There is a fun-side to budgets beyond the dreary boredom of the data and pedantic truisms bandied about. The lightest side of the budget this year, were capital receipts from disinvestment (code for under-the-radar privatization) which at 85% below budget outclassed, for the “back bencher award”, revenue receipts, which only shrank – like cooked methi (Fenugreek)- to 23% below the budget.
Putting lives before growth
Both were the victims of the pandemic and the very sensible strategy, eloquently explained in the accompanying Economic Survey, of letting the economy draw the fire of the pandemic whilst shielding lives – where India has done astonishingly well.
When great results become a handicap
Sadly, as any child from a middle-class family knows, getting high marks without a tutor, only ensures that you continue to shoulder the burden of indifferent teaching in school- in which we have a redoubtable reputation, per the meticulous PRATHAM ASER surveys on school outcomes.
In a similar vein, because India came out of the Pandemic with flying colours on morbidity and mortality, FM Sitharaman was content to under-fund the Health and Family Welfare (HFW) Ministry in FY2022 (next year) with 10% less than what it will spend this year though it is nevertheless, 14% more than what was spent in 2019-20. HFW activists need to cry louder to be heard above the din of the compulsions of “economic growth”.
Sadly, the Economic Survey’s lament that a doubling of the HFW budget can halve the steep “out of pocket” expenses, which even the poor incur in public facilities, went unheard.
Privatization in a new bottle with a new label
The case of the long languishing “disinvestment” program is even more peculiar. Launched with much fanfare by the late PM Vajpayee’s government in 2000 it built upon the enormous ground- work by the Disinvestment Commission. After a flying start (MARUTI, BALCO, HZL, VSNL, sundry Hotels) it ground to a complete halt four years later. The engagingly ambitious, then Minister and veteran editor, Arun Shourie failed to uproot “Imperial” political and bureaucratic structures, which guard embedded privilege, ergo the “comforts” of administering a CPSE, better than the solid walls of Mehrangarh Fort in Jodhpur, Rajasthan.
Sadly, the Vajpayee government failed to consolidate its early gains and was followed by a decade of faux neo-liberal policies under the Congress led alliance. PM Modi’s “minimum government maximum governance” awoke hope in neo-liberal hearts that deep governance reform – code for squeezing government into supervisory and regulatory roles, whilst facilitating private management and ownership of productive assets- would follow. That hope died over the next six years till this year’s budget.
Unbelievably, now the government has approved a privatization (not a disinvestment) policy. Even more unbelievably, it reads as if the ghost of Margaret Thatcher has scripted it. The version in the budget speech is just 174 words long – surely a first for any policy ever made in India.
These documents tend to be verbose, with more flourishes, than a ballerina and are meant to hide embedded options for deviating from the stated objectives, should a change of course become inevitable- as it often does. The Indian bureaucracy is a master of double-speak but modern-day politicians have taken to this skill (sadly not taught under the governments rather lack-lustre SKILLS program) with gusto.
This new privatisation policy divides the universe of publicly owned enterprises into strategic and non- strategic – this is par for the course per its earlier avatars.
The slam-dunk part is in the following sentences which, align fully with the FM’s promise of a “never-before budget” –
“In strategic sectors, there will be bare minimum presence of the public sector enterprises. In non-strategic sectors, CPSEs will be privatised, otherwise shall be Closed”.
Never-before has it been put plainer.
But there is a catch
Of course, there is a catch. First, the term CPSE (Central Public Sector Enterprises) does not include publicly owned banks or insurance companies (LIC or the five general insurance companies) or non-banking financial institutions like NABARD, SIDBI, NHB etc. So, the available pie under the draconian “sell or quit” directive is much smaller than if the entire lot was sold.
Second, even within CPSEs, clearly visible “outs” remain to be exploited by the “I want my PSE to be left alone” crowd. Consider first, the cliff-hanger that the “nation” has been watching for the longest time – the privatisation of Air India.
The flexible magic of ambivalent drafting
Transport is a “strategic” sector. This labelling protects Indian Rail and oddly even state government owned bus fleets from privatization. The strategic requirement is that “a bare minimum” CPSE presence must be preserved. Aviation falls under the rubric “Transport”. But Air India and its subsidiaries and the diminutive chopper service provider Pawan Hans are already on the block. However, using the minimum presence clause, “God’s Own” Kerala, with its traditionally Communist preferences, could forever be condemned to depend on Air India Express (an Air India subsidiary) for the Gulf traffic, unless it changes course in May 2021.
How “strategic” is strategic?
Also, what is “strategic” about petroleum or coal or telecommunications in this millennium? The government is undermining petroleum dominance and replacing it with solar energy, because we are deficient in the former and surplus in the latter. Not just that. The world’s biggest petroleum companies are disinvesting in “dirty” fossil fuel and diverting funds flow to “clean” renewable energy. Even Mukesh bhai has deserted oil for data. Why should we be the last man standing -with a coal shovel- barely visible through the fog of sulphurous fumes?
In telecommunications, spectrum is a strategic resource whilst military communications is a strategic operational area. Labelling all of communications as strategic is much like private cabs – now used by the military to ferry officers- bearing the legend “On Army Duty” to recreate the diminishing awe of the Raj.
Hope even for those on the wane
Finally, whilst the establishment outlay of government will increase next year by 2% the spend on pensions will reduce by 7%. This “never before” inverse correlation has sparked hope in the hearts of senior incumbent bureaucrats that the retirement age might be increased from 60 to 75 years (thereby reducing current pension outgo).
It helps that the BJP “margdarshak” guidelines (defining 75 years of age as the upper cut-off for becoming a minister) are already aligned as is a new provision in the budget exempting those above 75 years of age, from filing income tax returns, if pension and bank interest are the only sources of income. A perfect triangulation here between hope, practice and regulation.
Extracted from TOI blogs February 4, 2020 https://timesofindia.indiatimes.com/blogs/opinion-india/budgetary-never-befores-for-fy2022/