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http://www.insightsonindia.com/2016/03/08/bigpicturethrustagricultureruraleconomygamechanger/

TheBigPictureThrustonAgricultureandRuralEconomy:
Isitagamechanger?
ByINSIGHTS

TheBigPictureThrustonAgricultureandRuralEconomy:Isitagamechanger?
Ithasnowbeenagreeduponbyalmosteveryonethattherecentbudgethasadistincttilttowards
agriculture,farmsectorandruraleconomy.Itisbeingarguedthatthistiltisduetotheimpressionor
rathercriticismagainstthegovernmentthatitwasprocapitalist,proindustryandantifarmers.The
financeministerhaslistedaseriesofpoliciesandmeasuresthatareaimedatalleviatingdistressin
agricultureandruraleconomy.
Background:
Agricultureisamajorcontributortothenationseconomyanditprovideslivelihoodsformorepeoplethan
anyinothereconomicsector,particularlyinruralIndia.About68%ofthecountryspopulationlivesin
ruralareas,accordingtotheWorldBank.
However,agricultureindustryhasstruggledsincethemonsoonrainfallshavebeenpoorfortwo
consecutiveyears,whichhasseverelyaffectedcropproduction.This,inturn,hashitrural
spending.Severalfarmershavetakentheirlivesfollowingcropfailures,unabletocopewiththe
burdenoftheirdebtsanissuethathasgainedworldwidemediaattentioninrecentyears.
MrJaitleysfocusonruralIndiainhisbudgetwasseenbymanyasanefforttowinovervoters,but
thecountrysruralandfarmingeconomiesdesperatelyneedsomehelp.
WhatsinthebudgetforAgriculture?
FinanceMinisterhasannouncedtheallocationofalmost360billionrupees(morethan$5.25billion)
towardagricultureandfarmerswelfare.Morethantwothirdsofthatmoneywillgotowardirrigationand
sustainablemanagementofwaterresources.
Another55billionrupees(over$800million)wasallocatedforagovernmentcropinsurance
scheme.Aseparatecorpusof150billionrupees(almost$2.2billion)wasprovisionedfor
subventionofinterestonloanstakenbyfarmers.
Inaddition,thefocusonorganicfarmingisexpectedtohelpfarmerincomesinrainfedand
stressedareas.
TheproposedallocationunderthePradhanMantriGrameenSadakYojnahasbeenincreasedto
27,000crore,withtheaimofconnecting65,000eligiblehabitationsbyconstructing2.23lakhkmof
roadsby2019.Thisisexpectedtosignificantlyimprovefarmtoforklinkages,facilitateexpansion
indistributionforconsumergoodscompanies,andreducewastageinthevaluechain.
Thegovernmentalsoannounceditscommitmenttoachieving100percentvillageelectrificationby
1May2018,forwhich8,500crorehasbeenprovidedforDeendayalUpadhayayaGramJyoti
YojnaandIntegratedPowerDevelopmentSchemes.Thiswillfurtherbenefittheruralmarketsby
improvingcoldchaininfrastructuretherebyreducingwastage,improvingavailabilityofperishables
andincreasingfarmerincomebyreducingdependenceonfuel.
Toimprovesupplyoffarmcredit,thetargetforagriculturalcredithasbeenincreasedto9lakh

croreforFY17,withaprovisionofRs15,000croretowardsinterestsubvention.
TheallocationundertheMGNREGShasbeenenhancedfrom34,700croreto38,500crorein
FY17.Thisisexpectedtoprovideanadditionalsafetynetfortheruralworkforceduringthenon
harvestseason.
Isitenough?
FinanceMinister,inhisbudgetspeech,talkedaboutdoublingfarmincomeinthenextfiveyears.While
thispromiseiscertainlylaudable,theblueprinttoachievethisappearsdoubtfulatleastgoingbythe
numbersinthisbudget.
WhilethebudgetoftheministryofagriculturehasbeenenhancedfromRs.17,000croreinthelast
budgettoRs.36,000crorenow,mostofthisincreasehasbeeninthePradhanMantriFasalBimaYojana
andinterestsubsidyonshorttermcredittofarmers.Excludingthesetwoprogrammes,theministrys
budgethasbeenincreasedonlymarginally.WhilethefertilizersubsidyhasbeencutbyRs.2,438crore,
theamountofexpenditurebudgetedonirrigationisonlyRs.2,340crore.Besides,thedelayin
implementationoftheNationalFoodSecurityAct(NFSA)andthereductioninfoodsubsidybyRs.5,000
croreinthisyearsbudgetdoraiseconcernsonthegovernmentsintentionontheNFSA.
Butwhatisrequiredatthetimeofruraldistressisnotjustlongtermsplansofruralrejuvenationandcrop
insurancebutalsopoliciestoprovidereliefintheshortrun.Theannouncementforanincreasein
expenditureonMGNREGAandPradhanMantriGramSadakYojanaiswelcomeinthisregard.Boththese
programmeshavenotonlyprovedusefulinbuildingruralinfrastructure,oneoftheninepillarsmentioned
bythefinanceminister,buttheyhavealsobeenabletogenerateemploymentandincomefortherural
poor.
AsagainsttheactualexpenditureofRs.35,766crorelastyear,thisyearRs.38,500crorehasbeen
allocatedforMGNREGA.Whilethisisanimprovementoverthelastyear,itislessthanthetotal
commitmentofRs.39,000crorepromisedbythefinanceministerlastyear(Rs.34,000croreinthe
budgetwithanadditionalprovisionofRs.5,000crore).Nonetheless,theincreaseisawelcomestep
towardrecognizingthepotentialofMGNREGAinreducingdistressinruraleconomyaswellasin
infrastructurecreation.SimilarincreasesinotherruraldevelopmentschemessuchastheIndiraAwaas
Yojanawillcertainlycontributetowardcreatingdemandinruralareas.
Whileconcernswillremainontheabilityofthisbudgettodeliveronthepromisetorevivetherural
economy,thisbudgethascertainlyshiftedthefocusofgovernmentpolicytothecrisisinthecountryside.
Thisbudgetmayavertthecrisisinruralareasandmaystopitfromworsening,butprudentgovernment
policyalsorequiresthatsomeofthesemeasuresarebackedupwithlongtermmeasurestoinsulatethe
ruraleconomyfromsuchepisodes.Thisrequiresreenergizingtheruraleconomyasanengineofgrowth
atatimewhenotherpartsoftheeconomyarenotdoingwell.

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