The Gist of Yojana: June 2015
Budget 2015-16: Impact on Growth, Employment and Welfare
Budget 2015-16 of the central government sets out ambitious
short and long term targets relating to growth and welfare. There is a direct
link between growth, employment and people’s welfare. Growth creates employment
opportunities, which lead to increased earnings and therefore to improved
welfare. In this context, the budget of the central government for 2015-16, can
be examined for its impact on employment through growth as well as through more
direct employment-promoting policy initiatives.
For growth, the target for 2015-16 is achieving an 8 to 8.5
per cent growth. The longer term target is to achieve a double digit growth, the
minimum of which would be 10 percent. On welfare, the budget wishes to achieve
by 2022, that is, by the 75th anniversary of our independence, 13 specific
objectives as indicated below:
1. Ensuring housing for all by completing 2 crore houses in urban areas and 4
crore in rural areas;
2. Ensuring that each house has basic facilities of 24-hour power supply, clean
drinking water, a toilet, and road connectivity;
3. Making sure that each family has at least one earning member;
4. Substantially reducing poverty;
5. Electrification of all villages;
6. Connecting all habitations by all weather roads;
7. Providing medical services in each village and city;
8. Educating and skilling youth;
9. Increasing agricultural productivity;
10. Ensuring communication connectivity to all villages.
11. Skilling young population and making in India;
12. Encouraging entrepreneurship in India; and
13. Developing India’s Eastern and North Eastern regions.
In achieving both the growth and welfare objectives, the central and state
governments as well as the public sector enterprises and departmental
enterprises and the private sector will have to play a critical role.
According to the revised GDP numbers brought out by the
Central Statistical Organisation, GDP growth in 2014-15 is estimated to be 7.4
per cent. For 20 15-16, the budget states a growth target in the range of8.0 to
8.5 per cent. This implies an increase in the growth rate of about 1 percentage
point. This requires an increase in the investment rate of about 4 to 5
percentage points, given the incremental capital-output ratio of 4 to 1.
The central government plays a critical role in the growth endeavor directly by
public investment and indirectly by facilitating private investment. As per the
2015-16 budget, the direct increase in public investment by the central
government is going to be limited. This is because of a considerable pressure on
central government revenues. The budget for 2015-16 has provided only for an
increase in the capital expenditure to GDP ratio of 0.2 percentage points from
l.5 per cent in the 2014-15 revised estimates to l. 7 per cent in 2015-16 budget
estimates. Clearly this increase is too inadequate to meaningfully uplift the
growth rate directly from the central budget. This limited additional fiscal
space for investment by the central government has been forced on the Finance
Minister because of the need to adhere to fiscal deficit path as committed under
the Fiscal Responsibility and Budget Management Act. The Finance Minister has
adhered to the fiscal deficit target of 4.1 per cent of GDP in the revised
estimates for 2014-15. He has created a narrow additional fiscal space of 0.3
per cent points of GDP compared to the consolidation path envisaged earlier,
which had envisaged a fiscal deficit to GDP ratio of 3.6 per cent. However, even
with this adjustment, the room for additional expenditure, it has been possible
to budget for an extra capital expenditure of only 0.2 percentage points of GDP.
Given the limited scope for direct additional public
investment by the central government, the role of state governments becomes
critical. After the recommendations of the Fourteenth Finance Commission, and in
fact, beginning from the 2014-15 budget, fiscal transfers are being given to the
states such that there has been an increase in the transparency of transfers and
autonomy for choosing priorities for the state governments. In the 2014-15
budget, a large volume of transfers that were being given directly to local
level autonomous bodies have been given to the states as state plan grants. This
has increased transparency in transfers. In the 2015-16 budget, a part of this
increase in plan grants is being given to the states as their share in central
taxes. On these funds, states have full autonomy and no conditions can be
attached as to how they spend these funds.
The remaining thrust for increasing investment can come from the departmental
and public sector enterprises. The government has already planned considerable
expansion of railways and services provided by the post and telegraph
department. It is the right time for the other public enterprises to activate
their expansion plans. If they borrow from the market to finance this
investment, it will not become part of government’s fiscal deficit. The FM has
increased outlays on both the roads and the gross budgetary support to the
railways, by Rs.14,031 crore, and Rs.10,050 crore respectively. The CAPEX of the
public sector units is expected to be Rs. 3,17,889 crore, an increase of
approximately Rs. 80,844 crore over RE 2014-15. It is estimated that investment
in infrastructure will go up by Rs. 70,000 crore in the year 2015-16, over the
year 2014-15 from the Centre’s Funds and resources of CPSEs. Beyond this, it is
the private sector that will have to playa critical role.
Candidates
suffering from blindness, locomotor disability and cerebral palsy can use
scribes to write civil services preliminary and main examination, the Union
Public Service Commission (UPSC) has said.
