Good News Before Budget

News: The 2022 budget session of the Parliament commenced today.

This article discusses the need of sustaining export growth. Also, it emphasizes that budget 2022 should focus on the agriculture and health sector to ensure efficiency and inclusiveness in government expenditure.

Performance of exports

One, India’s goods exports are at a record high of $393 billion and the global share of exports also rose to an all-time high.

Two, India has made good progress in exports of electronics, fine chemicals, pharmaceutical, textiles, and apparel exports.

What is the reason behind the growth in exports?

One, labor-intensive industries are moving out of China due to shrinking industrial workforce. Indian demography makes it a suitable alternative.

Two, government policies provide incentives for CAPEX. For example, speedy permissions, electricity, skilling reimbursement, and tax moratorium.

Three, there are some sector-specific factors as well. For example, specialty chemicals are growing due to the high price of chemicals. In the cotton sector, growth can be seen due to the US ban on Xinjiang cotton.

Health Sector Growth

Why budget 2022 should focus on health sector?

First, expenditure on health has been low for a decade, and pandemics created a consensus to strengthen the health system.

Second, the 15th Finance Commission recommended greater investment in rural and urban primary care, a nationwide disease surveillance system, a larger health workforce, and the increasing capacity of critical care hospitals.

Third, there is also a lack of availability of accredited healthcare facilities under PMJAY in tier-2 and tier-3 hospitals.

How the Budget 2022 can push for health system transformation?

First, the Union budget of 2021 increased allocation to the health sector by 137%, prioritized Pradhan Mantri Aatmanirbhar Swasth Bharat Yojana (PMASBY). Further, It merged the allocations to water, sanitation, nutrition, and air pollution control with the health budget.

Budget 2022 can ensure adequate funding for missions such as Digital Health Mission and Health Infrastructure Mission under the Ayushman Bharat.

Second, there is also a need to increase expenditure on new primary healthcare infrastructure, especially urban primary healthcare.

Third, there is also a need for a multi-skilled health workforce. The training of Accredited Social Health Activists (ASHAs) and Auxiliary Nurse Midwives (ANMs) can be done in a shorter time. Public health cadres must be created in every state.

Fifth, district hospitals need to be upgraded especially in underserved regions to become training centers for students of medical, nursing, and allied health professional courses.

Agriculture Sector

One, the burden of subsidies (food, fertilizers, and payments under the PM-Kisan Samman Nidhi) is multiple times of government’s expenditure on agri-R&D.

However, according to ICRIER, investment in agri-R&D brings five to 10 times higher returns and helps in poverty alleviation. Hence, there is a need to increase the amount of agri-R&D and extension, especially in horticulture, medicinal plants, livestock, fishery, etc.

Two, there is leakage of rice in the open market, and rice export unit value is below the MSP of rice. It reduces the global price of rice, and it means India has to export more quantities of rice to get the same amount of dollars.

What is the way forward?

First, there is a need for improvement in technology, skill development, investments in infrastructure to reshape value chains and sustain export competitiveness.

Second, in the agriculture sector, ICAR needs to be revamped to collaborate with the private sector and FPOs to make its research outcomes marketable.

Third, to reduce the burden of subsidy, the economic survey recommended reducing the coverage to 30 percent of beneficiaries under NFSA. Also, according to NITI Aayog, only 25 percent of the population is multi-dimensionally poor based on NFHS data.

Furthermore, beneficiaries should be given the option to receive the money in cash in their accounts to reduce leakages and also save on the high economic costs of these grains.

Source: This post is based on the articles “Good News Before Budget”, “Case for a health booster”, “Budgeting for farmer” published in Times of India, Indian Express, Indian Express respectively, on 31^st Jan 2022.