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Budget allocation for rural India

Around 95% of the rural economy continues to remain informal. Although, rural non-agricultural sector contributes about 2/3rd of rural GDP, we don’t have good statistics to assess the growth of rural non-agricultural sector. Hence, we have to depend on the growth rates of agricultural sector to gauge rural India. Even though agriculture contributes only 13% of India’s GDP, it is a source of livelihood for about 50% of the population. Agricultural sector growth was robust at 4.1% in 2016-17, at the back of only 1.2% in 2015-16 and -0.2% in 2014-15.  The recent demonetization adversely affected rural sector as seen from the lower sales of two-wheelers, fertilizers, and other consumer items in rural India. Now it is time to give big push to agriculture and rural sector to revive supply, demand and consumption with more allocation to rural and agricultural development schemes with more employment and income potential.

Funds to agriculture and rural sectors

The total allocation for the rural, agriculture and allied sectors in 2017-18 is Rs.1,87,223 crores, which is 11.6% higher than the 2016-17(RE). Out of this, allocation to agriculture was Rs.58663 crore which was 11.1% higher and for rural development was Rs.128560 crore which was 11.8% higher than the 2016-17 (RE).  This marginal increase of about 11% in both the sectors indicates that, there was no big push to rural sector in the budget.

 Rural Development schemes

Budget allocation for MGNREGA was Rs.48,000 crore which was marginally higher as compared to 2015-16(RE)  but focus on creating productivity enhancing assets like farm ponds and compost pits is a welcome step. Allocation to Pradhan Mantri Awaas Yojana (PMAY) – Grameen was 23,000 crores which was 53% higher than last year.

Agricultural Development Schemes

Fund allocation to green revolution heading  (of which largest schemes are National food Security Mission with Rs.1720 crore and Rastriya Krishi Vikas Yojana with Rs.4750 crore and other related schemes) was increased by 32.6% to 13,741 crore. However, the budget provision for PMFBY decreased from Rs. 13,240 crores in 2016-17(RE) to Rs.9,000 crores, but it mentioned that the coverage is going to increase from 30% to 40% of the cropped area, given the past experience it likely that we cannot cover the proposed increased area with the reduced budget. Strengthening of soil health card scheme by involving 648 KVKs is a good step as the soil testing labs with agricultural departments are not sufficient. Fund allocation to Prime Minister Krishi Sinchayi Yojana (PMKSY) was enhanced by 42% to Rs.7377 crore. Enhancing fund allocation to long term irrigation fund (Rs.40000 crores) and micro-irrigation fund (Rs.5000 crore) with NABARD is a welcome step as the irrigation is the key to increasing productivity. Strengthening e-NAM by providing Rs.75 lakh each mandi for setting up cleaning, grading and packaging facilities is a good step.

Programmes which matter for poor

Rural electrification and poverty elimination programmes are important to reduce disparities among regions and people. Allocation of Rs. 4,814 crores under the Gram Jyoti Yojana for electrification of 100% villages is appreciable, but needs to be implemented with passion.  Rs. 4500 crores allocation to Deendayal Antyodaya Yojana to bring one crore households out of poverty and to make 50,000 gram panchayats poverty free by 2019, the 150th birth anniversary of Mahatma Gandhi is a welcome step.

Policy Reforms

Budget also talked about market reforms like introduction of new model law on contract farming to open up agricultural markets and create competitive market structures, there was also an emphasis on Model Agricultural Land Leasing Act, 2016 in the coming years and some scope for introduction of Universal Basic Minimum income mainly to benefit the rural poor.

Overall, it appears that the ongoing flagship programmes like Pradhan Mantri Awas Yojna (PMAY)-grameen for rural housing, Rastriya Krishi Vikas Yojana(RKVY) to increase farmers’ incomes, Prime Minister Krishi Sinchayi Yojana( PMKSY) to increase area under irrigation, National Livelihood Mission – Ajeevika  for reducing poverty has been given high priority with more fund allocation.

(The author is the Director of National Institute of Agricultural Extension Management (MANAGE), Hyderabad. He can be contacted at email: )

A Amarender Reddy

(The views expressed by the author in the article are his/her own.)

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