Runup to Interim Budget 2024: It should show a road map for the next 5 to 10 years

Even though the Union Budget on February 1, 2024, will only be an interim budget, expectations are high. In 2019, the Government of India announced Pradhan Mantri Kisan Samman Yojana in the interim budget. Today, it is the scheme with the highest amount of allocation under the Department of Agriculture and farmers welfare. We would like to see the budget delineate a five- or 10-year road map for the agriculture and rural sectors. 

The Centre has decided to continue with physical distribution of wheat and rice under the Public Distribution System (now renamed as Pradhan Mantri Garib Kalyan Anna Yojana) till December 2028. It means that the current system of procuring at least 60 million tonnes (mt) of food grains will continue. Despite the success of direct benefit transfer (DBT) of funds under several schemes of the Union and state governments, DBT for food does not seem to be on the Centre’s agenda. We can therefore expect that Punjab and Haryana will continue to be of crucial importance for procurement. They have been contributing a little less than a third of the rice procured in India.

The sustainability issues of these two states are well known. Depletion of the underground water table is an emergency. In Haryana, 88 out of 143 assessed units in districts (in 2022) were overexploited. In Punjab, 117 out of 153 units were over exploited. For decades, the need for diversification from rice to less water- consuming crops has been under discussion. But there is no road map on how to achieve it. 

Haryana is providing Rs 7,000 per acre to farmers for diversifying from paddy to cotton, maize, millets, pulses, fruits or vegetables. But Punjab’s financial position is precarious and without the help of the Centre, a meaningful programme for diversification cannot start. We hope that the Union Budget will come up with a meaningful intervention to achieve diversification over the next five to 10 years.

We would also like the budget to address the threat of climate change and its impact on agriculture and the rural economy. High temperatures in February 2022, erratic rainfall during the monsoons of 2022 and 2023 and untimely rains in March 2023 resulted in lower production of wheat, rice, sugarcane, pulses and other crops. As a result, the government was forced to restrict or ban the export of wheat, rice and sugar. For preparing Indian agriculture to meet the challenge of climate change, large investment is needed in research so that climate-resistant varieties of seeds can be developed. Several indigenous varieties can provide a lead in this direction.

The budget needs to recognise the long-term threat to food security from climate change even if it is not an election issue in the short term.

The budget for rural development (RD) would be largely shaped by the Union Finance Minister’s (FM) prognosis of the current state of the rural economy. This is because economists are divided as to whether the current growth pattern in the rural economy is K-shaped or not. If the FM is driven by the latter narrative, the budgetary allocations of the flagship RD programmes would largely be incremental in nature, with modest increase and no special initiatives to boost the income of the poorer households. We hope that the FM would also take note of two concerns in the run up to the general elections. First, even the national income accounts on gross domestic product (GDP) and gross value added point to a tepid growth in aggregate household consumption demand, which is a major driver of GDP growth. Second, price rise, particularly food inflation, is unarguably hurting the low and low-middle income households.

We hope that these concerns will persuade the FM to provide substantial hike in the allocations for these programmes especially those generating employment.

The Narendra Modi government, right from 2014-15 onwards, has shown remarkable preference for rural infrastructure programmes like housing, rural roads, rural electrification, rural sanitation and water supply. Provision of these basic needs and amenities on a saturation mode has also yielded rich dividends in terms of a steep decline in the multidimensional poverty in the rural areas between 2015 and 2021, from 32.59 per cent to 19.28 per cent. We expect this thrust to be continued in the next fiscal year as well.

In this connection, we would hope that the FM unveils a new phase of the Pradhan Mantri Gram Sadak Yojana (PMGSY), which has made a huge difference to the rural road connectivity in India. The ongoing programme covers only those habitations which number 500 people in the plain areas and 250 in the tribal/hill areas, that too based on 2001 census. Thus, it leaves out all rural habitations which have reached these existing thresholds over the last 20 years. Besides, even habitations with population up to 250 in the plain areas and 100 in the tribal/hill areas need to be provided all-weather connectivity of good quality so that public services can reach these areas, which remain substantially deprived in terms of provision of basic needs and public services even after 75 years of independence. The new phase of PMGSY (PMGSY 2.0) can target coverage of these left-out habitations over the next 10 years.

We also hope that the FM raises the social security pension for the elderly poor, widows and differently abled under the National Social Assistance Programme to at least Rs 1,500 per month, to be shared equally between the Centre and the states. Central assistance for this programme is abysmal (Rs 200 per month) and has not been revised for more than 15 years.

The FM may also consider repurposing the Mahatma Gandhi National Rural Employment Guarantee Act to meet the emerging needs of the ‘care economy’, particularly in the context of the ongoing demographic transition. This will open up large number of new employment opportunities for semi-skilled youths with even 8-10 years of schooling in rural areas, besides supplying much-needed additional human resource support for health, nutrition and child care.

We wish that the budget lifts India’s rural economy from its current situation of crisis.

 Hussain and Mohapatra were Union Secretaries in the Ministries of Agriculture and Rural Development

Views expressed are the authors’ own and don’t necessarily reflect those of Down To Earth

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