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Recently, the Kelkar Committee published a roadmap for fiscal consolidation. The report stresses the need and urgency to address India’s fiscal deficit. A high fiscal deficit – the excess of government expenditure over receipts – can be problematic for many reasons. The fiscal deficit is financed by government borrowing; increased borrowing can crowd out funds available for private investment. High government spending can also lead to a rise in price levels. A full PRS summary of the report can be found here. Recent fiscal trends Last year (2011-12), the central government posted a fiscal deficit of 5.8% (of GDP), significantly higher than the targeted 4.6%. This is in stark contrast to five years ago in 2007-08, when after embarking on a path of fiscal consolidation the government’s fiscal deficit had shrunk to a 30 year low of 2.5%. In 2008-09, a combination of the Sixth Pay Commission, farmers’ debt waiver and a crisis-driven stimulus led to the deficit rising to 6% and it has not returned to those levels since. As of August this year, government accounts reveal a fiscal deficit of Rs 3,37,538 crore which is 65.7% of the targeted deficit with seven months to go in the fiscal year. With growth slowing this year, the committee expects tax receipts to fall short of expectations significantly and expenditure to overshoot budget estimates, leaving the economy on the edge of a “fiscal precipice”.
Figure 1 (source: RBI)
Committee recommendations - expenditure To tackle the deficit on the expenditure side, the committee wants to ease the subsidy burden. Subsidy expenditure, as a percentage of GDP, has crept up in the last two years (see Figure 2) and the committee expects it to reach 2.6% of GDP in 2012-13. In response, the committee calls for an immediate increase in the price of diesel, kerosene and LPG. The committee also recommends phasing out the subsidy on diesel and LPG by 2014-15. Initial reports suggest that the government may not support this phasing out of subsidies.
Figure 2 (source: RBI, Union Budget documents, PRS)
For the fertiliser subsidy, the committee recommends implementing the Department of Fertilisers proposal of a 10% price increase on urea. Last week , the government raised the price of urea by Rs 50 per tonne (a 0.9% increase). Finally, the committee explains the rising food subsidy expenditure as a mismatch between the issue price and the minimum support price and wants this to be addressed. Committee recommendations - receipts Rising subsidies have not been matched by a significant increase in receipts through taxation: gross tax revenue as a percentage of GDP has remained around 10% of GDP (see Figure 3). The committee seeks to improve collections in both direct and indirect taxes via better tax administration. Over the last decade, income from direct taxes – the tax on income – has emerged as the biggest contributor to the Indian exchequer. The committee feels that the pending Direct Tax Code Bill would result in significant losses and should be reviewed. To boost income from indirect taxes – the tax on goods and services – the committee wants the proposed Goods and Service Tax regime to be implemented as soon as possible.
Figure 3 (source: RBI)
Increasing disinvestment, the process of selling government stake in public enterprises, is another proposal to boost receipts. India has failed to meet the disinvestment estimate set out in the Budget in the last two years (Figure 4). The committee believes introducing new channels [1. The committee suggests introducing a ‘call option model’. This is a mechanism allowing the government to offer for sale multiple securities over a period of time till disinvestment targets are achieved. Investors would have the option to purchase securities at the cost of a premium. They also propose introducing ‘exchange traded funds’ which would comprise all listed securities of Central Public Sector Enterprises and would provide investors with the benefits of diversification, low cost access and flexibility.] for disinvestment would ensure that disinvestment receipts would meet this year’s target of Rs 30,000 crore.
Figure 4 (source: Union Budget documents, PRS)
Taken together, these policy changes, the committee believe would significantly improve India’s fiscal health and boost growth. Their final projections for 2012-13, in both a reform and no reform scenario, and the medium term (2013-14 and 2014-15) are presented in the table below: [table id=2 /]
On October 2, 2021, Swachh Bharat Mission (SBM) celebrates its seventh anniversary. It was launched on October 2, 2014 to fulfil the vision of a cleaner India by October 2, 2019. The objective of the Mission was to eliminate open defecation, eradicate manual scavenging, and promote scientific solid waste management. In this blog post, we discuss the sanitation coverage leading up to the launch of the Swachh Bharat Mission and the progress made under this scheme.
Nation-wide sanitation programmes in past
According to the Census, the rural sanitation coverage in India was only 1% in 1981.
The first nationwide programme with a focus on sanitation was the Central Rural Sanitation Programme (CRSP), which was started in 1986 to provide sanitation facilities in rural areas. Later, in 1999, CRSP was restructured and launched as the Total Sanitation Campaign (TSC). While CRSP was a supply-driven infrastructure-oriented programme based on subsidy, TSC was a demand-driven, community-led, project-based programme organised around the district as the unit.
By 2001, only 22% of the rural families had access to toilets. It increased further to 32.7% by 2011. In 2012, TSC was revamped as Nirmal Bharat Abhiyan (NBA) to accelerate the sanitation coverage in rural areas through saturation approach and by enhancing incentives for Individual Household Latrines (IHHL).
In comparison to rural sanitation, fewer programmes were enacted to tackle deficiencies in urban sanitation. In the 1980s, the Integrated Low-Cost Sanitation Scheme provided subsidies for households to build low-cost toilets. Additionally, the National Slum Development Project and its replacement programme, the Valmiki Ambedkar Awas Yojana launched in 2001, were programmes that aimed to construct community toilets for slum populations. In 2008, the National Urban Sanitation Policy (NUSP) was announced to manage human excreta and associated public health and environmental impacts.
On October 2, 2014, the Swachh Bharat Mission was launched with two components: Swachh Bharat Mission (Gramin) and Swachh Bharat Mission (Urban), to focus on rural and urban sanitation, respectively. While the rural component of the Mission is implemented under the Department of Drinking Water and Sanitation, the urban one is implemented by the Ministry of Housing and Urban Affairs. In 2015, the Sub-Group of Chief Ministers on Swachh Bharat Abhiyaan under NITI Aayog had observed that the key difference between SBM and previous programmes was in the efforts to attract more partners to supplement public sector investment towards sanitation.
Swachh Bharat Mission – Gramin (SBM-Gramin)
The Sub-Group of Chief Ministers (2015) had noted that more than half of India’s 25 crore households do not have access to toilets close to places where they live. Notably, during the 2015-19 period, a major portion of expenditure under the Department of Drinking Water and Sanitation was towards SBM-Gramin (see Figure 1).
Figure 1: Expenditure on Swachh Bharat Mission-Gramin during 2014-22
Note: Values for 2020-21 are revised estimates and 2021-22 are budget estimates. Expenditure before 2019-20 were from the erstwhile Ministry of Drinking Water and Sanitation.
Sources: Union Budgets 2014-15 to 2021-22; PRS.
The expenditure towards Swachh Bharat – Gramin saw a steady increase from 2014-15 (Rs 2,841 crore) to 2017-18 (Rs 16,888 crore) and a decrease in the subsequent years. Moreover, during 2015-18, the expenditure of the scheme exceeded the budgeted amount by more than 10%. However, every year since 2018-19, there has been some under-utilisation of the allocated amount.
As per the Department of Drinking Water and Sanitation, 43.8% of the rural households had access to toilets in 2014-15, which increased to 100% in 2019-20 (see Figure 2). However, the 15th Finance Commission (2020) noted that the practice of open defecation is still prevalent, despite access to toilets and highlighted that there is a need to sustain the behavioural change of people for using toilets. The Standing Committee on Rural Development raised a similar concern in 2018, noting that “even a village with 100% household toilets cannot be declared open defecation-free (ODF) till all the inhabitants start using them”. The Standing Committee also raised questions over the construction quality of toilets and observed that the government is counting non-functional toilets, leading to inflated data.
Figure 2: Toilet coverage for rural households
Sources: Dashboard of SBM (Gramin), Ministry of Jal Shakti; PRS.
The 15th Finance Commission also noted that the scheme only provides financial incentives to construct latrines to households below the poverty line (BPL) and selected households above the poverty line. It highlighted that there are considerable exclusion errors in finding BPL households and recommended the universalisation of the scheme to achieve 100% ODF status.
In March 2020, the Department of Drinking Water and Sanitation launched Phase II of SBM-Gramin which will focus on ODF Plus, and will be implemented from 2020-21 to 2024-25 with an outlay of Rs 1.41 lakh crore. ODF Plus includes sustaining the ODF status, and solid and liquid waste management. Specifically, it will ensure that effective solid and liquid waste management is instituted in every Gram Panchayat of the country.
Swachh Bharat Mission – Urban (SBM-Urban)
SBM-Urban aims at making urban India free from open defecation and achieving 100% scientific management of municipal solid waste in 4,000+ towns in the country. One of its targets was the construction of 66 lakh individual household toilets (IHHLs) by October 2, 2019. However, this target was then lowered to 59 lakh IHHLS by 2019. This target was achieved by 2020 (see Table 1).
Table 1: Toilet construction under Swachh Bharat Mission-Urban (as of December 30, 2020)
|
Targets |
Original Target |
Revised Target |
Actual Constructed |
|
Individual Household Latrines |
66,42,000 |
58,99,637 |
62,60,606 |
|
Community and Public Toilets |
5,08,000 |
5,07,587 |
6,15,864 |
Sources: Swachh Bharat Mission Urban - Dashboard; PRS.
Figure 3: Expenditure on Swachh Bharat Mission-Urban during 2014-22 (in Rs crore)
Note: Values for 2020-21 are revised estimates and 2021-22 are budget estimates.
Sources: Union Budget 2014-15 to 2021-22; PRS.
The Standing Committee on Urban Development noted in early 2020 that toilets built under the scheme in areas including East Delhi are of very poor quality, and do not have adequate maintenance. Further, only 1,276 of the 4,320 cities declared to be open defecation free have toilets with water, maintenance, and hygiene. Additionally, it also highlighted in September 2020 that uneven release of funds for solid waste management across states/UTs needs to be corrected to ensure fair implementation of the programme.
The Standing Committee on Urban Development (2021) also expressed concern about the slow pace in achieving targets for source segregation and waste processing. The completion of their targets stood at 78% and 68% respectively of the goal set under SBM-Urban during 2020-21. In addition, other targets related to the door-to-door collection of waste also remained unfulfilled (see Table 2).
Table 2: Waste management under Swachh Bharat Mission-Urban (progress as of December 30, 2020)
|
Targets |
Target |
Progress |
Progress |
|
Door to Door Waste Collection (Wards) |
86,284 |
81,535 (96%) |
83,435 (97%) |
|
Source Segregation (Wards) |
86,284 |
64,730 (75%) |
67,367 (78%) |
|
Waste Processing (in %) |
100% |
65% |
68% |
Sources: Standing Committee on Urban Development (2021); PRS.
In February 2021, the Finance Minister announced in her budget speech that the Urban Swachh Bharat Mission 2.0 will be launched. Urban Swachh Bharat Mission 2.0 will focus on: (i) sludge management, (ii) waste-water treatment, (iii) source segregation of garbage, (iv) reduction in single-use plastics and (v) control of air pollution caused by construction, demolition, and bio-remediation of dumpsites. On October 1, 2021, the Prime Minister launched SBM-Urban 2.0 with the mission to make all our cities ‘Garbage Free’.
