Rural economy to be 2017-18 Budget’s highlight

The Union Budget for 2017-18, the fourth by the Narendra Modi government, is expected to broadly continue the pro-poor and pro-farmer credentials laid down in the previous Budgets with enhanced allocations for marquee schemes such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Pradhan Mantri Gram Sadak Yojana (PMGSY), and Krishi Vikas Yojana (KVY).

The focus is likely to be on consolidation and improvement of existing programmes to ensure their completion ahead of the next general elections in 2019, rather than announcement of new schemes, Business Standard has learnt from multiple sources in the government.

According to officials across ministries, the broad consensus emerging in pre-Budget consultations is that too many fresh schemes, without giving a big financial thrust to the existing initiatives, might not be a bright idea at this stage. The aim is to plug the delivery gaps and ensure the benefits of these schemes reach the poorest of the poor. The ruling BJP and its ideological fountainhead the RSS too are believed to be of the view that pro-poor and pro-rural initiatives should be not only continued but given added push in the coming Budget.

Rural economy to be 2017-18 Budget’s highlight In the 2016-17 Budget, Finance Minister Arun Jaitley allocated a substantial portion of central funds on reviving the rural sector hit badly by two consecutive seasons of poor monsoon. There was a noticeable year-on-year increase in allocations of schemes such as MGNREGA, PMGSY, KVY, Krishi Sinchayee Yojana, among others.

“We need to think beyond ‘food security’ and give back to our farmers a sense of ‘income security’. The government will, therefore, re-orient its interventions in the farm and non-farm sectors to double the income of the farmers by 2022,” Jaitley had said in his last Budget speech. He had also announced a dedicated long-term irrigation fund with an initial corpus of about Rs 20,000 crore.

This year, however, Budget compulsions for a huge increase in allocations are not as pressing as bountiful monsoon and good harvest have helped in lifting rural sentiments. Conversely, a bumper harvest has, in fact, compelled the government to intervene and stop market price in many commodities from falling below their minimum support price (MSP) levels, thus needed extra funds for agencies such as Nafed and Small Farmers’ Agribusiness Consortium.

So, rural-centric programmes such as PMGSY could get allocation similar to 2016-17 when it got around Rs 27,000 crore, which included the states’ share.

Given its role in pushing rural demand, MGNREGA could see a significant rise in allocation. Already, allocation under the scheme is at an all-time high of Rs 43,500 crore in 2016-17, which also includes additions made through supplementary demand for grants, while the rural development minister has sought an additional Rs 10,000 crore. This includes Rs 12,000 crore, which was used for clearing pending dues from last year.

Sources said an increase in allocation for Budget 2017-18 MGNREGA could come from special focus on creation of water harvesting structures under the scheme.

Officials said extra funds are also being sought for Soil Health Card scheme, Pradhan Mantri Fasal Bima Yojana, irrigation schemes, electronic National Agriculture Marketing, etc so that they can be completed within their targeted completion times.

Focusing on clean drinking water in rural areas through revamping of the National Rural Drinking Water Programme is also on the cards along with higher allocation. The government seeks to cover all 85 per cent unconnected households through clean piped drinking water in the next few years. The scheme was allocated Rs 5,000 crore from the Centre in 2017-18, which includes a matching grant from the Centre.

The food subsidy, according to the ministry’s estimate, could touch Rs 1.4 lakh crore in 2016-17, against the budgeted Rs 1.35 lakh crore, as now all states and Union territories have come under the ambit of National Food Security Act from November onwards.

However, there could be some savings, as grain stocks are at their lowest levels owing to low procurement and effective management, which could lower some of the carrying costs.

Rural economy to be 2017-18 Budget’s highlight

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