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Budget & Rural Sector: WILL HOPE HELP IN TURNAROUND?, By Dhurjati Mukherjee, 5 February 2018 Print E-mail


New Delhi, 5 February 2018

Budget & Rural Sector


By Dhurjati Mukherjee


As indicated in the Economic Survey, which had focussed on the farm sector, employment and education, the present Union Budget has met the expectations, at least, theoretically of most experts who have been deliberating about the possible thrust areas. It has found a mixed response from various sections which include politicians, economists, media etc. But though one may feel that Finance Minister Jaitley has done his job reasonably, much will depend on the promises made.           


As expected the thrust has been on agriculture in view of the agrarian crisis that has plagued the country In fact, as the Survey pointed out that real agricultural GDP had remained constant for the last four years. Moreover, it needs to be mentioned that the BJP had promised in its election manifesto 2014 to ensure remunerative prices for the famers’ produce and double their income by 2022. There were also suggestions by experts before during consultations about the need to devise a more systematic procurement method, raising farm credit targets and expanding the network e-NAM (National Agriculture Market).        


Thus, the thrust on agriculture needs to be commended. In fact, hiking the minimum support price by 1.5 times may be considered a roadmap for doubling farmers’ income in the coming years. Here, however, it needs to be pointed out that the number of poor and marginal farmers who would actually be benefitted has been rightly questioned which only time will tell. By hiking the agricultural credit target to Rs 11 lakh crores, Jaitley aims to ensure farmers’ a 50% return on their cost of production.        


It is noteworthy that Rs 2600 crores has been earmarked to boost groundwater irrigation under the Prime Minister Krishi Sanchai Yojana, which targets 96 irrigation deprived districts where less than 30% of the land holdings get water. The scope of the Long Term Irrigation Fund (LITF) under NABARD would also be expanded to cover specified command area development projects. Similarly an additional allocation of Rs 1000 crores has been rightly made for extending irrigation, strengthening facilities and improving groundwater management in rural areas. 


Jaitley’s observation that “the government’s commitment to farmer welfare is evident by institutionalising mechanisms such as development of gramin agricultural markets, increasing minimum support price (MSP), promoting cluster-based agriculture, developing last mile infrastructure and a fillip to realise the untapped export potential of the sector” appears encouraging. The proposal for creation of the Agri-Market Infrastructure Fund, with a corpus of Rs 2000 crores is for developing and upgrading agricultural marketing infrastructure in the 22,000 gramin agricultural markets and 585 agricultural produce market committees (APMCs).


A significant proposal is ‘Operations Green’ on the lines of ‘Operations Flood’ to tackle the volatility of tomato, onion and potato prices. The awareness that traditional agriculture cannot provide adequate income, animal husbandry, fisheries and aquaculture are some of the rural activities that stand to gain from the Budget. Rs 10,000 crore fund to finance infrastructure requirements of fisheries, aquaculture and animal husbandry has been created to generate rural employment. But whether these measures would help in doubling farm incomes during 2017-2022 remains a big question. 

Apparently, the budgetary allocation for MNREGA has been kept at Rs 55,000 crores which is exactly the same the scheme is likely to spend in 2017-18. Likewise, the job scheme did not make budgetary headlines, possibly due to inadequate allocation though it may be expected that the government gives extra money in the revised estimates.  


While recasting the ‘Restructured National Bamboo Mission’ the Jaitley aptly referred to bamboo as ‘green gold’ and made a sizeable outlay of Rs 1290 crores. This may help in value addition and help schedules castes and tribes forest areas. However, skill development in this sector would be needed. 


The emphasis on rural infrastructure development is also noteworthy where around Rs 14.34 lakh crores has been earmarked. The expenditure is aimed at creating employment of 321 crore person days, 3.17 km of rural roads, 51 lakh new houses, 1.88 crore toilets and provide 1.75 crore new household with electric connections besides boosting agricultural growth. These obviously look quite encouraging though much will depend on the efficiency of implementation, which unfortunately, is not quite good.      


Social infrastructure development has also received due attention. Though the government has increased cess by one per cent to 4, the allocations towards health and education have not been hiked significantly. In the realm of heath, the proposal to set up 24 new government medical colleges and hospitals may not meet the target of setting up one medical college for three parliamentary constituencies. It would have been better if the figure of 24 would have been doubled. The wellness centres proposed for maternal and child health may help the rural sector and the provision of Rs 1200 crores appears quite satisfactory though more funds would be necessary.


The state of health facilities in villages is in a poor condition and the impoverished sections do not have the money to avail private sector treatment. Undeniably upgrading health centres in the villages was very much necessary and unfortunately there is no such announcement. However Rs 5 lakh medical reimbursement under the National Health Protection Scheme (NHPS), provides an annual coverage of Rs 50,000 and is envisaged to benefit 10 crore poor families, needs to be appreciated.


There have been allegations, and not without reason, that implementing all these plans would require enhanced resources that have not been allocated. It stands at Rs 9975 crores compared to Rs 9500 crores (Budget estimate) of 2017-18. Thus it remains to be seen how Jaitley’s promise of providing health facilities to the poor would be realised. Remember, India’s allocation for health as percentage of GDP is much lower compared to the other emerging economies like Brazil, China, South Africa, etc.  


The promise to create 70 lakh more jobs appears to be overstated. Economists feel that this is highly unrealistic figure though the emphasis on both physical and social infrastructure definitely may create some direct and indirect jobs. The envisaged investment of Rs 5.35 lakh crore for Phase-I of the Bharat Mala programme for roads and capex of Rs 1.46 lakh crore for railways may provide the momentum for creation of jobs. It is difficult to believe that there would be much increase in employment creation in the big formal sector but there is potential in rural infrastructure development and labour-intensive small and micro sectors.      


As regards the education, there is not much and the allocation, as usual, has been much below what is necessary. School education and literacy has recorded a modest 7.86% increase but it is noteworthy that Eklavya Vidyalayas would be set up in every block which has 50% of population and at least 20,000 tribals on the lines of Navodaya Vidyalayas. There is no plan to set up central universities in specialised areas like agriculture, dairy etc. which are necessary to give thrust to agriculture and rural development. Also the government could have planned to assist State governments in setting up model schools in each sub-division or two in each district by giving say 50% grant.       


Whether the Budget is populist or part of a social philosophy to boost the rural sector may be debated. Congress leaders have dubbed it as mere rhetoric and un-implementable promises compared to resource allocations, while the Leftists have found nothing for social outcasts, SCs, STs and OBCs. However, a lot of expectations have been raised and only the Government’s sincerity and implementation schedule will make these a reality. Moreover, resource allocation in some sectors needs to be boosted, which the government may consider while formulating the revised estimates. --- INFA


(Copyright, India News & Feature Alliance)

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