Budget 2018: It’s the rural economy, stupid

A groundnut farmer with his produce
Groundnut farmer Mulubhai Sama in his village Malida, Gujarat.

With large parts of the country, including poll-bound states, gripped by a farm crisis, Modi government’s last budget gives top priority to the rural sector.

New Delhi: At a time when there is talk of much discontent in India’s farm and rural sectors, the last full budget of the Prime Minister Narendra Modi-led BJP government has, not surprisingly, attempted to give a push to these critical sectors and cater to the rural electorate ahead of the Lok Sabha polls due next year.

“While making the proposals in this year’s budget, we have been guided by our mission to especially strengthen agriculture, rural development, health, education, employment, MSME and infrastructure sectors of Indian economy,” Finance Minister Arun Jaitley said in his budget speech, summing up the thrust of this budget.

Pointing out that the government is committed to achieving the goal of doubling farmer income by 2022, Jaitley proposed to raise the minimum support price (MSP) of all crops to 1.5 times that of the production cost, and announced the launch of ‘Operation Greens’ to deal with price crash in tomatoes, onions and potatoes.

Farm crisis in various parts of the country, including in poll-bound states such as Karnataka, Madhya Pradesh and Rajasthan, has left the BJP worried about losing support of sections of this constituency, a chunk of which it wrested from the Congress in the 2014 polls. In the recent Gujarat assembly elections, the BJP suffered reverses in rural areas where cotton and groundnut farmers have been unhappy about low prices for their produce.

The flagship Ujjwala scheme, which gives free LPG connections to the poor, has been expanded to increase its target of covering 5 crore poor women to 8 crore poor women. Ujjwala, a hugely popular scheme among women, has been widely credited as having helped the BJP electorally in several state elections, including in the crucial Uttar Pradesh polls where the party won with a resounding mandate.

In the rural sector, the government’s emphasis has been on maximising livelihood opportunities, as reported by ThePrint last week. The flagship rural livelihoods scheme—the National Rural Livelihoods Mission (NRLM)—has been given a budgetary allocation of Rs 5,750 crore, up from Rs 4,500 crore in the 2017-18 budget.

“As my proposals outlined indicate, focus of the government next year will be on providing maximum livelihood opportunities in the rural areas by spending more on livelihood, agriculture and allied activities and construction of rural infrastructure. In the year 2018-19, for creation of livelihood and infrastructure in rural areas, total amount to be spent by the ministries will be Rs 14.34 lakh crore,” the finance minister said.

The marquee National Rural Employment Guarantee Act (MGNREGA) has seen a jump in initial budget allocation from Rs 48,000 crore to Rs 55,000 crore, as reported by ThePrint last week.

The funding for this scheme, however, is indicative since it is a demand driven scheme and the government is legally bound to provide 100 days of employment every year to each rural household if they so demand. The figure of Rs 55,000 crore is also what the mid-term expenditure framework had suggested and is the same as the revised estimates for 2017-18.

Interestingly, the BJP was accused of attempting to water down the scheme and squeeze its funds after it came to power in 2014. However, with Lok Sabha elections due next year, the BJP will want to be seen on the right side of a policy initiative that paid rich electoral dividends to the Congress-led UPA, which launched the scheme, and has hence, maintained its funding momentum.

Prime Minister Narendra Mod’s government had initially been criticised by the opposition for being “pro-rich”, with Congress president Rahul Gandhi giving it the tag of ‘Suit Boot Ki Sarkar‘ (a government of the rich). The party has, since, consistently tried to alter this perception. Backing off from attempts to ease the Land Acquisition Act, bringing in demonetisation and giving budgetary nudges to the rural/farm sector have all been part of this image-correction exercise.

1 COMMENT

  1. “Pointing out that the government is committed to achieving the goal of doubling farmer income by 2022, Jaitley proposed to raise the minimum support price (MSP) of all crops to 1.5 times that of the production cost, and announced the launch of ‘Operation Greens’ to deal with price crash in tomatoes, onions and potatoes.” will this happen? The only way is to allow FDI in agricultural sector .It is feasible because India is a country with diversified climatic conditions,which will attract more giants across the globe. Secondly there should be stringent rules to minimise the exploitation by the Indian traders.Instead of increasing the unproductive MGNREGA expenditure,the mechanisation of agriculture is a need of the day. Not only Jaitly , every body in this country forgotten the truth ,that Indian economy is an agro based economy.

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