Rightly reflects pandemic-era priorities

Infrastructure focus will create jobs but more could have been done on the health front

Budget speeches are seldom criticised for what has been said while reading them out in Parliament, unless they are about tax increases, but have almost always been criticised for what has not been included in them. This is especially so in Part A of the Budget speech where the finance minister lists the various positive steps her government will take in the coming fiscal year to address specific concerns of the various interests in the country.

Since resources are scarce, the finance minister has the unenviable task of balancing the interests of the different groups. Hence, an objective way to evaluate the Budget would be to see what priorities the government has set for itself and then how the minister has gone about meeting them.

The finance minister started the substantive portion of the Budget by focusing on infrastructure. The central government is necessarily the best agency for developing national level infrastructure and so the minister’s commitment to boost multi-modal infrastructure and logistics is to be lauded. India needs more infrastructure and investment in infrastructure crowds in private investment, reduces the cost of doing business and leads to the creation of new and efficient economic activities.

Infrastructure investment, therefore, not only creates new jobs directly, but also indirectly. For me, the top priority for India now is the creation of jobs. Many have lost their jobs during the pandemic; many of those who did not entirely lose their jobs and livelihoods still saw a depletion over the last two years in their earnings. As we, hopefully, enter the post-Covid phase of our lives, not only do we have to get back the jobs we lost but also boost the creation of new jobs at a rate commensurate with getting us back on to the path we were on prior to the pandemic.

India has a large young population and being productively employed is, often, their most important aspiration. Along with infrastructure, health and tourism, or hospitality, are the two other sectors that have huge employment generating potential. As for tourism, she mentioned it twice; once when she discussed building ropeways and the second time was when she announced an additional Rs 50,000 crore for the Emergency Credit Line Guarantee Scheme that is meant exclusively for hospitality and related activities. This is highly welcome.

When it comes to health, unfortunately, she mentioned health initiatives for the next year in the context of how the health system was being digitised. There are three positive aspects to this digitisation initiative. First, it improves the efficiency of the health services by creating medical history for both the individual and the community. This helps both the efficacy of current treatment protocols, as well as furthers medical research to develop newer and more effective protocols. Second, it helps in health administration as our experience with CoWIN and the vaccination drive has shown. Third, it greatly addresses our shortfalls in the supply of human resources. For example, tele-medicine, which finally obtained legal support during the pandemic, makes it possible for people in remote areas to get timely medical help. However, if job creation is a priority, our shortfall in human resources could be better served by actually developing human resources for health.

Illustration: Binay Sinha

And here I do not mean only doctors and nurses, who in any case have a tendency to leave the country after their training. We also need paramedics of every kind, some of whom need little time to be trained and can help in the provision of health services in precisely the ways digitalisation of the health sector does. The health sector is a remarkable sector in that it grows with the economy, uses skills at all levels of sophistication and is always in stable demand among all segments of the  population.

Prior to paragraph 51, the finance minister mentioned how in the last two years the health sector has been improved. Indeed, it has and we are probably better equipped to handle a new wave of the virus, should it come. But these improvements were for a specific emergency. What we need is a deliberate, strategy-driven boost to the health sector.

Why am I emphasising on the need to focus on employment-intensive sectors? As I mentioned earlier, people have lost jobs and earnings. This has negatively affected the demand for goods and services causing many enterprises to lose their markets. Providing cheap credit and other production incentives to micro and small enterprises will not galvanise them into restarting operations unless they are confident that their products will be bought. That requires money in the hands of people who would demand these goods. Demand will pick up only when buyers earn money through productive employment.

Is there anything in the Budget speech that I do not like? In my first reading of the speech, there is nothing I can definitely put my finger on and claim that this should not have been done. Are there things in the speech that I am wary of?

I am a little bit worried about the underlying approach in some of the announcements made by the finance minister. Post-1991, we have been moving towards a market driven economy where the government acts as a facilitator in the market place rather than as a player in that space. Unfortunately, there seems to be some turnaround in that regard. Let us take the Green Bonds, for example. As part of its market borrowings in 2022-23, the central government will float sovereign Green Bonds. The money thus raised will be used to reduce the carbon intensity in public sector projects. Why should this money not be used to incentivise reduction in carbon intensity throughout the economy, in both private and public sector projects? I have the same problem with some of the digitalisation exercises being carried out. Are all of them public digital infrastructure or are some of them squeezing out private innovation possibilities? Infrastructure investments by government, digital or otherwise, should be instruments of commerce and not commerce itself. Commerce is best left to private resourcefulness. But then these are issues beyond an annual Budget discussion. 

The writer is research director, IDF