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It was expected that Union Finance Minister Nirmala Sitharaman would make a big announcement to improve the rural economy as part of the Union Budget 2025-26. But it did not happen.
The finance minister made two important points in her budget speech. One, to arrange a ‘Rural Credit Score’ for the credit needs of the rural population and second, to entrust the responsibility of advancing the rural economy to the ‘Indian Postal Service’.
The budget of the Union Rural Development Ministry has been increased by about Rs 14,000 crore, compared to last year. The Pradhan Mantri Awas Yojana has the highest share in this. Curiously, the budget for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has not been increased.
The budget of the ministry for 2025-26 has been kept at Rs 1,87,754 crore, while the revised estimate of the budget in the year 2024-25 was Rs 1,73,912 crore. However, the budget estimate was Rs 1,77,566 crore. There has been an increase of Rs 13,842 crore over the revised estimate.
MGNREGA accounts for the largest part of the total budget of the rural development department. There has been no change in the budget of the MGNREGA scheme, which protected the rural economy during the COVID-19 lockdown, compared to last year.
In the year 2024-25, the estimated and revised budget was Rs 86,000 crore. The same provision has been made in the year 2025-26. However, experts have been demanding for a long time that the budget should be increased to increase the labour day and wage rate for the improvement of the rural economy.
Pradhan Mantri Awas Yojana (Rural) has received the second-largest share in the budget for rural development. For the year 2025-26, it has been estimated at Rs 54,831.99 crore, as against the revised estimate of Rs 32,426.32 crore in FY 2024-25. That is, an increase has been made compared to the revised estimate. However, there is no significant increase in the estimated budget. That is because when Sitharaman presented the budget for the financial year 2024-25, there was a provision of Rs 54,500.13 crore for the Prime Minister’s Housing Scheme.
An amount of Rs 16,000 crore has been removed from the budget of the Union Ministry of Rural Development. This amount was provided in the revised budget for the financial year 2024-25 under the head of additional transfer to the Agricultural Infrastructure and Development Fund. However, this provision was not made in the estimated budget, while Rs 12,002.22 crore was spent in this regard in the financial year 2023-24.
The budget of Pradhan Mantri Gram Sadak Yojana has been increased. For the current financial year 2024-25, a provision of Rs 12,100 crore was made in this regard, which has been increased to Rs 16,600 crore. However, the estimated budget for FY 2024-25 was Rs 16,500 crore.
Sitharaman said in her budget speech that India Post services will be added to the remote areas to give a push to the rural economy and India Post will be transformed into a large public logistics organisation.
Also, broadband connectivity will be provided to all government schools and primary health centres in rural areas under the Bharat Net project. A ‘Rural Credit Score’ framework will be created to meet the credit needs of the villagers. And new jobs will be created for young farmers and rural youth.
According to the budget speech, the integration of India Post with the large public logistics organisation will cater to the growing needs of global workers, new entrepreneurs, women, self-help groups, micro, small and medium enterprises and large business organisations.
In addition, India Post with 1.5 lakh rural post offices will be geared up to act as a catalyst for the rural economy with the help of the India Post Payment Bank and a vast network of 2.4 lakh postal workers.