Budget 2015: Here's how FM Jaitley can get his fund allocation right

As the budget making process enters the final stages, the calls for a path-breaking budget heralding big-bang reforms are getting louder. But most of the big-ticket reforms are off-budget matters.

Subsidies can be pruned only by the administrative ministries; labour law amendments can be initiated only by the labour ministry. Technically, the budget is nothing more than an accounting exercise, which has just become a vehicle for policy grand-standing.

An accounting exercise simply involves balancing the books and allocating money to different uses (departments in the case of the government). Some get more, some get lots more and others get neither more nor less. None, in fact, get less and that is what is wrong with the exercise. There are ministries whose budgets could do with some slashing, freeing up money for other ministries that will need more.

So which are the ministries that Jaitley should give less to?

We can start with the culture ministry, with a budget allocation of Rs 2,511 crore. Should promotion of culture be a government’s responsibility?

Look at all that goes under the head of promotion and dissemination of art and culture – Rs 5 crore each for “International culture Activities and Grants to Indo-Friendship Society” and “Scheme on Intangible Culture Heritage”, Rs 101 crore for zonal cultural centres (a more than double increase over last year’s allocation), Rs 90 crore for centenaries and anniversary celebrations (fortunately this saw a slight cut from last year’s Rs 100 crore).

Perhaps the government needs to play a role in maintaining national archives and museums, but does it need to be managing libraries as well? Why should there be a National Mission on Libraries, Leading to the Formation of a Commission with a budget of Rs 57 crore?

There’s huge scope for pruning the budget of this ministry, which has seen an 80 percent increase between 2012-13 and 2014-15.

Textiles is another ministry whose budget can either be cut or frozen, preferably the former. Do we need a dedicated ministry running schemes to promote handlooms and powerlooms, for fashion and textile education and rehabilitation of textiles labour, manage boards for wool and silk and piloting a Jute Technology Mission?

The bulk of the outlay of the ministry of heavy industries and public enterprises (Rs 1,261 crore) is on propping up ailing public sector undertakings. If the government is not going to put these enterprises on the block, it can at least stop putting more money into them.

Does the agriculture ministry need a Rs 31,000 crore budget when much of the action is in the states? Why on earth is the Delhi Milk Scheme still being propped up, with a budget allocation of Rs 16 crore? DMS was started to supply milk to Delhi at a subsidised rate. Until Mother Dairy came on the scene, it was the only organised supplier of milk in the Capital. But now there are any number of packaged milk providers and the traditional gwalas.

There is very little case for pumping in more money into the civil aviation ministry. Of the allocation of Rs 7,377 crore, over Rs 4,000 crore is gobbled up by Air India, Pawan Hans, Hotel Corporation of India and Air India Charters. Go ahead, give more to the Bureau of Civil Aviation Security and the Airports Authority of India but do these bleeding enterprises deserve more? The Haj subsidy has been coming down over the years, but isn’t it time to do away with it?

Many of these allocations are piddly amounts, really, and cutting these will be like emptying the ocean with a bucket. There are far bigger expenditure cuts that need to be done – on NREGA, the National Food Security Act and the like.

Unfortunately, these are politically extremely difficult and the government may not want to tread this minefield right away. But let’s not forget that ditty – little drops of water/little grains of sand/make the mighty ocean/and the distant land. Every crore saved by compressing allocations to the ministries mentioned – and there are many, many more like these - can be pushed into other more deserving ministries. What are they?

The infrastructure ministries, for one. There’s a pressing need to plug the huge infrastructure gap the country faces and it is infrastructure which is going to give the growth engine a big shove. The financing needs of the sector are humungous and budgetary provisions alone may not be enough, but these can be used to leverage other forms of investment.

The ministries of drinking water and sanitation and water resources (which looks after irrigation) should also not be grudged more money. Potable drinking water, sanitation and irrigation are huge challenges that the country needs to meet.

Social infrastructure also needs a financing thrust. The health ministry made news a month back because of a 20 percent cut in its budget, the reason for which is still not known. Health is an important issue and should not normally be the subject of cuts. Instead the health budget needs enhancing, especially allocations for the national disease control programmes.

That does not mean there’s no scope for cutting in the overall ministry budget. There’s a serious need to curb spending on the Central Government Health Scheme (CGHS), which provides medical facilities to Central government employees and their families as well as pensioners, MPs, ex-MPs, ex-governors, retired judges, freedom fighters, accredited journalists – it’s a huge list.

The system is inefficient and a huge source of corruption, especially in the purchase of medicines. And yet it sits on prime real estate across the country and has a huge staff of doctors, nurses. There has been talk of phasing it out and replacing it with a medical insurance scheme but it has remained only talk. There’s little point in pumping in Rs 800 crore a year into CGHS. This needs to be pared down.

Education too needs more money and should not be denied it. But there is a need to take a good, hard look at where the money is being allocated and how it is being spent. Go ahead and give more to the Sarva Shiksha Abhiyan, Mid-Day Meals and for secondary education. But the Rs 8,977 crore outlay for the University Grants Commission needs a second look. The entire budget of the human resource development ministry needs to be gone over with a fine tooth comb to remove a lot of fluff that is currently there.

But while pouring money into all these ministries, far more rigorous measures than currently exist need to be put in place to see that the spending yields the desired results. Often money allocated is not spent (that was one of the reasons for the cut in the health budget) or not spent wisely. This needs to change as well.

Accounting exercises need to go beyond merely allocating money; they also need to look for activities that are out of sync with present day realities and weed them out.

The rejigging of allocations exercise will be helped a lot by the Fourteenth Finance Commission report. If, as media reports say, it has recommended that 42 percent of central taxes go to the states, that will not leave very much in the Centre’s pockets.

The best bet for Jaitley then will be to limit central spending to items in the Union List and part of the Concurrent List and national priority areas like eradicating illiteracy, universal primary education, universal immunisation and the like as well as infrastructure. That will also make the achievement of fiscal consolidation targets easier.