Decoding “Reform, Perform, and Transform”
What has fascinated me the most in the 2019 Union Budget is the evocative, if not innovative, use of jingles. Be it “Har Ghar Jal” for universal access to (drinking) water or the use of “Team India with Jan Bhagidari” for minimum government and maximum governance, or “Green Mother Earth and Blue Skies” for the vision of a pollution-free India, who has ever witnessed, let alone conceptualised, such sublime mellifluousness in a mundane accounting statement like the budget document! And the linguistic genius is at its height when it comes to the names of the schemes, especially those for income support. The generous use of maan and sammaan is music to the ears of commoners whose dignity and self-respect are very often trampled upon in the market economy in want of income, and hence, purchasing power.
But to me, the most enthralling of all these is the jingle of “reform, perform and transform.” The rhythm of the syllables generates an image of economic development attained through policies that assume some kind of “regimental” discipline. I can almost visualise a “pristine” economy, marching on by stirring up a “rat-tat-tat” sound on the ground. But where is this economy heading to? Ironically, the basis of such imagery is rooted in contentious initiatives —the Goods and Services Tax, the Insolvency and Bankruptcy Code, 2016, and the Real Estate (Regulation and Development) Act, 2016 (assumed to be the precursors to the reform, perform, and transform agenda) and schemes like the MUDRA, Ujjwala and SAUBHAGYA (projected as transformers of the common man’s life)—introduced by the current government during its previous tenure between 2014 and 2019. It is a well-known fact by now that the outcomes of these initiatives have not been assessed with much empirical rigour yet.
In this context, let me recapitulate the fact that the veracity of the estimates of key macro-indicators forming the basis of this budget—such as the economic growth rate, and the fiscal deficit, which are carefully observed by the investors in general—is disputed. In case of the fiscal deficit, for instance, the variability of the estimates ranges from 3.5% (as per the finance minister’s budget speech) to 5.8% (as per the Comptroller and Auditor General) to 9% (as per the Morgan Stanley Bank) of the gross domestic product. While the disputes stand unresolved, the alternative estimates cannot be rejected summarily, mainly on the grounds that almost 24% of the 2019–20 budgetary outlays are earmarked for the interest payments on the loans taken by the government/country. And this is almost 12% higher than the allocations made in the last year’s budget under this head.
What is further disconcerting in this context is the “no liquidity” outcry, which is now coming from those socio-economic sections of the country that are beyond that of the wage earners. More importantly, this time, the complaints—such as the collapse of the white goods markets and the stagnation of rural consumption—are coming from the business sector, especially the big businesses. For instance, Mahindra and Mahindra has reported a 15% decline in its monthly profits in July 2019, largely due to a 16% dip in its domestic sales from July 2018. Interestingly, this decline is not merely due to a fall in the sales of passenger or commercial vehicles, but also due to a rather staggering decline in tractor sales. As of 31 March 2019, tractor sales were almost 31% lower as compared to March 2018.
This depicts a rather glum picture of the economy. Over the past decade, our domestic savings have been down by more than 8%, and there is tight liquidity in the banking sector. Despite the potentially vicious cycle of lacking employment, income, and liquidity in these circumstances, it is worrisome to find the government allocating the next higher shares of the budget to sectors like defence and subsidies (almost 11% to each) whereas, key sectors like agriculture, commerce and industry, health, and education have received allocations as low as 5%, 1%, 2%, and 3% respectively. In terms of scheme-wise allocation—not to mention that this year’s budget has declared almost 120 schemes, compared to about 80 in 2018—capital outlay on defence services has been increased from that in 2018–19. When compared to the outlays on employment, health, and education in 2019, this outlay on defence is roughly 27%, 118% and 125% higher than the sum of allocations earmarked for the major schemes of employment, health and education, respectively.
What do we make of these allocations? And how do we interpret “reform, perform, and transform” in this context? I hope the readers would excuse me for diverting their attention from this uninspiring discussion of numbers and allocations to a (clichéd, yet funny) story that I was frequently told during my school days. It is the story of a student who is asked to write an essay on “crematorium,” while he has memorised one on the “cow.” So, he begins: Crematorium is a place where lives come to an end. Our lives are precious gifts of god. Thus, we should utilise our lives to serve others, just as a cow does to serve us. Then he continues: A cow is a domestic bovine animal… so on. Though a digression, this story may not be totally out of context, especially for understanding the convenience of a budget of catchphrases in a context where the realities of the economy, the intentions of the ruling party, and the aspirations of the common man lie ways apart.
The views expressed here are personal and do not reflect the collective view of the journal.
