Yojana March 2018 Summary: Union Budget – (Part - 2)

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👌 📝 Farm Productivity to Income Inclusiveness - The emphasis is laid on income rather than production alone, input intensive agriculture has transferred a food deficit nation into food surplus and net exporter.

Union Budget: Yojana March 2018 Summary (in English)
  • The declining size of farms, depleting resources and escalating costs of applied inputs and farm labourers has reduced the net return from farming.
  • The budget 2018 - 19 was an attack on farmer՚s distress, it anchored around inclusiveness with a focus on innovations, income, investment and rural infrastructure. The moves suggested which suggest that farming and farmers are corner stones of the government are
  1. 22 % higher allocation to crop insurance under PMFBY than previous year
  2. Higher allocation for cluster organic farming value chain
  3. High value commodities
  4. Critical input and services
  5. Farm credit
  • The government has successfully identified the limiting factors impeding farmer՚s ability to realise their much deserved income.

A Paradigm Shift: Broadened Scope & Operation

  • Census 2011 data revealed that 55 % agriculturists are agricultural labourers and SECC 2011 estimates 56.4 % of rural households to be landless.
  • 16.44 million Workers depend on livestock rearing and fisheries for their livelihood. The budget explicitly recognises agriculture as an enterprise
  • The approach is empowering to the farmers given the historical treatment of farmers as passive recipients of benefits of government schemes. The budget ensures that the resources outreach to a wide spectrum of stake holders within agriculture. Income security is a recurring theme in the last 3 budgets.
  • PMFBY announced in second year of government՚s formation, covers 26.5 % of farmer՚s population. It became a game changer as its coverage of non-loanee farmers increased by 6 times in 2017.
  • Initiatives were launched on micro irrigation, soil health, and organic farming to ensure sustainability in agriculture.
  • 11.5 crore soil health cards have been dispatched. 470 markets have been linked ti e-NAM. The road network has been systematically planned to improve access to rural habitations and hence agricultural markets. PM Kisan Sampada Yojana is the real approach to link the major production clusters with processing and post harvesting management for value addition.

Inclusiveness: Focusing the Unfocused

  • The target of ₹ 11 lakh crore agricultural credit for 2018 - 19 will help much needed push for private investment in agriculture along raising farm level productivity.
  • Credit was available to only those cultivators having land titles or some license for availing institutional credits as in case of AP license for bank credit to lessee cultivators. This has left many farmers with the option of leasing land. The number of tenant cultivators in the country is difficult to estimate given that most cases go unreported. More than 1 ⁄ 3rd amongst them are landless and 56 % are marginal landowners. Various surveys suggest that increase in lessee cultivators over years.
  • The significant increase in pure tenants (landless households tiling land by leasing it) signifies the role of landless households contribution in achieving food security but without any help from the government.
  • NITI Aayog is mandated to find novel approaches to mainstream these tenant farmers by strengthening their access to crop loans for augmenting their economic viability and social status, including improving their access to other farm, off-farm and non-farm opportunities along with farming on lease.
  • Animal dairying and fisheries contribute to almost 27 % of agricultural GVA which have impact on status of small and marginal farmers. 31 % increase in allocation to department of Animal Husbandry, Dairy and Fisheries
  • Market and Remunerative Prices to All
  • Inclusive MSP - Government has stepped forward to formulate initiatives to purchase produce at MSP or through some other mechanism to ensure that atleast the amount declared as MSP reaches the farmer. MP՚s Bhaavantar Yojna (Price Deficiency Payments) as one such alternate mechanism.
  • MSP is now mandated to be pegged ‘in principle’ at 50 % higher, than the production cost of farmer is another step towards ensuring income inclusiveness.
  • NITI Aayog has been mandated to work on Artificial Intelligence in different sectors including agriculture. This will help in optimization of resources for better planning and guiding the farmers to produce based on future needs.
  • Market near farm gate - One of the reasons for the vast gap between farm harvest price and MSP is limitations to market access. The small and marginal farmers (85 % of farmers) access is limited owing to low scale production. The absence of linkage between farmers and wholesale markets has been long impending the formation of an accessible decentralised market structure. ₹ 22000 crore has been allocated for upgrading 22000 rural haats into Grameen Agricultural Markets (GrAMS)
  • GrAMs to serve as multipurpose platforms for assembly, aggregation and local retail, would help to realise unified national market by bringing primary post production activities to farmers at village level.
  • Valuing the Value Chain System
  • An explicit focus on cluster based approach to developing agriculture in a dispersed manner can potentially form the basis of future public and private agribusiness initiatives.
  • Farmer Producer Organisations (FPOs) have a dominant role in bringing forth specialisation and scale to otherwise fragmented sector, along with necessary managerial and technical backing.
  • A 100 % tax deduction to FPOs with turn over upto 100 crore, they also form a corner stone for Operation Greens.
  • Food processing industry contributes 8.8 % and 8.3 % GVA in manufacturing and agriculture respectively.
  • 👌 High Value commodities - such as horticulture and Medicinal & Aromatic Plants (MAPs) have received special attention in budget to augment farm income. 8,000 species of medicinal herbs and medicinal plants are found in the country. Indian Fragrance market is reported to have showcased a steady growth in the past, The Economist՚s Intelligence Unit estimating the sales value of perfumes and fragrances in India as USD 3169 million.
  • NITI Aayog with other ministerial stakeholders in the domain of demand and supply forecasts in agriculture, sanction for the same in the budget proposal is encouraging.
  • Natural Resources and Sustainability
  • FPOs are recognised as potent vehicles to usher in initiatives to promote organic farming with a proposed scale of 100 ha each.
  • The allocation to Organic Value Chain Development for North East Region has been increased by 60 % . The NE region offers a unique scope for exploiting organic produce under ASEAN and Act East Policy of the government.
  • The ambit of the PMKSY scheme will be expanded to counter the deteriorating ground water condition by focusing energies on 96 deprived districts where 30 % land holdings get assured irrigation.
  • A special scheme with state level of inter-governmental cooperation to subsidize machinery for in-situ management of crop residue to address the deteriorating air quality in Delhi during winters.
  • Mechanism to sell surplus solar power by farmers to electricity grids and Distribution Company, combining income generation and sustainability targets.
  • 👌 Galvanizing Organic Bio-Agro Resource Dhan (GOBAR-DHAN) has been announced for management and conversion of cattle dung and solid waste in farms to compost, fertilizer, bio-gas and bio-CNG.
  • Namami Gange Program: 187 projects have been sanctioned for infrastructure development, reverse surface cleaning, rural sanitation and other interventions at a cost of ₹ 16,713 crore. 47 projects have been completed and remaining projects are at various stages of execution. All 4465 Gange Grams villages on the bank of river have been declared open defecation free.
  • Sufficient continuity can be seen through inclusion of command area development projects under the previously announced Long Term Irrigation Fund with initial corpus of ₹ 20000 crore.
  • Increase in allocation of National Rural Livelihood Mission by 28 % to revamp National Bamboo Mission, play a critical role in augmenting the farm and non-farm income and employment in rural India.

MSMs: Engines of Consolidation

The budget aims to give thrust in 4 areas: Agriculture and Rural Sector, Infrastructure, Healthcare and job creation through MSMEs.

👌 CriSidex, launched after the announcement of the budget. MSME to be Engines of Consolidation of Economy was announced.

The government have been talking of pushing share of manufacture from 25 % , which is not going 15 - 16 % of GDP, without reforms the risk-reward ratio continues to slides for MSMEs.

The Union Budget 2018 - 19 have signaled a change in status quo. The changes are

  1. Fixed term employment to all sectors, which was limited to textiles, has been extended to other sectors, which would be game changing labour reform. Many sectors have seasonal and cyclic trade. Employers would not hire people nor report hiring because hiring for short term is illegal, the proposal to receive resistance by trade unions.

    The budget also allows weighted deduction of 130 % of expenses on additional workforce. It also provides to bear provident fund for new employees for three years.

    The women employee՚s contribution for EPF has been reduced to 8 % while the contribution of the employer remains 12 % .

  2. The budget also gives support to manufacturing industries by leveraging customs duty on more than 40 labour intensive products.

The duties still remain within WTO committed rates of 25 and 40 % . The move is dubbed as regressive.

👌 India is negotiating Regional Comprehensive Economic Partnership (RCEP) : a free trade agreement between 10 member ASEAN countries and six countries (Australia, China, India, Japan, South Korea and New Zealand) with which ASEAN has free trade agreements

  1. Public sector banks and corporates have come on board the 👌 Trade Electronic Receivable Discounting System (TReDS) an online bill discounting platform and that will be linked GSTN network so that transactions between the large buyers and MSME sellers become automatically verified easing working capital woes of MSMEs.
  2. 3794 crore to MSME sector for giving credit support, capital and interest subsidy and innovations

The announcement of expanding coverage or reduced Corporate Tax of 25 % to companies shaving turnover upto ₹ 25 crore, which would benefit a small MSME segment. 93 % of MSMEs are not companies but partnerships and proprietorship firms.

Companies with somewhat lower ratings may also be eligible for accessing the Bond Market. More bank funds will be available for MSMEs.

Creation of Livelihoods: Core of Policy Making

  • The budget had its significance as it was the first budget after the launch of GST in July 2017.
  • The announcement of recapitalization of public sector banks and proactive step towards resolution of non-performing loans are few of the key initiatives which endeavor to address weakness in India՚s banking and credit profile.
  • The international credit rating giant Moody՚s upgraded India՚s credit rating to BAA 2 from BAA 3 after a gap of 13 years.
  • The government is expecting economic growth rate to surge above 8 % as it announced 2018 - 19 budget that aimed at boosting rural infrastructure.
  • Big push to infrastructure, beginning of universal healthcare AYUSHMAN, housing for all, revolutionizing education and support for ancillary sectors like fisheries, food processing and textile augers.
  • Expenditure of ₹ 14.24 lakh crore on livelihood and infrastructure in rural areas, considering the agrarian distress in the country is a significant move. The total credit growth to agriculture is set at ₹ 11 lakh crore.
  • The government is now considering mandating large corporates, to meet about 25 % of their financial needs from the bond market. A greater demand stimulus is provided for by permitting trade in lower rating bonds allowing investors better choice of debt paper and improving liquidity in the Indian Corporate Debt Market.
  • IFSC at GIFT CITY, where tax exemptions have been provided for transfer of derivatives and certain securities by nonresidents from capital gains tax, which would a step towards the hope to have overseas trading activity and price discovery move back to India. GIFT CITY would provide a single window for all regulatory concerns and help expedite decisions on multiple policies.
  • Creation of infrastructure investment thrusts for monetization of state enterprise is a positive development. The government has approved listing of 14 Central Public Sector Enterprise, including two insurance companies, on the stock companies.
  • Initiating the process of strategic disinvestment in 24 CPSEs including strategic privatization of Air India would scale their governance.

📝 Job Creation: Key Developments

  • India is home to more than 18 million unemployed people.
  • 30 % of India՚s population aged between 15 and 29 years are not in education, employment or training (NEETs) . All this makes jobs a major issue for the country՚s development. The overall rate of unemployment is around 3.5 % , bigger worry is the unemployment rate in 15 - 24 age group which was 10.5 % in 2017 (10 % in 2014) according to ILO report.
  • Job creation is not keeping pace with the demand. About 2,164, 575 employees across 30,475 establishments have been registered under Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) since 2016.
  • The construction sector is one of the largest seasonal employment providers in India next only to agriculture, creating more than 45 million jobs directly or indirectly.
  • The industry is in agrarian distress and need for job creation. On agrarian distress, it proposes a slew of rural projects encompassing link roads, grameen markets, agro -processing centres, food parks, micro irrigation, Wi-Fi hotspots, toilets, affordable housing, health and wellness centres, upgrading district hospitals, district level skill centres and fishing and animal husbandry infra funds. The total amount to be spent on various infrastructure in rural areas by various ministries is 14.34 lakh.
  1. Fixed-term contract hiring has been extended beyond apparels to all sectors to create quick jobs. This enables employers to hire workers for specific project on contract basis. Fix term employment across sectors will also boost creation of jobs even though there could be some element of seasonality into it, such as plantation and mining
  2. To boost the infrastructure industry, to create employment and aid growth, budgetary expenditure on infrastructure is being increased to 5.9 lakh crores against 4.94 lakh crores in 2017 - 18.
  3. Corporate tax rate has been lowered to 25 % .
  4. The government to set up skill centres in every district of country under PM Kaushal Kendra Program.
  5. PM Rojgar Protsahan Yojna has been pegged at ₹ 1,652 crore in 2018 - 19. The leather industry is labour-intensive sector and good growth potential. PMRPY will give further impetus to generate more employment opportunities in the leather and foot wear industry. ₹ 7,148 crore has been provided for the textile sector in 2018 - 19.
  6. ₹ 3,794 crore have been allocated to MSME sector as credit support, capital, and interest subsidy and promotion of innovations.
  7. On-farm and non-farm employment for the farmers and landless farmers. The budget also talked of self -employment and entrepreneurship as a means to create more jobs. More than 3 quarter of loan accounts are held by women and over half by people from under privileged segments under MUDRA scheme.
  8. Agriculture needs to be treated holistically as an enterprise. Agricultural policies cannot be solely production centric and must promote entire agricultural value system-the entire supply chain from pre-production, post production, marketing need focus. Focus in this budget is on agri logistics, processing and market infrastructure.
  9. Irrigation development PMSY allocation has been increased to ₹ 2,600 crore.

Placing Health Care at the Centre Stage

  • Budget 2018 - 19 created a flurry of excitement among health professionals, media and the public with a package of major initiatives.
  • Two of these initiatives packed under the label of Ayushman Bharat Program.
  1. A scheme to promote comprehensive Primary Health Care (CPHC) was heralded by the proposal to transform 1,50, 000 health sub centres into Health and Wellness Centres (HWCs)
  2. National Health Protection Scheme which assures 10 crore poor and vulnerable families of financial coverage upto ₹ 5,00, 000 per annum for hospitalization costs of secondary and tertiary care.
  • CPHC builds upon the platform established by NHRM. NHRM focused on maternal and child health services, the NHP 207, calls for National Health Mission (NHM) to become the vehicle for comprehensive, continuous primary care. This requires expansion of services to cover hitherto unattended areas like non-communicable diseases (NCDs) and mental health disorders.
  • NHM to become a unifying platform for primary health services related to maternal and child health, communicable and non-communicable diseases apart from advancing health promotion efforts in the community.
  • Long term care of chronic diseases is enabled through efficient follow-up at primary care level which also has reliable bi-directional referral and return linkages with advanced care at secondary and tertiary levels. Some diseases like TB, HIV-AIDS need follow up visits and continuous care.
  • Long term chronic diseases like hypertension and mental disorders, primary care has to be reconfigured. Health promotion through community level health education and individual counselling at health care facility is an important activity that has been neglected in primary care so far.
  • Healthy diets and regular physical activity must be advocated in communities and missed opportunities for tobacco cessation must be minimized.
  • Transformation of sub centres into HWCs give shape to comprehensive primary care and enables continuity.
  • Apart from facility based care, community outreach would also strengthen health promotion and disease prevention.
  • HWCs would provide essential drugs and basic diagnostic tests free of costs. HWCs can generate real time data for disaggregated estimates and monitoring of various health indicators. Judicious use of telemedicine and mobile technology can help improve the delivery of healthcare at HWC.
  • Primary health services must extend to primary and community health centres. The budgetary allocation does not reflect the commitment. The allocated budget has come down by 2.1 % from the revised estimate. NHM has been virtually been ignored in the budget. Urban primary health care is been ignored since long. Primary health services in cities and towns acquires great urgency. ₹ 1200 crores allotted for HWCs need to be increased as effort is called up.
  • The major challenge for developing fully functional HWCs is shortage of human resources. HWCs will be staffed by non-physician healthcare providers only, but there is need to create mid-level healthcare providers like nurse practitioners and community health assistants who have gone through a 3 year degree program.
  • There is proposal to deploy AYUSH practitioners, with bridge course orientation to allopathic medicine in HWCs in controversial since AYUSH practitioners provide expertise in traditional systems.

The staff HWCs include

  1. 2 Auxiliary Nurse Midwives
  2. A Multi purpose male worker
  3. A Laboratory technician cum drug dispenser
  • Thus creating jobs for many young people.
  • RSBY- coverage was limited to ₹ 30,000 annually per family. It had to compete with state funded health insurance schemes which offered annual coverage between 1 - 3 lakhs per family. It fail to provide financial protection against out of pocket health expenditure, catastrophic expenditure or healthcare induced impoverishment.
  • NHPS reduces the level of catastrophic health expenditure but will not cover out patient care.
  • Efficient primary care services will also be required to reduce the need for secondary and tertiary care services and act as prudent gatekeeper. In the absence of effective prime health services, the uncontrolled demand for NHPS will drain health budget in turn reduce the funds available for primary care and public sector hospital strengthening
  • NHPS to start from October 2018, the funding required for full functioning of NHPS would be 5 to 6 times. State governments are expected to contribute 40 % of the cost and will be encouraged to merge state funded health insurance schemes with NHOs to ensure portability of coverage to persons who move across the state borders, but would require consensus across different political parties.
  • Strategic purchasing is the process by which NHPS proposes to judiciously purchase of services from empanelled public and private hospitals. This requires careful choice of the diseases, tests and treatments to be covered, development and adoption of evidence base standard clinical management guidelines.
  • Fraud detection and grievance redressal mechanisms need to be developed. Public awareness about NHPs is to be created.
  • Administration of NHPS would be done by a trust or an insurance scheme. The choice is left to the states. The trust established by the government has greater accountability and less overheads. An insurance company comes with prior expertise but has more expensive overheads and likely to demand higher premiums. The government has to pay all the premiums. The principle of risk pooling is common, in large risk pool, the healthy cross subsidize the sick in any given year keeping the premium down.
  • The non-poor also can buy this scheme but the premium should be paid by them.
  • The need for producing more basic doctors and specialists has been recognised, as is the necessity of strengthening of district hospitals. 24 new medical colleges to be started which would be attached to the district hospitals. This also requires high levels of public financing as private sector is limited to few states only.
  • Allocation of establishment of new medical colleges has been reduced by 12.5 % , unless the budgets show substantial increase in next few years, it would be difficult to attain NHP target of 2.5 % of GDP.
  • ₹ 500 would be given to TB patient every month as support for their nutrition. ₹ 600 crore is set aside for this. Sanitation component of SBM will be scaled through construction of more toilets to reduce health hazards through open defecation.
  • Air pollution: Ujjwala scheme: Free LPG gas connection for poor women. A Subsidized loan for farmers around Delhi for proper disposal of crop waste. Respiratory diseases, cardio-vascular diseases, cancers childhood asthma and respiratory infections and diabetics can be controlled if air pollution is reduced.
  • Success of ambitious initiatives that have been proposed depends on a sizable and progressive increase in budget allocated to health both by state and central government.
  • NHP calls for states to increase their health budgets by 8 % by 2020. Investment in multi layered, multi skill work force, capable of providing high quality services is essential, these must be coupled with strong regulatory and monitoring systems.

Infrastructure creation: Integrating the Nation

  • ₹ 5.97 trillion is allocated for infrastructure in the 2018 - 19 Union Budget. The infrastructure allocations have not only been increasing in absolute terms but also as a share of total budgetary allocation.
  • The sub sectors of railways include railways, roads, aviation etc.
  • The single largest entity spend is for the Indian Railways, which is mainly for capacity creation, including track doubling, third and fourth line works, 5,000 km of gauge conversion, redeveloping of 600 railway stations and introduction of modern train sets. Suburban railways including Mumbai and Delhi also got special focus in the budget.
  • The Union Budget includes a total outlay of ₹ 1.21 trillion on road infrastructure. The spend is a part of ₹ 5.35 trillion on Bharatmala Project, which includes development of economic corridors, efficiency improvement on key national corridors and border, coastal and port connectivity roads.
  • Both Railways and National Highways Authority of India are expected to source funds beyond just internal surpluses and budgetary support.
  • The Railways apart from traditional sourcing through bonds is expected to bring in public private partnership especially in railway station development and rolling stock manufacturing.
  • The NHAI would use schemes like toll, operate and transfer and raising equity from market using assets that have crossed the transfer phase of earlier build and operate transfer (BOT) .

📹 In maritime sector, the focus is on spending on Sagarmala Project.

Sagar Mala Project - Closer to Success of Blue Revolution with Key MAP Locations
  • 99 smart cities and rural infrastructure through development of rural roads, houses, electricity, sanitation, irrigation and water supply.
  • Bandwith for spending - The inability to spend is a function of insufficient governmental band-width in putting out well-written project documents and quick processing of permissions, lack of legal and judicial bandwidth and the significant non-performing infrastructure assets, stalled permissions and delay in permissions are the reasons for holding up of many projects in the midway.
  • Ministry of Road Transport and Highways (MORTH) must be commended for attempting to resolve many legal issues in many projects but there are many still stuck.
  • There is no mechanism for reviewing the budgetary performance, not just financially but in actual outcomes achieved. The annual economic survey is at best a document that looks at performance of aggregate manner. For example previous budgets had schemes like 👌 Setu Bharatam (to remove level crossings on National Highways) , Special Unit for Transportation Research and Analytics (SUTRA) and Special Railway Establishment for Strategic Technology and Holistic Advancement (SRESHTA) , it is difficult to find the state of progress for these activities vis-a-vis their original intent.
  • The allocataions in different sectors over past few years tobe guided by long-term multi-activity project conceptualization like Pradhan Mantri Gram Sadak Yojna (PMGSY) , Sagarmala High speed rail (HSR) and Bharatmala projects.
  • 📹 Bharatmala is in many ways a modified version of National Highways Development Project, such conceptualization provides more stability and direction, rather than being buffed by varying annual demands.
Bharatmala Pariyojana (Current Affairs/GS 2017 - 18) - WW. 52
  • BharatNet Project (earlier National Optical Fibre Network) has had implementation issues, causing significant delays in timelines, part of the problem is due to handling over part of the project to public sector undertakings, which donot have this as priority.
  • PMGSY has been one of the successful infrastructure projects. The second decadal phase of this project has been advanced to 2019 instead of 2022. The rural road networking is not only penetrating deep, but also focusing on improved maintenance and two-sided connectivity, but also services.
  • In case of electrification, village level connectivity has shifted to house-hold connectivity. In terms of sanitation, building toilets, full effectiveness can be achieved only by changing the behaviour, these need marketing efforts.
Union Budget: Yojana March 2018 Summary (in Hindi)

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