Economy

Expect budget to be rural-centric, focus on delivery to beneficiaries

PM Modi has already launched a major water conservation campaign, put the focus of his second tenure on revival of the agrarian economy

 
By Richard Mahapatra
Last Updated: Thursday 04 July 2019
Photo: Getty Images

If there is any budget that ought to have a feel-good factor, it has to be this year’s. Logically, the full budget of 2019-20 must be in printing now. Only those chosen to supervise know what exactly it contains.

But officials from the Ministry of Finance in private said: “A decision has been made not to change the allocations presented in the interim budget.”

The interim Budget was presented in February 2019. The full Budget for 2019-20 will be presented by the newly-appointed Finance Minister Nirmala Sitharaman in the Lok Sabha on July 5.

“None of the schemes declared in the interim budget and around that time would be scrapped or refurbished,” the offcials added.

If this is the principle behind the current budget, it’s likely to be rural like the interim budget. Also, going by major public pronouncements by Prime Minister Narendra Modi, it will be a rural budget.

Reading between the lines, Modi's new ambitious $5 trillion Indian economy target has put the rural economy in the driving seat. He has already launched a major water conservation campaign and has put the focus of his second tenure on revival of the agrarian economy.

But without any extra allocation and new schemes or programmes, what could be the key message of the budget?

“The focus of the budget would be more on bringing in sharpness in delivery of benefits to beneficiary. And that will be reflected in terms of major convergence of programmes in the upcoming budget,” said a senior Finance Ministry official involved with the finalisation of the budget.

Rather, he added, the focus will be more outside the budget — galvanising the bureaucracy into implementation of schemes. This will also be the key focus of the PM-KISAN — an income support scheme that was started in the interim budget but with retrospective effect.

Similarly, the promise of piped water supply to all household will be a key focus area with targets being set. The budget would only reflect the allocation in terms of funds.

“The focus is on closing the loop of basic necessities that the Modi government promised in its last tenure. People have got a house, a toilet, a LPG connection, electricity, health insurance and now the focus is on piped water supply,” the official stated.

And like earlier schemes, the delivery of benefit would be the key. 

“Budget doesn’t have anything to do with implementation.”

It is expected that the allocation to rural infrastructures and water and irrigation infrastructures will be significantly higher. A new target might be set to start and finish all stalled irrigation projects. Similarly, rural roads and highways will also be a priority sector.

This is more to do with the reality of high unemployment sinking in, according to the officials. Though agriculture sector employs the most, it will not be able to generate employment as well earning for locals in the short-term.

The food processing industry, with potential for long-term results, is likely to get a key allocation in the budget. Thus, infrastructure building will cater to the demand for daily wage jobs in the rural areas.

Similarly, given the focus on water and irrigation, the revival of stalled projects would also fulfil government’s second objective of providing irrigation facilities to the farmers.

In this scheme of things, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) will also see a significant increase in allocation (expected to be around 10-12 per cent increase over the interim budget level).

But this would be more of preparing for a dry monsoon season and a potential drought condition that is would spike daily wage jobs under the public wage programme.

Keeping in mind the deficit monsoon and also the ongoing drought condition in 40 per cent of districts in the country, there is also a demand to increase the number of guaranteed 100 days of employment under MGNREGS to 150 days.

If officials are to be believed, the budget may focus more on MGNREGS.

This rural focus, however, is the government’s “feel-good” factor at a time when the economy is not that robust. Particularly, private consumption across the country has come down. Rural areas account for a large percentage of this.

So, the need is to project the government’s willingness to jack up consumption in rural areas. This can only be done through stimulus like heavy public spending on rural India. Any loss in farming income has to be compensated through alternatives like daily wage job in government projects and by increasing the guarantee of employment in MGNREGS.   

In pre-budget consultation with industry leaders, the finance minister has been advised to work on revival of consumption, particularly in rural areas.

With the farming sector in a recession mode, this can only be achieved through public expenditure on employment generation activities.

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