Budget holds much-needed rural reform

Proposes to redefine backward region

By Richard Mahapatra
Published: Thursday 28 February 2013

After about hudreds of recommendations by 20-odd high-profile experts committees in the last half century, the government is finally taking steps to reform the ever-increasing rural programmes in the country. Finance Minister P Chidambaram’s budget has proposed some much sought-after reforms in rural development programmes.

The budget proposes to scale down the Centrally Sponsored Schemes (CSS) and Additional Central Assistance (ACA) schemes. From 173 at the end of the 11th Five-Year Plan, there will be just 70 schemes from this year onwards.

What's more, the states will have the much needed autonomy to plan and implement rural development programmes according to local needs. The Centre will just send money for these programmes as Central assistance. The schemes will be reviewed every two years for their effectiveness.

The number of rural development programmes in the country has proliferated since the Centre budgeted for such programmes as help to states in the early 1950s. Though not a Central subject, rural development accounts for the highest budget allocation, excluding defence. Since the 1980s, states and experts have been demanding reforms in rural development programmes, citing that the large number of schemes and a Centralised implementation hardly have any impact on the poor.

Boost for backward region

Budget 2013-14 has also proposed to redefine the backward region and allocated Rs 12,500 crore for the Backward Region Grant Fund, which works as an additional budget for regions that include Maoist insurgency-affected areas.

Redefining such area is important because since the mid-1990s, most of the development programmes are designed for the poor areas. Besides, India has been using a definition/criteria for backward area developed in early 1980s, based on terrain like forest, density of SC/ST population and length of international border. Without an updated and relevant definition of the backward area, many programmes must have bypassed the genuine beneficiaries.

The government proposes to use some valid criteria for this: how an area performing vis-a-vis national averages on income, literacy and other human development indicators. This is prudent given the wide regional inequality India is facing.

Though expected to be outlandish in populism, the reforms are refreshing. It helps the government bring in fiscal discipline in a slow-down period.

By bringing down the number of Central schemes and increasing allocation, each scheme will get much more fund than before. It has been a constant complain that many Central schemes have meager allocation, thus not making any impact at the ground level. Apparently, the government is going to weed out schemes that receive an allocation of Rs 100 crore or less.

The budget repeatedly mentioned about spending capacity of the rural development ministries. It seems the government has allocated funds according to last year’s spending. It works both as an incentive as well as punishment for bad performance. But the real reform will unfold when the rural development ministry starts implementing it.


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