A few years back, in 2017, to be exact, we had published a series of articles entitled “The Truth About Economic Development”, which elaborates in length, in the light of Sri Aurobindo and the Mother, the reality – or the myth – of the notion of ‘economic development’, or the so-called ‘Vikas’. In it, we explored all the hidden aspects of the “modern materialistic concept of Development or Progress (‘Vikas’) and how an exclusive focus on it is swiftly leading humanity towards its seemingly unstoppable extinction in the near future”. It was pointed out that “the pursuit of the modern gospel of Economic Development (‘Vikas’) is leading us towards a precipice and still, because of the progressive westernization of our hearts and minds we have never ever been able to give any serious consideration to (or even suspect) the dangers underlying such a pursuit, contrary to the genius and the soul of this country.” Now, after the coming in 2014 of the Modi government, which is being seen, more or less, as a nationalistic government, it seems that the Indian policy-making is trying to transcend the contours of corruption ridden myopic growth-driven economic vision — which with the coming of the PVN Rao government in 1991, after the USSR’s disintegration, shifted from being an exclusively socialistic, restrictive model to a more and more capitalistic and liberal model.
The Union Budget 2021: Key Highlights
This is reflected in the Union Budget 2021. A Budget is simply a document of vision or intent – an indicative framework – which signals the larger policy direction that the government of the day will follow through its allocative priorities. The present Budget rests on six stated pillars of the government viz. health and well-being, physical and financial capital and infrastructure, inclusive development for aspirational India, human capital, innovation and Research & Development, minimum government and maximum governance.
|Health||A jump by 137% compared to last year’s budget|
|Expenditure budget||A jump of 34% compared to last year’s revised estimates|
|Taxation||No changes – except exemption of pensioners aged 75 and more from mandatory filing of Income Tax returns|
|Disinvestment||Privatization of 2 PSUs and 1 insurance company|
|Bank recapitalisation||20,000 crore allocation|
|Infrastructure||Special infrastructural projects for poll-bound states|
|National Infrastructure Pipeline||Expanded to cover 7400 projects by 2025 and the establishment of Development Finance Institution|
|Foreign Direct Investment (FDI)||FDI in insurance to be raised from 49% to 74%|
|Agricultural credit||Allocation of 16.5 lakh crore for agrarian credit schemes|
|Fiscal deficit||It is 9.5% of GDP for current financial year and set at 6.8% for 2021-22|
The Budget marks a welcome break from the Modi government’s singular focus on social sector. The dual key points for which this Budget is seen as marking a break from the past stand out in the form of,
First, giving a boost to private sector, including privatization of Public Sector Units (PSUs), monetization of government holdings, disinvestment, breaking power distribution monopolies and limiting the general role of the state.
Second, expansion of fiscal deficit target, with the intent to accelerate spending, especially in areas like healthcare, infrastructure, research etc., and a general emphasis on capital formation. The 9.5% fiscal deficit for the current financial year is the most liberal since at least 1991. It has not imposed any additional tax burdens on individual taxpayers but has not relaxed the existing tax slabs either.
The significant changes in the Budget indicate that the government is sensitive to adopting a practical approach to immediate management problems. They come in the backdrop of major agricultural and labour reforms already initiated. The hard trade-offs made in the Budget in terms of prioritizing the private sector and manufacturing instead of social sector (such as agriculture, NREGA etc.) and of prioritizing areas like environment and sanitation which do not cater to any particular vote-bank lobbies, mark a tough and welcome change from the political economy of easy populism. This was done with full knowledge that the government will eventually face massive protests from various public sector unions, along the lines of farmers protests.
While the Budget does mark a step forward in India’s cleaning up of the shadows of a socialist past, yet how well the current approach of the government coheres with the future remains to be seen. From a deeper perspective, true well-being, which is the stated aim of economic policy, can be captured not by the current measures of GDP (which captures deprivation more than well-being, by focusing purely on expenditure yardstick), but by the extent of individual and collective fulfilment that is rarely quantifiable. While the current economic policy-making marks baby steps from a worse past, real judgment of national progress will rest on the parameter of true well-being. It is here, at a deeper level, that the field is still necessarily murky for the Modi government, despite its best intentions.
The Union Budget 2021-22 actually is, in most parts of it, infested with the materialistic utilitarian spirit. It’s obsession with the numbers of GDP or GNP and its growth rates or of the size of the economy is overwhelming. However, there are some cues in it which when seen in the light of some of the earlier initiatives such as the introduction of the new education policy and few bills introduced and passed in the earlier sessions of the parliament, indicate that perhaps India’s soul is trying to wake up after a long and deep slumber and slowly making some inroads into the heads of our policy makers, though still in disguise.
Health and Well-being
Because of the so-called pandemic scenario, it was not a surprise that one of the main focus points of the budget was ‘health and well-being’. This is clear from the allocation of Rs. 64,180 crores to new health schemes in addition to Rs. 35,000 crores to the covid vaccine. It is supposed to give a boost to the healthcare infrastructure. The emphasis is on developing primary, secondary and tertiary healthcare systems.
We have already elaborated at length, in our past issues, how the ‘pandemic’ has been given ‘out of proportion’ and undue importance by the whole world, including India and the WHO and some of its influential members. Besides, it is obvious that if we have to allocate ever increasing amounts of funds to the health segment without not only any perceptible improvement but even deterioration in health, it only means that we are getting ever more ‘ill’. And this cannot be the progress, the ‘Vikas’, if we have to spend ever increasing amounts without any positive result.
The government is very sensibly giving push to traditional Indian wisdom in this area and the Indian medicine system, the Ayurveda. The parliament passed in September last year a couple of bills for setting up a National Commission for Indian System of Medicine and for rejuvenating the Indian Medicine Central Council. The presence of two cabinet ministers when Baba Ramdev re-launched Patanjali’s Coronil, an Ayurvedic supportive medicine for dealing with Coronavirus Disease or Covid, further gives a glimpse of the government’s intention to further Indian traditional medical systems. The government’s active push for ‘Namami Gange’, cleaning our rivers, ‘swachchh bharat abhiyan’ etc. which may not boost the numbers of ‘GDP’ that much but certainly contribute to people’s health and well-being, may be looked upon as giving a clue that the Modi government is not so blind as to go exclusively after the ‘elusive’ Vikas. The focus on ‘Health and Well-being’ instead of ‘the disease and dealing with it’ is in itself a very refreshing change.
Another focus is on Infrastructure. The push is indicated by big plans in the field of infrastructure such as roads, highways, railways, ports, gas pipelines and so on. Other important measures are: the production-linked incentive schemes (PLI) for 13 sectors to give a push to an ‘Atmanirbhar Bharat’ scheme; the launch of seven Mega Textile Investment Parks over the next three years and the measures to give a boost to start-ups and so on. And Modi’s slogan, ‘Zero Defect and Zero Effect’ – that produce must be excellent and at par with the best while having no deteriorating effect on the environment or the ecology – also gives an indication of the vision in this respect. Nitin Gadkari, the Union Minister for Road Transport & Highways, who is also the Minister of Micro, Small and Medium Enterprises, has shown a stupendous vitality in pushing India’s infrastructure to its acme.
We think this stress on infrastructure is a must. An opulent India with a state-of-the-art infrastructure, – as India actually was in its glorious past, when it was looked upon as the Golden Bird – and standing strong on its roots, is a must if it is to contribute to the redemption of the world from its present ‘sorry’ state, and once more assume its role of the spiritual ‘Guru’ of the world. After all, who ever listens to a poor, pale and misery ridden State.
For the first time since independence, in a policy document, the National Government is seen taking pride in ancient Indian knowledge and its Dharma, when it proclaims that ‘the rich heritage of ancient and eternal Indian knowledge and thought has been a guiding light for this policy’. This shows that something is changing in an otherwise doomed scenario. At present, we see that education, along with health and justice – which are in themselves sacred services in any humane society – are completely rotten and rusted with what we may call the materialistic utilitarian spirit. Even in such a time, if the new education policy could at least talk of “an education system rooted in Indian ethos that contributes directly to transforming India, that is Bharat.”, then it certainly gives some hope and strengthens our faith that the divine hand is there and we may not remain for long in the trap of this all pervasive utilitarian spirit.
In the Budget 2021, the FM has announced that more than 15,000 schools will be qualitatively strengthened to include all components of the National Education Policy. They shall emerge as exemplar schools in their regions, hand holding and mentoring other schools to achieve the ideals of the Policy. This clarity and resolve in implementing the new education policy is welcome.
Policy on Divestment
The announcement of a policy on divestment of the Government’s shareholding in Central Public Sector Undertakings (CPSUs) that aims at selling all CPSUs in “non-strategic” sectors and restricting its presence in “strategic” sectors to the bare minimum has been in the works for nearly five years. It was initiated by NITI Aayog which will now have to work on the details.
This encouragement to the private sector and free market and minimising the interference of the corrupt and huge bureaucracy with colonial mindset, the Macaulay’s putra, and the government’s willingness to be out of business and even allow a lateral entry of private sector even into the traditional Indian public sector is a welcome step. Putting more confidence and less suspicion in the entrepreneurial spirit of India’s business community must be encouraging for the private sector. India is awakening and gaining vitality which is expressed through its enterprising and creative people around the world. The present government is also giving it a helping hand. ‘Atmanirbhar Bharat’, ‘Make in India’ and other such schemes seem to be doing just the right thing.
In essence, the new avenues and right direction heralded by the present Budget reveal that the intent of this government is well-placed.
The present Budget heralds the first big shift in India’s economy since 1991. For, the 1991 economic reforms were accompanied by the rise of regional, coalition politics based on cultivation of vested interests/vote-banks, and, with few cautious budgetary exceptions, this political format has dictated economic visions as espoused in successive Budgets. For instance, the UPA era Budgets were overwhelmingly guided by the vision of ‘inclusive growth’ – base on lavish farm loan waivers, subsidies etc. – based on holding practical and real economic logic (and sacrificing environmental and other tough steps) hostage to political slogans (ignoring environmental and other issues requiring tough steps) of bridging a purported ‘gap’ between ‘two Indias’ (of the rich and of the poor respectively). The Budgets of the time had converted everything into an ‘entitlement’ – education, food, jobs etc. – to which the poor had the ‘right’. Private sector did function well, but the language and culture of the day was to vilify it.
While the Modi government, in its first term, attempted to take baby steps towards dismantling this structure by institutional changes (such as dismantling Planning Commission), it did not work out, as the practical political compulsion of vested political vote-banks continued to dominate the system. Modi’s social sector push, endearing him to the poor, was one of the reasons for his 2019 victory, among others. Even as the BJP or rather, PM Modi, has been endeared to the poor and the marginalized across castes and classes over the years, the party has used this opportunity to gradually unite these sections of society through the narrative of Hindutva. Otherwise, it would never have been possible to ensure this firm unity of the majority Hindu community that we see today merely through the vacuous and empty narrative of social-sector development.
The results are visible now – in elections and otherwise. Having secured a visible change in the national character and with a standing on a firm political footing, it is only now in the Modi government’s second term that we see a real economic break from the past. The present Budget stands out for its unique, single-minded emphasis on the potential of free markets. Unlike the previous Budgets of the Modi government – and of previous Congress-led governments – the historic legacy of uncertainty and of dallying between socialism and capitalism has been abandoned for a firm, unidirectional policy. There was no appeasement of historic vote-banks in the Budget – such as, farmers (despite the raging ‘farmers’ protests) and low income tax payers.
From this Budget as well as from the other actions of this government over time, it is visible and hoped that the emphasis on capitalism is not just a simplistic imitation of western capitalism or a glorification of capitalism as a system. Rather, capitalism is conceived as a technical, convenient framework, at the present time, and given its past legacy, within which only the immediate practical economic decisions could be taken. The Budget, even while giving a boost to the private sector, nowhere glorifies the capitalistic mode of development. It simply signifies a break from Modi’s intensive focus, in the past, on social investment – for farmers, for pro-poor social infrastructural and jobs schemes etc. Now this past social focus is not abandoned but coupled with a long-term vision for entrepreneurial freedom in the country.
However, had the focus of this government been simply and exclusively on a visionless private sector-led growth or capitalistic economic management it would have been worrying. Instead, as we have seen in certain aspects of the Budget and in practice, the government, with whatever limited understanding, does have its sight on the far-off vision of the revival of India’s global position as a ‘Vishwaguru’ (as, Modi has mentioned several times in his various speeches) in line with a modern revival of India’s past ethos and culture. This fact alone is what makes the Budget and this government’s overall long-term approach stand-out from that of its western democratic counterparts and from other capitalist countries.
Very few countries – even when they have nationalistic leadership – have leadership that recognizes that economic systems – capitalism or socialism or socialistic/democratic capitalism etc. – are simply frameworks/outer instruments which do not and should not be allowed to overshadow the real collective growth issues. As Sri Aurobindo had said, “This erring race of human beings dreams always of perfecting their environment by the machinery of government and society; but it is only by the perfection of the soul within that the outer environment can be perfected. What thou art within, that outside thee thou shalt enjoy; no machinery can rescue thee from the law of thy being.” (CWSA 12, 1997, p. 468).
For the hold of materialism is so strong, the ‘spirit of materialistic utilitarianism’ is so encompassing, that at the moment, even if our assessment that the soul of India is awakening is true, it doesn’t apparently seem strong enough to break the vicious circle or, as the logic of things goes, stop the near certain annihilation of the human race. But then, the Divine Mother works in mysterious ways which are beyond the grasp of human intellect. And we have full faith in the Master’s decisive words, “Whenever the first play of energy is exhausted and earth grows old and weary, full of materialism, racked with problems she cannot solve, the function of India is to restore the youth of mankind and assure it of immortality.”(CWSA 07: 1086) and further, “The sun of India’s destiny would rise and fill all India with its light and overflow India and overflow Asia and overflow the world. Every hour, every moment could only bring them nearer to the brightness of the day that God had decreed.” (CWSA 08: 17)
( Because of its materialistic utilitarian spirit.)