In his Budget speech on Wednesday, Finance Minister Arun Jaitley claimed that his overall approach while preparing the budget “has been to spend more in rural areas, infrastructure and poverty alleviation”.
But a look at the allocations for rural schemes and farm programmes in the Budget shows neither a dramatic increase in spending nor any fresh ideas.
The rural employment scheme under the Mahatma Gandhi National Rural Employment Guarantee Act continued to receive the largest share of central funds on rural development.
Under this scheme, the government provides a guarantee of up to 100 days of wage employment in rural areas to any household willing to do manual work.
In February 2015, soon after he assumed office, Prime Minister Narendra Modi had attacked the scheme, saying that he intended to continue it “as a living monument to the failures of the Congress”.
But this year’s budget allocation suggests that the government has had to acknowledge, and not for the first time, that the rural employment scheme is necessary to generate jobs in the countryside.
While Jaitley stated that this year’s allocation of Rs 48,000 crores in 2017-’18 is the highest-ever allocation for the rural employment scheme Act, in the ongoing financial year the revised estimates for the scheme with supplementary allocations have already reached Rs 47,500 crores and may even exceed that.
Activists from People’s Action for Employment Guarantee pointed out that with 22 out of 34 states showing negative balances – that is, they do not have the money to pay wages for work done or plan more work based on demand – and Rs 13,482 crores in pending liabilities, this year’s allocation will not keep pace with the previous year in real terms.
The activists said that this situation is already diluting the demand-driven nature of the employment scheme at a time when rural workers’ incomes have already been adversely affected by demonetisation.
Said Reetika Khera, an economist at IIT-Delhi: “The allocation to NREGA [National Rural Employment Guarantee Act] is disappointing as it remains inadequate in comparison to demand – there have widespread reports of job losses in the informal sector and many people are turning to NREGA to tide over these bad times.”
She added: “Once we factor in inflation to look at the change in real terms, that there is hardly any increase over the previous year’s revised estimates.”
‘Status quo budget’
Budget experts said that like rural employment, the allocations to rural infrastructure too largely maintained previous levels.
“There is some additional attention to rural housing, otherwise previous levels are being maintained that is all,” said Subrat Das, the executive director of the Centre for Budget and Governance Accountability. “Overall, it is a budget reflecting a conservative fiscal policy, but the economy needs an expansion, since this budget is coming after demonetisation.”
There seemed to be a major infrastructure thrust towards housing in rural areas. The finance minister said that the government proposed to build one crore houses in the next two years for the homeless and those living in kachcha houses (made of mud, wood and straw). The allocation for the Pradhan Mantri Awaas Yojana Gramin, a rural housing scheme, has been increased from Rs 15,000 crores last year to Rs 23,000 crores in 2017-’18.
Last year, against the target of constructing 32.6 lakh rural houses, 87,274 beneficiaries received the first instalment to build their houses.
There was no change in the allocation to rural roads under the Pradhan Mantri Gram Sadak Yojana, which had been sharply increased the previous year. Jaitley said that the rural roads scheme would get Rs 19,000 crore in 2017-’18, with another Rs 8,000 crore available from state governments.
Last year, against the target of 48,812 km of roads, 32,668 km of roads were completed. Over 6,000 settlements have been connected so far, while the target was to link 65,000 eligible sites.
Jaitley also announced the launch of the Mission Antyodaya scheme to lift one crore households out of poverty and make 50,000 panchayats “poverty-free” by 2019.
However, the finance minister did not announce any funds for this, and said that the scheme would use “existing resources”. He said that a composite poverty index would be framed to monitor the progress of panchayats from the baseline onwards.
Despite the fact that Jaitley prefaced his Budget speech with an announcement that the government’s goal was to double farmers’ income in five years, he gave little indication of how this would happen. Most of the speech repeated policies from last year, with slight increases in allocations for certain policies.
“This was a disappointing budget,” said Himanshu, a professor of economics at Jawaharlal Nehru University. “Existing policies have been rehashed and there is little about expenditure, which is the surprising thing. After demonetisation, we expected something more from the budget.”
For the most part, the budget focused on increasing allocations to existing schemes. The allocation for agricultural credit has been raised from Rs 9 lakh crores last year to Rs 10 lakh crores. Jaitley also increased the allocation for the Pradhan Mantri Fasal Bima Yojana, a crop insurance scheme, from Rs 5,500 crores to Rs 9,000 crores. The actual expenditure on this scheme was Rs 13,240 crores in 2016-’17 after extensive crop damage due to drought.
Other announcements were puzzling, like the one on a single agricultural market. This scheme, called eNAM, or e-National Agriculture Market, launched in April, aims to integrate markets across the country to provide standard prices. Jaitley set the target for implementation of eNAM at 585 markets. Though the eNAM website claims that 585 markets have already deployed this system, the finance minister said that only 250 markets have it.