national budget analysis 2012-13

7/29/2019 National Budget Analysis 2012-13

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1 D. Narasimha Reddy. For comments, suggestions and clarifications contact e-mail:

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General

Revenue Foregone (Rs. in crores)

Details Actual Estimates Estimates Actual

2009-10 2010-11 2011-12 2010-11

Corporate income tax 72,881 88,263 51,292.00 57,912.00

Personal income tax 45,142 50,658 35,698.00 30,653.00

Excise duty 169,121 198,291 212,167.00 192,227.00

Customs duty 195,288 174,418 223,653.00 172,740.00

Export promotion 52,440.21 57,390.63

Total 482,432 511,630 522,810.00 453,532.00

While the government is talking of tough decisions to reduce subsidies, it is also increasing

taxes, especially service tax from 10 to 12%. Overall, it is expecting Rs.7,71,000 crores from

taxes. This is an increase of 26% from 2010-11. Highest contribution is coming from service tax.Wealth tax is mere Rs.1200 crores. Who is paying this service tax? On the other hand, revenueforegone (that is exemptions) in 2010-111 has gone up to Rs.5,22,810 crores.

Total subsidies are Rs.1,90,015 crores only (including fertiliser, food, petroleum, interest and

others). Compare this, with exemptions to companies as estimated for 2011-12 total Rs.5,39,552crores (corporate income tax, excise, customs and export promotion). Within this, and because of

these exemptions, the effective tax rate for just 239 companies (above Rs.500 crore turnover is22.1%), which means the bigger you are the lesser tax is paid. Government says the effective tax

rate for corporates has been gradually rising (20.55% for 2006-07; 22.44% for 2007-08; 22.78%for 2008-09; 23.53% for 2009-10 and 24.1% for 2010-11). This means for years, corporates in

India have been getting subsidies, and becoming richer, even while the government 'struggles' toincrease its tax recoveries.

Summarily, everyone is paying taxes, except the rich corporates, and the employess of these rich

corporates. No doubt, this budget a "red carpet roll out" for private accumulation of wealth, byrobbing public, natural resources.

Come to think of it. what is subsidies? Can every government spending be termed as subsidy?

How come a give-away to corporates becomes capital investment, and a MSP becomes asubsidy? Subsidies, to programmes related to small producers, and poor, are invariably termed as

such. While the rich corporates, whatever they do, with the government money, is called

development. But, in fact, it is the other way round. Poor use natural resources to produce value-added products. Government investments, necessary to keep up protection of natural resources,enable availability of food and create value added products, in sectors dominated by the poor and

small producers, are pittance in comparison to the turnovers. And, all such investments do notreach them at all - with leakages and overheads taking the cake. For example, the benefit of 'free

power' to farmers in AP has long back become a profit margin for companies, backed by an


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inefficient government. Small and marginal farmers as usual shell out substantial sums to getpower connection, repairs and have to put up with shoddy services.

Handloom sector

Today, Pranab Mukherjee has presented the budget for the year 2012-13, in the Parliament. I amtrying to analyse the allocations to handloom sector, and share with you. The following is thetable of allocations:

Allocations for Handloom Schemes in Union Budget

Scheme 2012-13Integrated Handloom Development Scheme

(CSS)170.00

Revival reforms and restructuring package for

handlooms (CSS)2205.00

Market and Export Promotion Scheme (CSS) 48.00

Diversified Handloom Development Scheme 20.00Weaver Service centre 32.50

Handloom Weavers Comprehensive WelfareScheme

105.00

Mill Gate Price Scheme 350.00Others 30.00

Grand Total 2960.50

Observations:

1. Loan waiver package is a mere Rs.2205 crores, even though prior to UP and other Stateelections, government has announced a Rs.6800 crore package. At that time, we had observed

that this package needs to be reconsidered, and also the allocation for such package is a mere 6percent of the total annual turnover volume of handloom sector. Nevertheless, we welcomed

such a package. In this budget 2012-13, even this amount has not been provided for.

2. Last year, in 2011-12, an amount of Rs.360 crore was allocated under this same provision.

3. A very good and welcome step is increasing the allocation for Mill Gate Price Scheme, fromRs.55 crores to Rs.350 crores.

4. In his budget speech, Finance Minister mentions inclusion of two mega clusters. However, the

budget increase is a mere Rs.40 crores. This scheme has been running without a proper direction,with more and more cluster additions based on political recommendations.

5. Unfortunately, the allocation for welfare schemes is being reduced, from Rs.125 crores current

year to Rs.105 crores for the coming year. There is a gradual and deliberate reduction inallocations for handloom weaver welfare.


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6. Number of schemes have been reduced drastically, to a mere 3 major schemes.

Opinion

Handloom sector gets a whopping Rs.2960 crore allocation. It is equal to (just a little above) last8 years of allocations together. Our 8 years of continuous monitoring and feedback efforts seemto have paid off. However, in comparison to the need, it is too little and has come rather late. The

situation is akin to a severely malnourished child being given a plateful of tasty, oil rich food.While we can appreciate the generosity, the child to recover requires critical doses of liquid,

energy food. Maybe later, the child would be able to digest the food given now. Summarily, theallocation for handloom is better, but the ingredients do not help in the revival of handloom

sector.

Agriculture, Research, Livestock and Fisheries

Observations

1. There is a scheme for Integrated Scheme for Farmers Income Security with anallocation of Rs.1 crore a token allocation

2. There is no allocation for diesel subsidy in drought and deficit rainfall affected areas foryears 2012-13 and 2011-12. In 2010-11, Rs.4 Lakhs were spent on this scheme.

3. NAFED gets a grant of Rs.110 crores towards MIS/PSS in 2012-13. In 2011-12, theallocation was Rs.200 crores, but revised to Rs.110 crores. In 2010-11, Rs.98 crores were

spent on this already.4. A National Mission on Agricultural Mechanisation seems to have been launched in 2012-

13 with an allocation of Rs.1 crore.5. Funds for information technology, towards strengthening of agricultural information and

National E-governance in Agriculture, is Rs.86.50 crores. This is an increase fromRs.31.15 crores spent in 2010-11.

6. Funds allocated towards agricultural census is Rs.14 crores in 2012-13. However, in2010-11, Rs.15.88 crores were spent on this census, indicating a reduction in the

allocation for this year.7. Government has allocated Rs.9 crores towards Situation Assessment Survey of

Farmers for this year.8. Government has also allocated Rs.1 crore towards a National centre for Crop Statistics

for this year.9. In 2011-12, there was a revised allocation of Rs.64 lakhs towards Agricultural and Rural

Debt Relief Scheme, which does not get anyting for the year 2012-13, nor there was anyexpenditure on the same in 2010-11.

10.There was an expenditure of Rs.40 crores towards control of shifting cultivation. In theyear, allocation towards this was Rs.50 crores. For the year 2012-13, there is no

allocation.


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11.There is an interesting allocation towards Macro Management of Agriculture. In 2010-11, Rs.999.88 crores were spent on this. In 2011-12 and 2012-13, Rs.650 crores and

Rs.745 crores were allocated respectively.12.A National Mission on Seeds was launched with an allocation of Rs.49 crores in 2011-12.

This allocation was revised to Zero. In 2012-13, there is no allocation, effectively closing

this Mission prematurely. However, a National Mission on Seeds and Planting Materialwas launched in 2012-13, with an allocation of Rs.1 crore.13.Overall, allocation on seed programmes has been reduced from Rs.405 croes in 2011-12,

to Rs.316.15 crores in 2012-13. In 2010-11, expenditure was Rs.236.32 crores.14.Allocations for plant protection, principally towards strengthening and modernization of

plant quarantine and pest management, have increased to Rs.100 crores in 2012-13, froma expenditure of Rs.69.79 crores in 2010-11.

15.Allocation for development of oilseeds has reduced in 2012-13 to Rs.586.86 crores, whilethe expenditure on the same was Rs.713.45 crores in 2010-11.

16.National Food Security Mission (NFSM) gets a higher allocation of Rs.1780 crores in2012-13, while the expenditure was Rs.1279.76 crores in 2010-11.

17.Rashtriya Krishi Vikas Yojana (RKVY) gets a allocation of Rs.9217 Crores in 2012-13,an increase of Rs.1406.13 Crores from 2011-12. An expenditure of Rs.6719.94 Crores

was done in 2010-11.18.In total, dept. of Agriculture and Cooperation gets a allocation of Rs.20,530.22 crores in

2012-13. In 2010-11, expenditure was Rs.17,244.79 crores. In 2011-12, allocation wasRs.17,522.87 crores which was revised to Rs.16,515.05 crores. This is an indication that

the Department is not able to spend its allocated funds.19.Increase in this budget goes majorly to two schemes, RKVY and National Food Security

Scheme.20.Interestingly agricultural census gets a allocation of a mere Rs.14 crores, while the

livestock census gets a allocation of Rs.135 crores in 2012-13.21.Increase for livestock census is very high, from Rs.20 lakhs in 2011-12. Actually, in

2011-12, there was a allocation of Rs.3.56 crores, which was revised to Rs.20 lakhs. In2010-11, an expenditure of Rs.8.26 crores was incurred towards livestock census.

22.There is a package for replacement of fishing vessels seized by Pakistan. In 2011-12, thisgets a allocation of Rs.4 crores, which was revised to Rs.1 crore. In 2012-13, the

allocation is Rs.1 crore. Does this indicate that the problem has decreased, or this is partof subsidy reduction exercise?

23.Under Department of Animal Husbandry budget, there is a special package for Suicide-prone districts. Under this package, Rs.46.72 crores were spent. In 2011-12, there is a

allocation of Rs.98.69 crores, which revised/decreased to Rs.30 crores. In 2012-13, theallocation is Rs.35 crores.

S.No.

New Schemes/Schemes with fresh allocations in 2012-13 Rs. Incrores

1. National Mission on Agricultural Mechanisation 1.00

2. Central Agriculture Infrastructure and Establishment 1.00


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Scheme

3. National Centre for Crop Statistics 1.00

4. Situation Assessment Survey of Farmers 9.00

5. Integrated Scheme for Farmers Income Security 1.00

6. National Mission on Agricultural Extension 1.00

7. National Mission on Sustainable Agriculture 1.008. National Mission on Oilseeds and Oil Palm 1.00

9. National Mission on Seeds and Planting Material 1.00

S.

No.

Zero allocations in 2012-13 Rs. In crores

1. National Rainfed Area Authority 0

2. Rainfed area Development Programmes 0

3. Diesel subsidy in drought and deficit rainfall affected

areas

0

4. Agricultural and Rural Debt Relief Scheme 0

5. Control of Shifting cultivation under State Plan 0

6. Interest subvention on loans provided by NCDC to Co-operatives

0

7. Rehabilitation and reconstruction of co-operatives 0

8. Support to NAFED 0

From the below shown graph, it can be seen that allocations to agriculture and allied services, in

total and separately, as a percentage of total central government allocations is decreasing. In2010-11, the share of spending on agriculture and allied sectors is 1.55 percent of the totalcentral government spending. This share has dropped to 1.28 percent in 2011-12 allocations and

has increased marginally to 1.38 percent in 2012-13. Overall, there is decrease in the share by0.17 percent. Similarly, decrease for department of Agriculture and Cooperation is 0.95, 0.74 and

0.83 percent in that order, 2010-11, 2011-12 and 2012-13. For Agricultural research the decreaseis 0.49, 0.41 and 0.41 in the same order. For animal husbandry, fisheries and livestock, it is 0.11,

0.12 and 0.15, a better situation. As suicides are increasing, and farming is in dire straits, centralgovernment allocations are decreasing, notwithstanding the rhetoric and number game.


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Direct Transfer

Central government also does provide plan assistance to State/District level autonomous bodies

or implementing agencies. In 2010-11, it has transferred Rs.1,18,740.05 crores for variousschemes, under 12 central Ministries, including agriculture. In 2012-13, this has been increased

to Rs.1,33,358.88 crores. These funds are targeted for 54 schemes, including MNREGS, totalSanitation Campaign, Livelihood Mission, Food Security Mission, etc. Between 2011-12 and

2012-13, increase in direct transfers is Rs.8753.84 crores. Out of which maximum increase ofRs.5218.44 goes to various schemes under school education and literacy, including Sarva

Shiksha Abhiyan.

There is huge decrease in the allocation MNREGS, from Rs.39974.08 crores in 2011-12, toRs.31,659.09 crores in 2012-13 a decrease of Rs.8,314.49 crores. However, there is a increase

for National Rural Livelihood Mission, from Rs.2418.59 crores in 2011-12 to Rs.3259.50 crores.Interestingly, this Mission has an expenditure of Rs.2543.18 crores in 2010-11. It would be

insightful if this expenditure is analysed and its impact assessed on rural livelihoods.Unfortunately, this Mission does not include handloom weavers, biggest source of ruralemployment in India.

Overall, Ministry of Rural Development has the responsibility to transfer Rs.68,330.79 crores in

2012-13. In 2010-11, it did transfer Rs.71,108.43 crores, under 6 different schemes. It indicates

the importance of the Union Minister for Rural Development. In fact, there was news that theincumbent Minister has asked for Rs.1 lakh crore for his Ministry, primarily to respond todevelopmental needs in naxal-affected districts. This seems to have not been approved by the

government.


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Interestingly, across all schemes, allocation done in 2011-12 budget were revised and reduced byNovember, 2011, except one or two schemes. There are problems in fund transfer and the quality

of implementation in these schemes is obvious. There have been many reports, scandals andinvestigations into misappropriations. In fact, CAG in its report on Andhra Pradesh, in 2010-11,

there is no monitoring mechanism for such schemes at the State level, and the accounting and

accountability of organizations and funds are not supervised.

Most of the implementation agencies are autonomous bodies, headed most often by IAS officers,

with independent linkages outside the State government framework.

Under Ministry of Agriculture, there are 13 schemes for which direct transfers are made. Thisincludes big schemes such as National Horticultural Mission, National Food Security Mission

and Micro-irrigation. Out of a total of Rs.5824.36 crores administered by Ministry ofAgriculture, Rs.4675.70 crores are allocated for the above mentioned three schemes. Central

government also provides funds for State Extension Services. In 2012-13, this scheme has anallocation of Rs.600 crores. This is an increase from Rs.500 crores in 2011-12, and an

expenditure of Rs.240.28 crores in 2010-11. Despite these funds, agricultural extension servicesare very poor in many States. Allocations for these services has to be more than Rs.1500 crores,

if farmers, especially young, small and marginal farmers need to get correct advice and support.

The graph below shows the percentage of allocation for agriculture under total direct transfers bythe Central government. Even though there is an increase from the previous year, one can see

that this is very marginal. In 2012-13, it is just 4.75 percent of the total transfers, whichcomparatively has increased from 3.7 percent in 2011-12, and 30.25 percent expenditure in

2010-11.


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In 2012-13, the highest allocation is Rs.1825.70 crores to National Food Security Mission andthe lowest of 20 lakhs to National Seed Mission. There was a allocation of Rs.18 crores in 2011-

12, which was revised to zero by November, 2011. This requires more probing as to why this hashappened. Given the current problems for farmers with the quality of seeds, one needs to

understand why this scheme has been neglected and downsized by the governments, both at

central and State levels.

Allocation, revision and expenditure

This is a typical case of what happens with the budget, State or Central. An allocation is made in

February, and the Parliament approves it. It is revised (mostly reduced) in November, and thenthe expenditure happens in January to March period. Usually, expenditure is far less than the

original allocation. One would like to know the sanctity of Parliament. Public AccountsCommittee is supposed to monitor such 'violations'.

Below is the graph of funds allocated, revised and utilised, for the year 2010-11, under

Technology Mission on Cotton, by Ministries of Agriculture and Textiles together - Rs.151, 101and 83 crores, in that order.

While the honourable MPs are gungho about their privileges (as Arvind Kejriwal is learning),

they would not bother to ask whether this comes under sacrilege of their privilege - what theyvote for is not what is done. Can we now say Parliament is supreme?

national budget analysis 2012-13

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