High fiscal deficit will trim welfare spending: Ramesh

Union rural development minister Jairam Ramesh on Monday said there may not be a major increase in the allocation for social sector in the forthcoming Budget due to the grim fiscal situation.

"It is going to be very tough maintaining high levels of increases (in budget allocations) given the fiscal situation. It is a tough situation to be in," Ramesh told reporters on the sidelines of a convocation at Reserve Bank of India-promoted IGIDR.

"It is going to be tough," he repeated, when asked how the Budget will shape up for the social sector.In the face of rating downgrade threats, finance minister P Chidambram had in October 2012 set a fiscal deficit target of 4.8 percent for next fiscal.

Chidambram had also said he would rein in fiscal deficit at 5.3 percent this fiscal. Ramesh also said the government's flagship rural employment guarantee programme MGNREGA, run by his own ministry, needs to be more "flexible" to regional sensitivities, especially in the central India, where the Maoist insurgents are capitalising on the discontent spread by lack of development.

"If there is one group of areas which requires a completely different approach, it is the tribal areas which are characterised by very poor human development indicators. And it is not a coincidence that many of these areas are Maoist-affected," he said. "These are all areas of tribal deprivation, these are all areas of tribal discontent which have been used by Maoists."

This is the second time Ramesh has found flaws with MGNREGA in the last two months. Earlier, he had termed the programme as "paying wages for unproductive work" which creates no real assets. Ramesh also called for urgent attention to the sanitation and hygiene issues, saying that they have a direct bearing on malnutrition, and blamed economists and and Plan panel for being oblivious to it.

"There is adequate medical evidence to suggest that one of the causes for persistent high levels of malnutrition in the country is poor sanitation and hygiene. This has not yet percolated among economists who write on human development or even the planning commission...," he said.

Barring education, the country's performance on the other human development indicators like health has not been good, even though the economic growth has been strong, he said. He also pointed out a slew of paradoxes like the human development index continuing to be poor in spite of high per capita incomes in states like Gujarat, Punjab and Haryana.

Similarly, richest states like Maharashtra, Andhra and Karnataka have districts or pockets having the worst human development indicators, the minister said.