Impetus To Rural Economy

Source: The Hitavada      Date: 03 Feb 2018 10:02:21

By K R Sudhaman,

Significant measure in the Budget is the impetus provided to the rural economy and address farm distress, which would be a force multiplier for overall growth expected to surge toward 8 per cent annually. Thus, a honest attempt has been made to address the concerns of rural India.

STUNG by the India shining campaign of ruling NDA in 2004, which did not go well with rural India and hence defeated in the elections, Prime Minister Mr. Narendra Modi’s Government has come out with a Budget that brings cheers to struggling Bharat, hit by farm distress and collapse of informal sector in rural economy.

Finance Minister Mr. Arun Jaitley, presenting the last full Budget of Modi Government before it goes to polls in May next year, announced a game changing health insurance scheme to 10 crore below poverty families, which translates to 50 crore persons. The scheme, dubbed as Modi-care, much bigger than Obamacare, proposed by then US President for the health of its population, will bring a sea change in the healthcare of the population. The details of the scheme with a component from States is yet to be worked out but aims to provide up to Rs. 5 lakh cashless hospitalisation per year to all members of 10 crore below poverty line families.

This will help in moving towards universal healthcare after food security was implemented a few years ago. Of course, it is not going to be easy to rollout just as food security programme, which took some years and a lot of money from the exchequer. But it was ultimately implemented for the betterment of people. Likewise, this healthcare programme might take sometime to rollout but augurs well for the people. Health and education are two areas where Government has to do a lot more even though some efforts have been made by successive Governments. This healthcare effort of Modi Government is one revolutionary step that stands out in the Budget that needs to be applauded. This move is something originally started by Tamil Nadu Government some years back for up to Rs. 2 lakh hospitalisation and has been implemented in a few other States over the years. So this scheme is implementable at the national level and on a larger scale.

Another significant measure in the Budget is the impetus provided to the rural economy and address farm distress, which would be a force multiplier for overall growth expected to surge toward 8 per cent annually. This would help India to become fastest growing emerging economy, now at $2.5 trillion and expected to move two notches up in the coming months to overtake France and Britain to become fifth largest economy.

Jaitley announced several measures to kick-start the rural economy now stumbling due to the twin structural reforms of demonetisation and GST in the last one a quarter year. The ill-effects of these too measures, though good in the long run, have now been left behind. The measures including the decision to provide 150 per cent increase in minimum support price for the forthcoming Kharif crop, with a promise to ensure 1.5 times more farm income, will drive consumption in a big way, thereby helping growth of related sectors.

The package of measures provided to pump-prime MSMEs through better access to finance or lowering of the corporate tax rate to 25 per cent to companies having turnover up to Rs 250 crore would help to spur both employment and growth in this vital segment of the economy. MSMEs account for nearly 40% of manufacturing and 45% of exports in the country. It employs many times more compared to large industries, which are increasingly becoming capital intensive. The stress on jobs in the budget will help to generate meaningful employment going ahead. This will also help to solve the problem of disguised unemployment in the rural area.

Measures to step up irrigation, particularly minor irrigation, and linking of peninsular rivers will bring more areas under irrigation. Though India has the largest irrigated area in the world, still only 45-50 per cent of arable land in the country is irrigated. This augurs well for the rural economy as it is important to gradually minimise rain-fed farming, where yield is expected reduce over the years because of global warming, fragmentation of holding and so on.

Critics may accuse Jaitley of presenting a populist budget in an election year but in reality it is a very realistic Budget addressing the areas of concern in the economy, which hitherto has been partially neglected. The Government has rightly sought to take corrective steps and listen tothe anger of the farmers and rural India.

The Finance Minister also announced important measures to boost rural livelihoods. As Jaitley himself said in his 90-minute speech, the focus of the Government next year will be on providing maximum livelihood opportunities in the rural areas. The total amount to be spent by various ministries will be Rs.14.34 lakh crore, including extra-budgetary and non-budgetary resources of Rs.11.98 lakh crore. Strengthening the ground water irrigation scheme under Prime Minister Krishi Sinchai Yojna - Har Khet ko Pani – the Government allocated Rs. 2,600 crore for this purpose. This would provide assured irrigation in 96 deprived irrigation districts where less than 30% of land holdings get that presently.

Apart from keeping minimum support price for all hitherto unannounced crops of Kharif at least at one and a half times of their production cost, Jaitely raised farm credit to Rs.11 lakh crore for the year 2018-19 from Rs.10 lakh crore in 2017-18. He launched a new scheme ‘Operation Greens’ to address price volatility of perishable commodities like potatoes, tomatoes and onions, at an outlay of Rs. 500 crore. Operation Greens, on the lines of ‘Operation Flood’, shall promote Farmer Producers Organisations (FPOs), agri-logistics, processing facilities and professional management in the sector.

Overall, one would not be wrong in saying that an honest attempt has been made to address the concerns of rural India, which had hitherto been neglected and hence the Government had earlier received a tag of encouraging crony capitalism.