Strategic Budgetary Allocation and Economic Development
(Budget: 2010-11)


By

Amiya K. Mohapatra
Faculty of Economics
Department of MBA
ICFAI Business School
Jaipur, Rajasthan

Surendra P Kothari
Faculty of Commerce
SS Jain Subodh Commerce and Arts College
Jaipur
 


Introduction: The recent budget (2010-11) which is placed in the parliament is quite reform based and progressive. But each and every people understand, analyze, evaluate and criticize the budget and its effect in their own way. Broadly speaking considering macro variables prospective, we can say that the present budget is very much growth & welfare oriented. Like every year, the budget has its own impact on various sectors of the economy viz. agriculture, health, education, rural development, infrastructure, social welfare and security etc.

In this article, we will highlight the significance of current budgetary allocation on certain specific areas only.

(A). EDUCATION:- This year, the central government has made the provision of Rs.42,036 crores for the development and progress of education.  The fund for primary education has increased from Rs.26,800 crores to Rs.31,036 crores in comparison to the previous years. Rs.15,000 crores are granted for Sarva Shiksha Abhiyan too.

On other hand higher education get a grant of Rs.11,000 crores as against Rs.9600 crores  in the previous year. Apart from the above, a special package of Rs.425 crores is provided for setting up new IITs & IIMs. Besides it, Rs.1700 crores and Rs.1173 crores are granted for the enhancement of secondary & adult education in the country respectively. Like in the past, this year also government has allocated Rs.3400 crores for mid-day meals for the school children. The right of children to access free and compulsory education act-2009 creates a strong frame work for legal entitlement for all children in the age group of 6-14 years to education of good quality based on equity and non-discrimination.

(B). HEALTH:-Health is wealth. Understanding the value of health, the government distributed a fund of Rs.22,300 crores for the same. To streamline it, a special provision is made for the development of health in the rural sector also.

Rs. 15,672 crores is kept aside for National Rural Health Mission. The government has proposed to open 6 AIIMS to its credit for which Rs.750 crores is allocated. Besides it, Rs.155 crores kept aside for research on cancer and Rs.90 crores allocated for prevention and control of diabetes. The government intentionally raised the taxes on cigarette and tobacco to reduce its consumption and at the same time to raise the revenue. As a matter of great concern, we are spending only 0.36% of GDP on health which is very much less than expected 2-3% of GDP.

(C). RURAL DEVELOPMENT: - India lives in villages, so ample significance is assigned to the rural sector and its development in the present budget. It is the strategy which is focusing on rural development & upliftment of poor people. Rural development got a lion share in the present budgetary allocation. Present provision of Rs.66,100 crores for rural development signifies its own importance. The NREGS which is now being considered as a support & protection of rural life, revitalized itself by getting a budget provision of Rs.40,100 crores. This is a strategic move to reduce unemployment, inequality and poverty in the rural sector. This also helps the people at large by building community assets.

Recently Bharat Nirman Yojana became the corner stone for the rural infrastructure development for which Rs.48,000 crores are sanctioned. Backward Region Grant Fund has increased from Rs.5800 crores to Rs.7300 crores.

Finance Minister Pranab Mukherjee seems to adopt the "Keynesian Consumption Model" through which rural consumption got a boost to have a higher multiplier effect. This will certainly raise the growth, employment and standard of living of the country as a whole.

Rural Development and Budget Provision:

Sr.No.

Program Details

Rs. in crores

1.

NREGS/NREGA

40,100/-

2.

Rural Housing

10,000/-

3.

Pradhan Mantri Gram Sadak Yojana

12,000/-

4.

Sarva Shiksha Abhiyan

15,000/-

5.

National Rural Drinking Water Yojana

 9,000/-

Total Budget Provision

Rs.86,100 crores


Sources: - Compiled by the Authors.

The above table indicates that the budgetary provision definitely looking for rural development as the mantra of growth of the country.

(D). INFRASTRUCTURE: - Real development in fact lies with infrastructure development. These are the lifeline for the prosperity of a country. There are two types of infrastructure:

(i) Economic infrastructure (ii) Social infrastructure

In the present budget, both the infrastructures are got the added significance to their credit. In one hand education, health and housing as a part of social infrastructure got more than their required share. Similarly energy, transport, communication and banking etc. as a part of economic infrastructure get a solid provision to their credit too.

To accelerate the pace of growth sum of Rs.1,73,552 crores are allocated for overall infrastructure development of the country. It is around 46% of the total budget allocation. More precisely, this year a provision of Rs.19,894 crores are kept for the development of road transportation for all the states. Besides it, Rs.48,000 crores  is allocated for rural infrastructure  development and Rs.16,752 crores of funds are allocated for the growth of railway.

References:

  • Speech of Hon'ble Finance Minister
  • Union Budget Report :2010-11
  • Reports from News Channels
  • Hindustan Times
  • Financial Express,
  • Business Standards
  • Economics Times.
  • © Copy Right remain with the First Author.
     


Amiya K. Mohapatra
Faculty of Economics
Department of MBA
ICFAI Business School
Jaipur, Rajasthan

Surendra P Kothari
Faculty of Commerce
SS Jain Subodh Commerce and Arts College
Jaipur
 

Source: E-mail April 29, 2010

          

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