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Rural Sector & Budget

It is difficult to believe that such a commendable budget has been presented by Arun Jaitley with the right emphasis on agriculture and rural development. Keeping in view that a majority of the population lives in rural areas and that the infrastructure there needs huge resources, the budget is indeed focussed.

One is reminded of well-known economist Prof Michael Lipton, who two decades ago had said there was a trend in Third World countries to subsidise the urban middle class at the cost of the rural poor.

In India, as also in many other developing countries, the trend is to maximise growth by ignoring agriculture and rural development and emulating the Western models of development.

Undoubtedly, this is a wrong strategy as the country has high potential in food processing and agro-based industry as well as employment potential is too comparatively high.

Somewhat in the same tenor, late Mahbub-ul-Haque, creator of the Human Development Report and former Finance Minister of Pakistan, had rightly pointed out: “The basic concept of development is not too much GNP levels, important though that is, but to create an enabling environment in which people can enjoy long, healthy and creative lives”.

Keeping in view the above propositions, there has been a perceptive change in the priorities of the budget, which is quite rare in recent years. The four-pronged strategy to achieve growth has been rightly centred on: agriculture, rural infrastructure employment, health and skill creation and employment.

This budget has given special thrust to irrigation with 89 irrigation projects under Accelerated Irrigation Benefits Programme (AIBP) covering 80.9 lakh hectares. For the next five years, Rs 86,500 crore under this head has been earmarked and this financial year the amount disbursed is Rs 17,000 crore.

Therefore, by 2016-17 about 23 of these projects are expected to be completed. Moreover, 28.5 lakh hectares will be brought under the PM’s Krishi Sinchayee Yojana through mission mode and this should bring cheer to the farming community.

Over and above this, a dedicated Long Term Irrigation Fund in NABARD with an initial corpus of Rs 20,000 crore would be created. So far, it is indeed distressing to note that only 46 per cent of the cultivable land has been brought under irrigation, which doesn’t speak well of earlier attempts made by past Governments.

Keeping into consideration the impending water crisis, sustainable groundwater management, recharging of resources has been proposed with an estimated expenditure of Rs 6,000 crore. Clearly, the lack of water in the agriculture sector has affected production of various crops and the crisis in the sector deepened with drought in the past two years.

In such a scenario, the recharging of groundwater resources would go a long way in retrieving lost ground. Simultaneously, more experimentation would be needed by scientists to continue their efforts to develop water-efficient and drought-tolerant varieties as the President had pointed out some time ago.

To boost crop yields in rain-fed areas, organic farming has also been accorded priority in the budget and 5 lakh hectares is expected to be brought under Parmparagat Krishi Vikas Yojana in three years.

Similarly, another scheme Organic Value Chain Development has been launched. As organic products are much in demand, the products would help find ready acceptance both in domestic and export markets.

Another significant area has been soil health for which a card scheme would be implemented “with great vigour” to educate the farmers about the nutrient level of the soil. This would cover all 14 crore farm holdings by March 2017 and Rs 368 crores has been provided for the National Project on Soil Health & Fertility.

Crop insurance has been the brainchild of Prime Minister Modi and accordingly an e-platform would be launched next month to ensure farmers’ welfare. Accordingly, the Finance Minister has earmarked an outlay of Rs 5500 crores under the PM Fasal Bima Yojana for the coming year where the premium would be nominal and highest ever compensation would be given for crop loss.

The total outlay on agriculture and farmers’ welfare has been around Rs 36,000 crore with a target to increase crop yield in rain-fed areas and increase agricultural credit from Rs 8.5 lakh crores in the past year to Rs 9 lakh crores in 2016-17. The total outlay is substantially higher. Moreover, to reduce loan repayment of farmers, a provision of Rs 15,000 crore has been made in the current year towards subvention.

What Modi announced on February 28, was reiterated by Jaitley in his Budget that efforts would be geared up to boost the agricultural sector and double the income of the farming community in the next five years. Though there has been criticism about the announcement, the very intention needs to be applauded as it shows the government’s concern.

Obviously, doubling incomes in five years implies an average growth of 14.9 per cent a year which may be quite difficult to achieve but even then 50 to 75 per cent rise may be expected. Coming to rural infrastructure, 100 per cent rural electrification that Jaitley proposes shall be achieved by end April 2018 would definitely help achieve a turnaround of the villages.

The fact, that 5,542 villages were electrified, which is more than the combined achievement of previous three years, brings confidence about the government’s ability. However, though the target set may be difficult to achieve in the practical sense, even if 90 per cent villages are properly electrified, the benefits would indeed be immense.

In addition, the thrust on rural roads by earmarking Rs 19,000 crore under Pradhan Mantri Gran Sadak Yojana is significant. In fact, the total budgetary allocation for roads and highways has been increased to Rs 55,000 crore and the total allocation, including PMGSY, comes to around Rs 97,000 crore. Both rural roads and electrification would go a long way in developing the countryside and transforming the villages.

Added to this list is the rural job scheme, MNREGA which has been earmarked Rs 38,500 crore compared with Rs 34,699 crore last year. Though the scheme is of the UPA government, the fact that Rs 4,000 crore has been added shows that this government attaches importance. And if the entire amount is utilised this year there is every possibility it would be the highest sum spent in a year, according to Jaitley.

Moreover, the assets created would serve the twin purpose of rural economic development and job creation. Similarly, the setting up of 300 Rurban Clusters under the Shyama Prasad Mukherjee Rural Mission and the strengthening of the Krishi Vigyan Kendras are steps in the right direction. This sets at rest the criticisms that are being heard that the NDA government was pro-urban and not geared towards the farmers’ interests.

The Finance Minister’s concern for rural development and also the farming community has been clearly reflected in the budget after quite a long time, which indeed augurs well for the poor and deprived sections of society. Whether rural distress would be overcome remains to be seen, but undeniably a lot would depend on efficient implementation of the projects and delivery of services.