The Budget hides months of discussion, with stakeholders nursing a gamut of interests. This year was no exception and the Budget was an exercise in the accommodation of innumerable expectations; and it is bound to dissatisfy many.
I would like to apply the old economic litmus test to judge its efficacy: Is it in sync with the overall long-term vision framework? Does it build on what was started?
The ‘Transform, Energise and Clean India’ (TEC) agenda may seem like a new term but is, in fact, a continuation of various earlier initiatives of the Government. We see increased allocations for infrastructure and rural development. The total allocation of Rs. 1.87 lakh crore for rural, agri and allied sectors is a heartening increase of 24 per cent over the previous year. Alongside, the focus on development of rural infrastructure in the form of roads and a higher allocation for housing will energise the rural economy. Research sponsored by Nabard shows that rural roads can be virtually compared with the nerve system of a nation which enable building a healthy and equitable society.
The overarching theme of doubling the incomes of farmers in five years is interlaced with a host of requirements and policy decisions. A budget can at best try and address some of them at a time. Yet, we see a spirited attempt. Consider irrigation, crop insurance and continued income during the lean season, the three major aspirations of the Indian farmer. This budget has made a brave effort to handle all these.
The Budget provides Nabard with an additional Rs. 20,000 crore under the Long Term Irrigation Fund (LTIF), along with a separate allocation of Rs. 5,000 crore to push the micro irrigation agenda. On the crop insurance front, the Pradhan Mantri Fasal Bima Yojana has been provided an enhanced allocation of Rs. 9,000 crore. Livestock got a boost with the proposal for a Dairy Processing Infrastructure Fund of Rs. 2,000 crore which would grow to Rs. 8,000 crore in three years. These are promising developments.
The Budget highlights the importance of soil health which is critical to farm production and productivity. In many parts of India it has been impaired by wrong usage of fertiliser. The proposal to create minilabs for soil testing continues the existing thrust on Soil Health Cards. The Budget also continues chipping at the policy logjam afflicting market reforms in the agri marketing area. Another 335 e-NAMs will be added to the 250 created this year. In an innovative move, the Budget seeks to integrate e-NAMs with commodity exchanges and enact a model law on contract farming. Denotification of perishables from the Essential Commodities Act and providing Rs. 75 lakh at each e-NAM for cleaning and packaging of farmer produce are other value-driven propositions.
Rural India’s happiness quotient also depends upon the off-farm sector which includes all economic activities such as household and non-household manufacturing, handicrafts, processing, repairs, construction, transport, trade, communication, community and personal services in rural areas. Important proposals for skill building, developing over 600 district Prime Minister’s Kaushal Kendras, India International Skill Kendras and SANKALP (Skill Acquisition and Knowledge Awareness for Livelihood promotion Programme) will boost this sector.
The Rs. 10-lakh crore ground level farm credit target for 2017-18 should not be formidable going by past performance. The bigger challenge, however, is a more equitable spread of this agri credit in view of the fact that 40 per cent of agricultural households still do not have access to banks. The average does not reflect the geographical disparities in regions such as the North-East and other hilly States and LWE-affected districts. The banking sector has its job cut out regarding inclusion. The enhanced budget under the Financial Inclusion Fund will allow for more thrust on higher financial literacy and support the digitisation initiatives.
An important development with the potential of impacting the banking structure in rural India is the allocation of Rs. 1,900 crore over three years to bring digital banking to Primary Agricultural Cooperative Societies, the lowest tier of India’s rural cooperative credit structure. This will, for the first time ever, bring new generation banking services to small and marginalised farmers who are members of these cooperative societies.
The profound statement that “The Budget is not just a collection of numbers, but an expression of our values and aspirations” never seemed more fitting than it does in the Indian context. I believe that the Budget deserves a thumbs up for continuing with laying stress on rural India’s values and aspirations.