Budget 2018, impetus to rural economy

K R Sudhaman

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 Narendra Modi’s government has come out with an election budget that brings cheers to struggling Bharat, hit by farm distress and collapse of informal sector in rural economy.
Finance Minister 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 U.S. President for the health of its population, will be bring a sea change in the health care 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 some time 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 needed 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 per cent of manufacturing and 45 per cent 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.
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 by spending more on livelihood, agriculture and allied activities, and construction of rural infrastructure. 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. Apart from employment due to farming activities and self employment, this expenditure will create employment of 321 crore person days, 3.17 lakh kilometers of rural roads, 51 lakh new rural houses, 1.88 crore toilets, and provide 1.75 crore new household electric connections besides boosting agricultural growth.
Some 22,000 rural haats are to be developed and upgraded into Gramin Agricultural Markets to protect the interests of 86% small and marginal farmers. Two New Funds of Rs10,000 crore for fisheries and animal husbandry sectors are to be set up.Re-structured National Bamboo Mission is to Rs.129t0 crore. Development of bamboo will help in creating large-scale employment in rural area. Loans to women self help groups will increase to Rs.75,000 crore in 2019 from 42,500crore last year.
Allocation to infrastructure has been stepped up to nearly Rs 6 lakhcrore, which too will create rural jobs and development as most of the highways and railway lines pass through rural areas. The capital expenditure in Railways alone is 1.48 lakh crore and highways is a couple of lakhs of rupees. There is huge allocation to rural roads as well.
Overall, one would not be wrong in saying that a 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. (IPA)

Saturday, 17 February, 2018