What’s new in the Budget

The developmental orientation of the Budget 2013-14 can be assessed by looking at whether its proposals are based on continuity or novelty. The more novel the proposals for a sector in the Budget, higher is the developmental orientation in that sector. The Budget is development-oriented with respect to infrastructure and finance, but not so much the social sector.

INFRASTRUCTURE SCHEMES

The infrastructure sector comprises investment instruments, roads, ports, corridors, waterways, oil & gas, coal, MSME. The new formulations in this regard are: Regulatory authority for roads, investment allowance, new savings instruments (such as inflation-indexed Bonds or inflation indexed National Security Certificates) , industrial corridors, new ports, new waterways, grid, public-private partnership (PPP) for coal, Credit Guarantee Fund (CGF) for factoring, apparel parks and Integrated Processing Development Scheme (IPDS).

There are few policy continuities and modifications in the following areas: expansion of the Scheme for Regeneration of Traditional Industries (SFURTI), continuation of Technology Upgradation Fund Scheme (TUFS), review of Natural Gas Pricing Policy (NGPP), additional allocation to India Microfinance Equity Fund (IMEF), enhanced allocation for SIDBI refinance, liberalisation of Rajiv Gandhi Equity Savings Scheme (RGESS), Cabinet Committee on Investment (CCI), Tax free Bonds (TFB), Infrastructure Development Fund (IDF), enhanced corpus for Rural Infrastructure Development Fund (RIDF) etc.

The new policy formulations in the infrastructure sector clearly outweigh the policy continuity aspects and strengthen the developmental orientation of the Budget.

FINANCE SCHEMES

The financial sector comprises banks, insurance and capital markets.The Finance Minister has proposed a series of novel policy formulations in this sector, including a women’s bank, Urban Housing Fund (UHF), insurance penetration, facilitation of Foreign Institutional Investment (FII) and stock exchange vibrancy, Standing Council of Experts (SCE).

The Budget mentions only few steps for policy continuity, including capital infusion to banks, additional resource allocation to Rural Housing Fund (RHF) and the Financial Sector Legislative Reforms Commission (FSLRC). The new policy interventions in the financial sector, lend a strong developmental orientation to the Budget.

ENVIRONMENT AND SOCIAL SECTOR

In the environment sector, resource allocation to Indian Renewable Energy Development Agency (IREDA) ensures policy continuity. However, support for waste-to-energy projects and wind energy projects are the new policy formulations in the environment domain which strengthen the developmental orientation in this sector. As for the social sector, most of the schemes either continue existing policies through continued resource allocation or continue existing policies through additional resource allocation.

The examples of schemes in this category are: establishment of purification plants, malnutrition programme, mid-day meal scheme, Sarva Shiksha Abhiyan, JNNURM and traditional medicine. On the other hand, Nirbhaya Fund, Nalanda University, medical aid in Maulana Azad Education Foundation-supported centres and Pradhan Mantri Gram Sadak Yojana-II are the new policy formulations in the social sector.

The developmental emphasis in the Budget with respect to the social sector is muted, with existing schemes outweighing new ones. However, the Finance Minister has barely addressed issues of foreign trade, service sector, good governance which are crucial for next generation of reforms.

The issues are crucial for overcoming the roadblocks in sustaining the developmental momentum. But for him “the last day of February is another day in the life of a nation”.

The author is Professor, IIM, Ranchi.

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