 Welcome to NewsClick. We have with us Mitha Gupta, an economist, to talk to us about the budget 2017. What is your overall reaction to the budget? The budget is very disappointing. It's a budget which is a contractionary budget at a time when something totally different was required. In that sense, it's a budget which has its economics completely wrong. If you look at the economic survey which the government itself tables, it reports a huge increase in unutilized capacity. It reports job losses. It reports a recessionary condition in the economy as a whole and a decline in aggregate demand. Demonitization has only made it worse and has actually made a very cash-driven economy really, really cash-strapped, which means that the informal sector, the unorganized sector, people working there are in deep crisis. At a time such as this where you have unutilized capacity, you have excess labor in the market and you have 40 million tons of food stocks. Your current account deficit is very comfortable. You have good foreign exchange reserves. At a time like this, we would have expected actually an expansionary budget that the government would go ahead with a lot of expenditure, reduce the slack in the system. There's a huge scope for slack reduction and in that way generate aggregate demand and economic growth. But at the moment with this low economic growth, what has the government done? It's actually brought down fiscal deficit. It has brought down the budgetary support as a ratio of the GDP. It's come down from an already low 13.4% to 12.7%. So the overall support to the budget has come down. In addition to that, it has actually increased the burdens on the people. How to see the thrust of the budget given that there are elections in five states? Actually, I had expected and as had everybody else, that's why we were all alarmed as to why they had preponed the budget. So it was the general expectation that preponing the budget before the UP and other elections meant that there would be a, you know, what people call a populist budget, but what we would expect to be a good expansionary budget with a lot of expenditure on rural development, etc. But they haven't done any of that. So even in terms of its politics, it's quite confounding. You know, if I was a BJP candidate contesting an election from the UP, I would be a very, very, very, very worried person today. Why do you think that the budget is smaller compared to the previous budget? Well, it has been smaller mainly because of its adherence to neoliberal policies. You see, the whole idea is to have consolidation. Even at a time like this, the obsession is to keep fiscal deficit low. Also, you know, the whole approach towards fiscal management and the whole approach towards resource mobilization is a impediment in itself. If you're unwilling to tax the rich, you're unwilling to tax the corporates. In fact, you give them a tax holiday, you give them tax concessions. You'd be surprised to know that in this budget too, we have almost what? 2.1% of the budget which is given away as, well, gifts largest to the corporate sector. At the same time, apart from the tomming of the, you know, 20,000 crore relief to the income taxpayer, there's an attempt to get 200,000 crores as taxes. Of this 200,000 crores, about 75,000 crores is indirect taxes. Now, who pays indirect taxes? It's well known that they're aggressive in nature. The burden falls disproportionately on the poor and the working people. But even the estimate of 1.3 lakh crores from the rich or from income taxpayers is a gross overestimate. You can't believe it. It's laughable. Why? Because the assumption of GDP growth is over 11%. When the economic survey itself brings it down closer to 6.5%. And yet, all the tax buoyancy figures, all the tax estimates are on the basis of a very unrealistic GDP growth figure. Therefore, this budget is unbelievable in terms of its projections, its numbers. And it's going to be really, perhaps a slightly higher fiscal deficit or worse, a big cut in expenditure as we go. The budget claims that there's going to be affordable housing for the poor. Your take on the issue. You know, this business of affordable housing, we need to unpack it. You know, you have to look at it more carefully because actually what have they done? They have changed the definition of infrastructure by including affordable housing in it. This is something we've been resisting. We've been fighting. And the peasant movement in the country has actually been very worried about the kind of things that are included in infrastructure. Why? Because what this means is that the moment you make affordable housing a part of infrastructure, land acquisition becomes easier. It becomes a part of priority sector lending. So, credit becomes available. Much cheaper credit becomes available. And the moment you actually redefine the size of the housing itself by making it larger, as they have done, what you do is you try to create profits for the real estate sector and you also try to create a housing bubble. And that housing bubble is then pushed to show that the economy is doing very well. But this budget also talks like the previous budget about doubling farmers' income and your overall take on the agrarian sector. You know, that is where we were really expecting a lot. Why? Because we've had two consecutive years of drought. Net zone area has come down. There have been floods in many parts of the country. And on top of that, the demonetization actually caused a huge crisis at the time of sowing. People have lost jobs. People have migrated back from urban areas to rural areas. So, there was a big expectation that rural development, agriculture would receive a lot of government attention. And the government has really failed the farmers. There's actually been a decline in the contribution to the agricultural sector as a share of total budget outlay that's actually fallen. The so-called increase in Mandrega is a abysmal 500 crore increase from what it spent last year. And in any case, Mandrega is a demand-driven law. You know, it's not anybody's largest or it's not somebody's sort of gift. It's a demand-driven program. So, whatever demand there is, they have to give that work. Therefore, in sum, when it comes to agriculture and when it comes to the rural sector, the budget more than disappoints, it actually adds to people's burdens. So, do you mean to say that there have been no concrete steps taken to address the farmers' crisis affecting our country? I would say that, in fact, the opposite. What has been happening is that the agrarian sector, the rural sector has actually borne the biggest brunt of the crisis in the economy, the recession, the joblessness and the withdrawal of public services. Now, the budget is actually done away with the planning component. So, has there been any change in the allocation for SESTs in this budget? You see, this budget has done two things, you know, for the first time. One is to present the railway budget along with the general budget and then said that infrastructure expenditure has really gone up. Whereas, actually, there has been no real increase in infrastructure expenditure. But when it comes to tribal sub-plan and the SCSP, that is for the scheduled costs, it is mandated, it is a statutory requirement that the shares given out of plan funds would be in proportion to the population shares. It has not happened actually. Every year, there has been a huge shortfall. This year, less than 1.5 percent of the overall budget has been allocated for the welfare of SESTs and less than 2.5 percent of the overall budget has been allocated for the welfare of SESTs. Now, you can imagine how abysmal and low that amount is. So, even if the plan and non-plan distinction is done away with, even as a share of the total budget, it is so small, furthermore, there are other problems, you know, when it comes to these two heads. One of them is that a lot of that money is actually spent on other things. It has been allocated away from what is meant to be spent on. This budget especially focuses on cropping black money and also illegal funding for political parties. Do you have to say anything on this? Well, they have said that the amount of donations that can be given in cash are now down to 2000 rupees. But till you actually ban corporate funding of elections still you bring this expenditure by political parties within the ceiling which the election commission sets. In other words, till you put a ceiling on the expenditure by political parties and stop corporate funding of elections, how are you going to stop the use of black money? You know, changing the amount of cash that can be given is not going to make any difference. It is an irrelevant issue actually. Do you want to talk about the provision for having bonds that is given where people can buy bonds or in form of shares for political parties and the political parties can claim it later? You see, this RBI bonds, you know, buying it from there or giving it directly by check. That really doesn't make much of a difference. That's neither here nor there. That's just, you know, for some amount of, I suppose, publicity or whatever. The real thing that they need to do if they want to control black money in elections is to actually put a ceiling on the expenditure by political parties themselves and to stop corporate funding of elections. Now, coming to the social sector, can you throw some light on education and health sector as well? You know, it's quite shocking. Education and health are supposed to be the two sectors about which this government's claimed that it's going to do a lot. But there's barely been any increase and in some of the heads there's actually been a decline. At a time when we want to universalise education, universalise healthcare, at such a time to do this is actually quite criminal. It also comes on the heels of a change in the sharing pattern of expenditure between states and the centre. So, at this time actually for the centre to cut down or not increase its allocations is going to be terrible from the point of view of health and educational outcomes. Thank you very much, Smita. We'll talk to you on another issue quite soon. Thank you.