Budget 2019 is long on infrastructure development but short on human development

Financial Express, July 09, 2019

By Pradeep S Mehta

Budget 2019-20: For employment generation, the government intends to boost agro-rural industries through cluster based development with a focus on bamboo, honey and khadi clusters.

Budget 2019 India: The focus of Union Budget 2019-20 on promoting infrastructure development, fostering connectivity, and attracting foreign investment, is impressive. Nirmala Sitharaman has rightly acknowledged that structural reforms will be required to pursue these goals. For instance, the government has announced its intention to invest Rs 100 lakh crore in infrastructure over the next five years, and is likely to set up an expert committee to explore various options. The Finance Minister will require support from all stakeholders to identify, implement and monitor relevant structural reforms.

The government is also clear about the support its expects from the private sector in pursuit of its development agenda. For instance, it has been estimated that railway infrastructure would need an investment of Rs. 50 lakh crores between 2018-2030, for which a Public-Private Partnership (PPPs) has been proposed. The private sector should welcome this step, and use this opportunity to call for implementation of Kelkar Committee recommendations on PPP.

On connectivity as well, the government is likely to release blueprints for developing gas grids, water grids, i-ways, and regional airports. It is ready to experiment with innovative instruments for building large scale public infrastructure, and is keen to create aircraft lease financing, and maintenance, repair and overhaul industry in India. While much of this is expression of intent at this stage, the private sector should welcome these steps and express commitment to work with the government. It has necessary expertise and technology to translate government’s plans into reality.

A positive industry response should encourage the government to pursue difficult structural reforms, including: ensuring availability of necessary factors of production; fostering policy predictability and certainty; reducing uneven playing field and preference to public sector entities; ensuring competition; and promoting speedy dispute resolution. The government needs to realise that it will need to do much more that improving its rankings on doing business indicators and raising foreign direct investment limits to attract investment.

While ticking right boxes on infrastructure development, the government fell short of expectations on human development and employment generation initiatives. To become a true global power, India needs massive investments in health, education and social sectors, with appropriate involvement of different tiers of governance, and innovation from and other stakeholders, including private sector. This can help individuals prepare for changing nature of work and complement other government initiatives on employment generation.

For employment generation, the government intends to boost agro-rural industries through cluster based development with a focus on bamboo, honey and khadi clusters. While focusing on clusters is the step in right direction, a top-down model in this regard might not work. A bottom- up approach for cluster identification and development through stakeholder engagement and focused on resolving unique cluster specific problems is needed. An evidence based approach for identifying local solutions for local problems has better chances of success.

Pradeep S. Mehta is the Secretary General of CUTS International.

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