Temjen Kaba, president Ao Senden on March 26 urged all local bodies of Mokokchung district to improve proper coordination with the implementing agencies of different flagship schemes on Bharat Nirman

The world is slowly I moving towards a crisis in the food sector. The good news is that India on its own can find a solution to it. It is the time to transform ourselves into a food bowl for the rest of the world. But there are certain issues to be tackled before we become one.

The Union budget has sought to send a message that the government will do all it can to rein in inflation even while maintaining the growth momentum. The Prime Minister had made the point earlier that no government can be oblivious to the objective of ensuring price stability without hurting the growth process. However, as all recent monetary policy statements have been articulating, the pursuit of both the objectives calls for a deft balancing of the often conflicting options. For instance, higher interest rates are necessary to contain inflation but are detrimental to economic growth. It is clear from the budget proposals that the fiscal policy too is seized of a similar urgency in stimulating an economy that is slowing down and vulnerable to a resurgent inflation. There are downside risks from the external environment. While the consequences of the U.S. sub-prime crisis on the Indian economy are not yet clear, high food and commodity prices, including that of oil, pose significant supply side risks and are inflationary. The budget envisages several measures to boost domestic consumption. One of the key drivers of the spectacular GDP growth over the past four years, private domestic consumption has been lagging during the current year. The adjustment in income tax slabs should increase the disposable incomes of the middle class estimated at 250 million. The considerable step-up in the allocation of funds for Bharat Nirman and other social sector schemes will also boost consumption. So will the reduction in CENVAT and specific excise duties such as those on small cars and two wheelers. Over the past 18 months, domestic interest rates have risen as the RBI pursued a vigorous anti-inflation policy. Both consumption and manufacturing have been adversely affected. The government's commitment to fiscal rectitude should help ease interest rates. In fact, a vastly improved picture of public finance is seen in the lower public borrowing projections for 2008-09. However, the off-budget subsidies on food and petroleum do not figure in the government's estimates of the fiscal deficit. Also it is not clear how the government proposes to compensate the banks for the Rs.60,000 crore write-off of farm loans. Both public and private investments have been rising as a share of the GDP but their growth would seem likely to moderate. Continuing the attempts at removing infrastructural bottlenecks and upgrading the skills of the young workforce will help in removing supply-side bottlenecks. Along with the emphasis on agriculture and rural development, they hold the key to more inclusive growth with stability.

On February 29 when Finance Minister P. Chidambaram takes guard, his batting average is going to look almost Bradmanesque.

BHARAT NIRMAN: Allocation increased to Rs 31,280 crore against Rs 24,603 crore in 2007-08. Bharat Nirman, the flagship programme of the UPA government for rural infrastructure, with a cost of Rs 1,74,000 crore and a fast approaching deadline of 2009, got an allocation of Rs 31,280 crore this Budget. The highlight this year is the increase in allocation for rural housing. Bharat Nirman targets six development components, viz rural access to housing, roads, drinking water, telephony, electrification and irrigation. For the rural housing scheme, called Indira Awas Yojana, which benefits only those who have land, the Budget provides an increased subsidy for building houses under the programme. The government subsidy of Rs 25,000 crore for houses in the plains will now increase to Rs 35,000 crore. The public sector banks have been asked to give up to Rs 20,000 in loans at an interest of 4 per cent for the Indira Awas Yojana houses. About 6 million houses are targeted to be built under the programme by 2009. So far, 5.1 million houses have been constructed, according to Finance Minister P Chidambaram. OUTLAYS vs OUTCOMES Expenditure is up, education is not % children who can Class Read* Subtract Divide 1 3 3.9 1.5 2 9 14.2 3.7 3 21.6 31.1 11.2 4 42.5 34.7 27.6 5 58.7 31.9 42.4 6 71.7 27.8 54.2 7 79.7 23.4 62.8 8 86.6 18.3 71.6 Average 41.6 23.1 30.1 Note: Children who can divide can subtract as well Source: Pratham 2007 * Read a Class 2 text The allocation of Rs 5,400 crore for rural housing is up from Rs 4,400 crore last year. Bharat Nirman, as a whole, received Rs 31,280 crore, compared to Rs 24,603 crore in 2007-08. Bharat Nirman's component on drinking water, implemented through the Rajiv Gandhi Drinking Water Mission, got another feature under the Budget with the finance minister allocating a separate amount of Rs 200 crore for providing drinking water in schools. The allocation for the scheme has also been enhanced from Rs 6,500 crore last year to Rs 7,300 crore this year. The Budget was silent on rural access to telephony under Bharat Nirman except saying that 52 villages were getting access to telephone, well ahead of the target. The scheme targets reaching over 66,000 villages by 2009 and can progress at a rate of 45 houses per day. The Rajiv Gandhi Grameen Vidyutikaran Yojana, which aims at providing electricity connections to all villages by 2009, has been allocated Rs 5,500 crore this year. Access to irrigation under Bharat Nirman got a fillip with the Accelerated Irrigation Benefit Programme allocations getting almost doubled from Rs 11,000 crore to Rs 20,000 crore. Under the programme, 24 major and medium irrigation projects and 753 minor irrigation projects will be completed in this financial year, creating an irrigation potential of 500,000 hectares. The scheme targets 10 million hectares. While six million hectares are to be covered under major and medium projects, one million hectares are to be brought under micro irrigation. Chidambaram said that 548,000 hectares were brought under drip and sprinkler irrigation since 2006, while, with a budgetary allocation of Rs 500 crore, 400,000 hectares were being targeted for coverage this year.

The Congress does not lose any opportunity to flay state governments, ruled by rival parties, of misappropriating funds disbursed under the Centre's flagship schemes.

The Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) is one flagship programme of the UPA government where the entire budgeted allocation of Rs 33,000 crore has been committed, but the desired result is still elusive.

RGGVY, a component of Bharat Nirman, was launched in April 2005 with a mandate to electrify 100,000 villages and release electricity connections to 2.3 crore rural BPL households i

While we all get ready for elections, fiscal rectitude will be a priority for the next government. The curtains have finally come down. The Budget has provided a clear indication of things to come. In a year when 11 states will go for elections and the sword of Damocles for the general elections hanging, a populist fiscal stance is only to be expected. Unfortunately, a populist Budget never fully appeases anyone. Those who get the sops want more and those who do not get them get more upset. This Budget attempts to target the benefits to sections of farmers and urban middle class and when the Pay Commission report is submitted, to the government employees. It is yet to be seen whether the largesse will translate into votes, but surely, these measures will impact for several more years. The Economic Survey was candid about the need for austerity in the prevailing environment, but the Budget does not seem to care. The Budget for 2008-09 has been formulated in the background of moderating growth, a difficult international environment, unimpressive agricultural performance, rising world oil prices, surging capital flows and continued infrastructure bottlenecks. Austere fiscal policy was required not only to provide a counter-cyclical stance but also to keep interest rates low and manage capital inflows better. Acceleration in growth required significant augmenting infrastructure investment. Rationalising subsidies and increase in investment were necessary to accelerate the agricultural growth rate to 4 per cent. It was also hoped that the finance minister would initiate reforms in the excise tax regime to move towards a goods and services tax (GST). To be fair, higher allocations have been made in the Budget for some of the infrastructure sectors though capital expenditure as a ratio of GDP shows a decline. The energy sector's allocation is 30 per cent higher, the roads and transport sector's 22 per cent higher, and communication sector's 32 per cent higher. There are substantially higher allocations to the six components of the Bharat Nirman Programme, which are in the nature of improving connectivity and rural infrastructure. The total plan expenditure in the Union Budget shows an increase of 17.3 per cent over the revised estimate for 2007-08, though this is just about one-half of the level in 2004-05. However, plan capital expenditure shows an increase of just 5.3 per cent, and at 0.6 per cent of GDP this is worrisome. Thus, there has been a significant increase in plan expenditure, but not for creating infrastructure but for various schemes, most of which are in the states' domain. The funds for these programmes are transferred directly to the third level of government or other implementing agencies because the central government wants to claim ownership and clearly, in many places accountability and delivery systems have yet to be put in place. Economists judge the Budget on the basis of its likely macroeconomic impact and policy signals it gives. In the context of surge in capital flows, it was necessary to keep the interest rates low and allow the RBI to undertake market stabilisation to ensure relatively stable exchange rates at least in the short term. That called for containing the fiscal deficit at even lower than the target set under the FRBM Act. For 2007-08, thanks to the buoyant revenues from direct taxes, it was possible to overreach the target, though some expenditure liabilities, particularly on subsidies, have not been fully taken account of. The revenue deficit for 2008-09 relative to GDP is estimated at 1 per cent and the fiscal deficit at 2.5 per cent. Indeed, although phasing out the revenue deficit is mandated in the FRBM Act, it was unrealistic to expect reduction in the deficit by 1.5 percentage points in one year. Budgets are like fashion girls on the ramp; what they hide raises more curiosity than what they reveal. However, most observers have been quick to point out that the fiscal deficit is clearly an underestimate for it does not take account of some important liabilities. First, the Budget estimates do not include the impact of implementing the Sixth Pay Commission. It may be recalled that it was the pay revision in 1997-98 that led to an era of high fiscal imbalances and this alone could add to the fiscal deficit by about half a percentage point of GDP. The second important omission is provision for loan waiver. This is estimated to cost Rs 60,000 crore and or a little over 1 per cent of GDP. That is not all. Despite claims to transparency, the subsidy numbers clearly look under-budgeted. In the case of fertilisers, for example, the Budget estimate for 2008-09 at Rs 30,986 crore is close to the revised estimate for 2007-08 (Rs 30,501 crore). Of course, this does not take account of the Rs 7,500 crore bonds given to fertiliser companies. That is not all. The subsidy accruing to fertiliser companies based on the estimated sale of fertiliser would not be less than Rs 60,000 crore in 2007-08 and to that extent the deficit numbers for 2007-08 are suspect. This is the problem with a Budget prepared on the basis of cash and not accrual accounting. Finally, it is not clear how the finance minister will find an additional Rs 10,000 crore for Gross Budgetary Support for the plan when revenues are estimated to grow at 17.5 per cent and direct taxes at close to 20 per cent even after taking into account the increase in the exemption limit in personal income tax and reduction in excise duties. By this reckoning, the fiscal deficit and off budget liabilities should at least be higher by another 2 per cent of GDP. On changes in tax policy, reduction in the CENVAT rate to 14 per cent, increase in the threshold for service tax and reduction in the Central Sales Tax would help in eventually introducing GST. But the measures stop there. This was the opportunity to extend the base of service tax to all services and universalise input tax credit to convert the CENVAT into a manufacturing stage GST. The tinkering in excise rates has continued and this does not make sense. The policy makers are still to understand that crowding the tax policy with too many objectives only adds to administrative complexity and creates pressure groups. On the whole, difficult days are ahead and while we all get ready for elections, fiscal rectitude will be a priority for the next government, whoever comes to power!