Notwithstanding growing urbanization in the last decade or two, India still live in Six lakh villages and rightly the 2015-16 general budget, the first full year budget of Prime Minister Narendra Modi rightly gives the due attention to Rural Development coupled with increased allocation to the farm sector. Several new initiatives have been launched by Finance Minister Arun Jaitley in the budget, which has gone unnoticed. The overall plan expenditure may look lower but one should not forget that with the implementation of 14th finance commission recommendations, the states get clear 10 per cent more share of central pool of taxes at 42 per cent giving substantial hike in resources that are untied thereby helping states to design and provide more resources in those rural programmes that require more money. Jaitley has also provided significant resources for rural development. Apart from specific allocation of Rs 79,526 crore for rural development, several initiatives and allocations for infrastructure, railways and social schemes for poor will benefit rural folks as these investments are going to be for 60 per cent of 1.2 billion populations living in rural areas.
As Jaitley himself said in his budget speech in Parliament on February 28 that with the economy turning around “dramatically” in the nine months of Modi government coupled with restoration of macro-economic stability, conditions have been created for stepping on the pedals for sustainable poverty elimination, job creation and durable double-digit economic growth, which meant more rural prosperity in the country.
The first and foremost achievement of this government is success of Jan Dhan Yojana in a short period of 100 days. Through this financial inclusion programme 12.5 crore unbanked families, mostly in rural areas have been brought into the financial mainstream, thereby providing much needed launching pad for carrying out successfully various social programmes particularly for rural poor. This has led to launch of game changing JAM Trinity programme – Jan Dhan, Aadhar and Mobile—to implement direct transfer of benefits mostly to rural poor in a leakage-proof, well targeted and cashless manner. This is a significant development. In fact the leakage in social schemes has been so much that they have not had the desired result in the 6-7 decades of economic development since independence. As late Prime Minister Rajiv Gandhi himself said only 16 paise reached the beneficiary from every rupee spent. Rajiv Gandhi made this observation 25 years ago and it has not become any better, perhaps marginally better as leakage and corruption is widespread even today. JAM will ensure that the rural schemes are more effective, efficient and better targeted. The budget also puts in place a roadmap that aims at double-digit economic growth that is “feasible very soon”. greatly benefitting rural India through inclusive growth. In this regard, financial inclusion is going to be a major tool and Jan Dhan Yojana is going to facilitate in a great measure.
“In respect of social and economic indicators, for seven decades now, we have worked in terms of percentages and numbers of beneficiaries covered, it is quite obvious that incremental change is not going to take anywhere. We have to think in terms of a quantum jump,” Jaitley observed and announced several out-of-box ideas to transform rural India.
He unveiled a 13-point agenda that is to be implemented by 2022, the 75th year of independence with a sizeable rural component. This comprise a roof for each family in India—that is six crore houses to be built of which 4 crore houses in rural areas with 24-hour power, clean drinking water, a toilet and road connectivity. Electrification of all the remaining 20,000 villages in the country by 2020. Connecting each of 1,78,000 unconnected habitations by all weather roads. This meant completing one lakh km of rorad currently under construction and building of additional one lakh km of road. Increasing farm productivity through irrigation and other measures. To bring on par North Eastern and Easter regions, which are at present lagging behind particularly in economic development.
Jaitley said in spite of the large increase in the devolution to states due to the recommendations of 14th finance commission, adequate provision is being made for the schemes for the poor with allocation of Rs 68,968 crore to the education sector including mid-day meals, Rs 33,152 crore to the health sector and Rs 79,526 crore for Rural development activities including Mahatma Gandhi National Rural Employment Guarantee programme, Rs 22,407 crore for housing, Rs 10,351 crore for women and child development, Rs 4,173 crore for Water Resources and Namami Ganga (cleaning of the river). A Substantial amount under these heads will go for the development of villages.
Apart from ensuring that farm credit is raised to Rs 8.5 lakh crore next fiscal year from Rs 8 lakh crore this financial year, the government committed to Rs 34, 699 crore for MGNREGA, which would be further stepped up if needed to ensure that no one, who is poor in rural India is left without employment. MGNREGA will also help in benchmarking rural wages at a higher level and promote rural consumption that will help kick-starting economy to achieve 8-8.5 per cent growth in 2015-16 and then move on to double-digit growth.
While the farmer is no longer in the clutches of the local trader and to increase kisan’s income, government proposed to create a unified national agriculture market. The problem at present is that India has thousands of mandis at present and as a result the prices of farm produce goes up by 15-20 per cent benefitting several middlemen thereby benefitting neitherthe poor farmer or consumer. To fund the unfunded, Jaitley proposed to create a Micro Units Development Refinance Agency (Mudra) Bank. This is a major attempt to generate employment in rural areas particularly in weaker sections of the society. There are 5.77 crore small business units, mostly individual proprietorship, which run small manufacturing, trading or service businesses. Sixty-two per cent are owned by scheduled castes, scheduled tribes or other backward communities. Mudra bank will have a corpuse of Rs 20,000 crore and credit guarantee corpus of Rs 3,000 crore. Mudra bank will refinance micro finance institutions through a Pradhan Mantri Mudra Yojana. Jaitley said these measures will greatly increase the confidence of young, educated or skilled workers, who would now be able to aspire to become first generation entrepreneurs; existing small businesses, too, will be ale to expand their activieties. “Just as we are banking theun-banked, we are also funding theun-funded,” he said.
Working capital requirement of micro, small and medium enterprises, located substantially in rural areas will also get a boost with the establishment of Electronic Trade Receivables Discounting system soon. This will be help in financing of trade receivables of MSMEs, from corporate and other buyers, through multiple financiers. This should improve the liquidity in the MSME sector significantly. To increase access to the formal financial system government proposed to utilize the vast postal network with nearly 1,54,000 points of presence spread across villages of the country. “I hope that the Postal Department will make its proposed payments bank venture successful so that if contributes further to the Pradhan Mantri Jan Dhan Yojana.
The budget also steps up allocation for rural health and social security. To promote jan Suraksha, Pradhan Mantri Suraksha Bima Yojna will be launched soon to cover accidental risk of Rs 2 lakh for a premium of just Rs 12 per year. Similarly Atal pension yojana, which will provide defined pension, depending on the contribution and its period. Government will contribute 50 per cent of the benefciaries’ premium limited to Rs 1000 each year for five years in the new accounts to be opened in the next nine months. Government also proposed to create senior citizen welfare fund utilizing unclaimed deposits of about Rs 9,000 crore in Public Provident Fund and Employees Provident Fund. The corpus will be utilized to subsidize the premium of vulnerable groups such as old age pensioners, BPL card-holders, small and marginal farmers and others. Details of the scheme will be announced later this month. This social security schemes will largely benefit rural population. Of the 10.5 crore senior citizens in the country, seventy per cent live in rural areas and a large number are in rural areas.
The Budget also allocates Rs one lakh crore allocation to National Bank for Agricultgure and Rural development will have positive impact on the rural infrastructure. The long-term credit fund has been provided 15,000 crore in the next financial from Rs 5000 crore in the current financial year. This will help in pushing agro-based rural industries. Rural roads get Rs 25,000 crore allocation.
The Modi government has quietly stepped rural development and agriculture in the budget under various heads, which has apparently gone unnoticed giving credence to the opposition criticism that this year’s budget is mainly for corporate and the middle class. In fact there are several initiatives and one has to read the fine print of the budget as the initiatives are spread across various departments and if they are implemented in right earnest, it will transform the rural India into a vibrant economy.
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