The Budget is an amalgam of various planning initiatives, which will help the farmers
The Union Budget 2018-2019 was predominantly a people-centric Budget, focused on the agrarian and the rural economy. Sectors like healthcare, agriculture, MSMEs, education and skill have been given importance, while public expenditure on infrastructure and railways has been hiked. Besides these concessions, the sectors that have taken a hit include the financial sector, defence and consumer spending. Specifically, the reintroduction of long-term capital gains tax on equity investments has cast a pall over the financial sector.
These allocations cohere with the Government’s position on fiscal deficit targets, as it discards conservatism for populism in the election year. Even though a slippage in the projected fiscal deficit target despite decent receipts of about Rs 1,00,000 crore instead of the targeted Rs 72,000 crore from disinvestment left the markets disappointed, the Budget was not a surprise, coming as a precursor to a slew of State Assembly elections and the lok Sabha election.
Even in terms of contributing to alleviating rural and agrarian distress, the planned measures announced will have to go through upgradations before they can start working well for the farmer. Surprisingly, the farmer-centric Budget did not reflect the concern in the Economic Survey that created quite a flutter, namely, that climate change will lead to a 25 per cent reduction in farmers’ income in rain-fed areas. If one were to go by the analysis in the Economic Survey, instead of looking at people-centric compulsions of the Budget, it will become clear that a lot more needs to be done and could have been done on the front of climate change in a Budget that has earned the recognition of being based on sops to the agricultural sector.
Most of the initiatives in the agricultural and rural economy were focused on accelerating farm livelihoods, infrastructure and insurance, with a package of about Rs 14.34 lakh crore being allocated to farm livelihoods and a Rs 11 trillion increase in agricultural credit. The Government announced the setting up of minimum support price at 1.5 times the cost of production of kharif crops and allocated Rs 500 crore to ‘Operation Green’ to support agriculture. In terms of livelihoods, it also announced increased allocations to building rural infrastructure, health insurance for the poor, schemes and allocations to generate employment, more loans under MUDRA Yojana, the MSME sector package and directed the NITI Aayog to work on ensuring remunerative prices for the farmers in the event of crop failure. All in all, over three lakh crore rupees will be spent on rural India, with MNREGA allocations to help in doubling farmer incomes.
In fact, prominence has been given to MNREGA, with references to accelerating participation of women in the programme and deploying space technology for it. This is not surprising as despite all its vilification, this Government is known for its social sector spending and leverage of MNREGA. The past successful track record in some of the Government’s flagship social schemes, like rural electrification, sanitation coverage and Swachh Bharat mission, as highlighted by the Finance Minister, show that.
Ironically, even though concessions to the agriculture sector have been labelled as ‘Operation Green’, it finds little echo of promotion of sustainability. Certainly, doubling farmer incomes has little to do with sustainability, unless it is also accompanied by changed agrarian practices — but the only reference to such ‘clean’ practices appeared to be limited to the use of solar pumps. Instead, the Budget could have also reflected some kind of environmental planning. With the Government already deciding to divert finances from environmental funds and coal cess to GST compensation and the current Budget not reflecting any progress on environmental planning either, the current Budget remains wanting on sustainability despite talking of ‘Operation Green’.
At a larger level, the extent to which these budgetary allocations will contribute in achieving desired outcomes remains a big question. Unless the perceived vision (in this case, transforming the rural economy) is in tune with the stated budgetary targets and allocations, there will be chances of slippages. In the case of the just presented Budget, it will be a misnomer to believe that it is a solely rural-focused Budget, as the means of achieving rural livelihoods and farm targets rely on market linkages, such as strengthening self help groups, linking farmers to agricultural markets, boosting Aadhaar and digital technologies for farmers through existing means like soil heath card schemes, dairy processing infrastructure etc. Much more has been happening and will happen, especially with the expected involvement of NITI Aayog in various programmes.
This raises long-term questions whether introducing new technologies, without increasing agricultural and rural infrastructure in a way that can make sense to people, including training them to be able to access technology easily, will help. The Budget is an amalgam of various planning initiatives spanning direct sops and indirect promises of market connectivity, which will usher in more favourable conditions for the farmers.
(The writer is with the Institute for Peace and Conflict Studies and writes for The Resurgent India Trust)
