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Budget 2011: Increases unlikely to make major difference in social, rural sectors

The 2011-12 Indian budget has done little to address food inflation. There is an overall 17% increase in the social sector

Union budget 2011-12, presented by the finance minister on February 28, 2011, has budgeted a 17% increase in social spending (health, education, welfare schemes) over the current year.

The health sector will receive Rs 26,750 crore, a rise of 20%, while education spending will also increase to Rs 52,000 crore. Rural development gets Rs 66,100 crore. Though the finance minister announced that the National Food Security Bill, which will provide a legal guarantee of subsidised food for low-income families, will be tabled in Parliament this year, no budgetary allocation has been made for it (the C Rangarajan Committee had estimated the cost at Rs 92,000 crore).

A major policy shift is direct transfer of cash subsidy to people living below the poverty line (BPL), from March 2012. This means all BPL families will receive direct cash subsidies to buy fertilisers and cooking fuel (LPG and kerosene) at prevailing market prices rather than the price of these products being subsidised by the government. Currently, 6.52 crore BPL families are covered under the public distribution system. As a consequence, perhaps, there was a 13% reduction in subsidy on fuel, food and fertilisers for 2011-12.


The increase in the health budget by Rs 4,589 crore, to Rs 26,750 crore, does not put it much above the current 1.2% of GDP. Public health activists say the health budget should be at least 2-3% of GDP if it is to make a real difference. The World Health Organisation calls for even higher allocation, at 5% of GDP. To reach the goal of 2% of GDP in five years, that the UPA government itself has set, the increase should be at least Rs 10,000 crore every year, according to Dr Anant Phadke, coordinator of the Jan Arogya Abhiyan.


Of the Rs 52,000 crore allocated to education, Rs 21,000 crore (up from Rs 15,000 crore) has been reserved for the Sarva Shiksha Abhiyan (SSA) and introduction of scholarships for students belonging to the scheduled castes and tribes, for Classes IX and X. The recently introduced Right to Education Act guaranteeing free and compulsory school education to all children comes under the SSA. But, as a recent annual survey by the NGO Pratham revealed, while school enrolment figures have gone up in most states, quality of education has fallen: overall, after five years of schooling, almost 50% of children are at the Class II level. There is no allocation in the budget for this aspect of education which has been alarming educationists for some time now.


There is a 2.6% increase in allocation for agriculture and allied sectors over last year. Rising food prices has been a major concern in the past year. For the agriculture sector, the budget saw an increase in bank lending as well as in interest subsidy to farmers who pay off their short-term crop loans on time. With a 3% interest subsidy to farmers, the effective rate of interest will be 4% per annum. Steps to raise storage capacity, cold chains and mega food parks were also announced. The first two have been given infrastructure status to attract private investment. Around Rs 300 crore has been provided to promote 60,000 villages growing pulses in rainfed areas, and another Rs 300 crore for palm oil cultivation.

Rural development

The corpus of the Rural Infrastructure Development Fund (which routes bank funds for financing rural infrastructure) has been raised to Rs 18,000 crore, up from Rs 16,000 crore. Bharat Nirman which aims to upgrade rural infrastructure gets Rs 58,000 crore, an increase of Rs 10,000 crore, and the Rajiv Awas Yojana for slum-dwellers got Rs 1,270 crore, up from Rs 150 crore -- an increase of 700% with the aim of creating a slum-free India. With an allocation of Rs 40,100 crore, the National Rural Employment Guarantee Scheme has seen no increase. However, the finance minister said salaries of NREGS workers have risen under the new wage calculation system. The rural development ministry revised the minimum wage by linking it to the consumer price index for agricultural labour in January 2011, causing wages to rise by an estimated 17-30%. 

The Centre has created a special Women’s Self-Help Group Development Fund of Rs 500 crore. A Microfinance Equity and Development Fund for overall funding of the sector already exists; the current allocation is an addition, according to the chief of the National Bank for Agriculture and Rural Development that administers the scheme. There are nearly 70 lakh self-help groups in the country.

Anganwadi workers who have been demanding an increase in wages for several years (they even took out a morcha in New Delhi in this connection, recently) will see an increase in their wages as the Centre has allocated Rs 3,000 crore for the purpose. In Maharashtra, for example, the state and Centre’s contribution together will push salaries up to Rs 4,050 (Rs 3,000: Centre, and 1,050: state), while helpers will get Rs 2,000. There are nearly 28 lakh anganwadi workers in India.

The anganwadi and self-help group provisions appear to be the only components of “gender budgeting”, a concept first introduced in the 2005-06 budget.

Unorganised sector

A National Social Security Fund has been created for workers in the unorganised sector, with an allocation of Rs 1,000 crore. The government will give Rs 1,000 for each National Pension Scheme account opened by workers in the unorganised sector. An exclusive skill-development programme for the textile sector, and banking facilities, will be provided to all habitations with a population of 2,000 and more.

There has been a 50% hike in allocation for schemes for women and child development; Rs 4,500 crore has been allocated for the Ministry of Social Justice and Empowerment, a hike of 80%.

Source: DNA, March 1, 2011
            The Indian Express, March 1, 2011
           The Mint, March 1, 2011