the infrastructure and research facilities at some of the premier institutions of the country.
 
The PM’s fellowship to encourage 1,000 promising students to take up research in premier Indian institutions is proposed. Special attention has been given to ICT initiatives in both schools and higher education through schemes such as digitisation of classrooms, the Diksha programme and the Digital E-Learning Platform created to benefit both students and teachers.
 
Vocational education, skill development and entrepreneurship
 
The 44 per cent increase in the skills budget allocation for the ministry of skill development and entrepreneurship reaffirms the government’s commitment to vocational education and skill development. The Pradhan Mantri Kaushal Vikas Yojna has targeted to skill 10 million youth between 2016 and 2020. With only 1.18 million youth trained so far, the odds against achieving this target seem overwhelming. The modest target of three million considered for 2018-19 may not be sufficient.
 
The Budget announcements indicate an increase in the number of centres under Pradhan Mantri Kaushal Kendras (PMKK) and a focus on apprenticeships. However, the PMKK allocation has been reduced by 58 per cent and that for apprenticeships by 32 per cent.
 
The allocation of Rs 1.9 billion for the development of polytechnics is a positive move. It is proposed to boost long-term vocational education and support the Make in India campaign. The two external-aided programmes — Skill Strengthening for Industrial Value Enhancement with an allocation of Rs 22 billion focusing on ITIs, and Skill Acquisition and Knowledge Awareness for Livelihood Promotion with an allocation of Rs 40 billion — will be a big boost to the skilling infrastructure and capacity in the country. The focus on market-relevant skills and improving the quality of training, including a streamlined assessment and certification framework, will be key to enhancing skill and employability.

Ashok Varma, Partner-Social Sector, PwC India

Team members: Abhijeet Pandey, Amrita Sengupta, Bano Fatima, Krupa Varghese, Jatin Dhingra, Mukesh Goel, Narayan Thacker and Nikita Chadha