Rural development

Several flagship schemes have faced huge cuts in annual allocation

Published: Monday 25 May 2015

Rural development

The Narendra Modi government’s first year was perceived as anti-poor and pro-business. During the 2014 Lok Sabha poll campaign, Modi had come down heavily on the United Progressive Alliance (UPA) government’s rural programmes, citing them as doles. Several of Modi’s ministers have also criticised the massive UPA spending on rural welfare, saying it was a hindrance to overall development and sheer wastage of public money. The 2015-16 Budget maintains this notion. 

  • The total budgetary allocation for rural development is the lowest in three years. This year, the allocation is 5 per cent less than that of last year. The total allocation is Rs 79,526 crore for rural development, including the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Last year, the allocation stood at Rs 83,852 crore.

  • Besides MGNREGA, other flagship schemes have also faced huge cuts in annual allocation.

  • In MGNREGA, the allocation is almost static even though the expenditure has increased. Around Rs 8,000 crore has to be set aside for paying the long overdue wages to labourers. Given the recent crop damage and a potential drought this year, the programme may witness increased demand for jobs.  

Prime Minister Narendra Modi at the launch of Jan Dhan Yojana

MGNREGA: a fall from grace
Year 2013-14(Actual) 2014-15(BE) 2015-16(BE)
Yearly Budget 32,993 34,000 34,699
Actual Expenditure 38,602 35,873  
Average Days of
Employment Per Year
45.9 40  
SC 45.28 39.61  
ST 48.92 40.15  
Source: (cited on May 21, 2015)

Indira Awaas Yojana, India’s flagship scheme for ensuring houses to all in rural areas

One of the key promises of the NDA government has been to ensure housing for all. But the Budget allocated in this sector is much less than the previous one. 

Indira Awaas Yojana, India╩╝s flagship scheme for ensuring houses to all in rural areas
2014-15(BE ) in cr 16,000
2015-16(BE ) in cr 10,025
Difference(in cr) 5,975
Source: (cited on May 21, 2015)

Panchayati raj

Modi said during his election campaign that a panchayat should be to a village what the Parliament is to the country. But in the 2015-16 Budget, the panchayati raj ministry has been the hardest hit. It has been stripped off many schemes and given just Rs 60 crore. 

Panchayati raj
Year 2014-15(BE) 2015-16(BE) Difference
Backward Regions Grant Fund
(in cr)
5,900 0 1,635
Rajiv Gandhi Panchayat
Sashaktikaran Abhiyan
1,006 60 946
Source: MoRD,, Centre for Budget and Governance Accountability

Sanitation (rural)
Modi received a lot of praise for launching the Swachh Bharat Abhiyan (Clean India Campaign). The prime minister has also promised to make India defecation-free by 2019, the year of the next Lok Sabha elections. But his first full Budget does not reflect this. 

Year 2014-15(BE) 2014-15(BE) Difference
Rs (in cr) 4,260 2,625 1,635
Sources: Ministry of Drinking Water and Sanitation

Drinking water (rural)

A key ingredient of the Gujarat model that Modi used to his advantage is 24X7 water supply. Though the prime minister had talked about Gujarat’s rural drinking water supply model, the Budget has a different story to tell. 

Drinking Water (Rural)
Year 2014-15(BE) 2014-15(BE) Difference
Rs (in cr) 11,000 3,619 7,381
Source: Ministry of Drinking Water and Sanitation

There has been a huge setback to Right to Education (RTE) as the responsibility has now shifted to states after reduction in the elementary education fund.

Year 2013-14(Actual) 2014-15(BE) 2015-16(BE) Difference
Sarva Siksha Abhiyan 24,802 28,258 22,000 6,258
Mid-Day Meal 10,918 13,215 9,236 3,979
Source: CBGA

Drought followed by unseasonal rainfall in February-March resulted in crop loss over nearly 200,000 hectares in northern India. Another “deficient” monsoon this year will lead rural India to slip deeper into the agrarian crisis. But the government has not taken any concrete step to control the situation. Instead, it has reduced the Budget and put the responsibility on the states. 

Year 2014-15(BE) 2014-15
Total allocation Rs (in cr) 31,063 24,910 6,153
National Food Security Mission 2,030 1,300 730
Mission for Horticulture 2,263 2,000 263
Mission on Oil Seed and Oil Palm 433 353 80
Mission for Sustainable Agriculture 1,684 835 849
Mission on Agricultural Extension and Technology 1,316 1,170 146
Integrated Scheme on Agri Marketing 800 900 +100
Crop Insurance 2,823 2,823 0
Rashtriya Krishi Vikas Yojana 9,954 4,500 5,454
Pradhan Mantri Krishi Sinchayee Yojana   1,800  
Sources: Ministry of Agriculture and Cooperation

The rate of increment of minimum support price (MSP) has been decreasing every year. The rate of increment of  MSP on paddy, wheat and pulses has been declining for the last three years. The common paddy saw the steepest rise of 16 per cent in 2013, and since then, it registered a rise of 4.8 per cent in 2013-14 and 3.8 per cent in 2014-15. In the same years, wheat also registered a 3.5 per cent increment in comparison to 5 per cent in the previous year.

Commodities Variety 2010-11
(In Rs)
(In Rs)
(In Rs)
(In Rs)
(In Rs)
Paddy Common 1,000 1,080 1,250 1,310 1,360
  Grade A 1,030 1,110 1,280 1,345 1,400
Wheat   1,120 1,285 1,350 1,400 1,450
Maize   880 980 1,175 1,310 1,310
Arhar   3,000 3,200 3,850 4,300 4,350
Gram   2,100 2,800 3,000 3,100 NA

Important decisions taken during the last year

  • The procurement of levy rice was stopped.

  • Centre asked states to not stop bonuses on crops.

  • The year witnessed the lowest increase in MSP.


Modi has been diluting the Land Acquisition Act brought about by the UPA government. The previous government introduced The Right to Fair Compensation and Transparency in the Land Acquisition, Rehabilitation and Resettlement Act, 2013. The Act replaced the 119-year-old British-era Land Acquisition Act, 1894. The Modi government brought two ordinances to dilute the Act.

The amendment will bring about the following changes:

  • It will remove the consent clause of the Act.

  • It will also remove the mandatory Social Impact Assessment (SIA).

  • The retrospective clause, which states that acquired land not used for five years will automatically be returned to farmers, will not be applicable.

Pradhan Mantri Jan-Dhan Yojana

In 2010, the Centre launched the Financial Inclusion Plan (FIP) under the Reserve Bank of India’s (RBI) supervision to achieve universal banking by 2016.

Till March 2013, 18.2 million accounts were opened 

In August 2014, Modi re-launched FIP by naming it as Pradhan Mantri Jan-Dhan Yojana with a revised target to be achieved by January 2015.

Though the target was achieved, 67 per cent of the bank accounts had no transactions (meaning the accounts were inactive).

Pradhan Mantri Jan-Dhan Yojana
Total accounts No. of RuPay debit cards Balance in accounts (in Rs) No. of zero balance accounts
Total 75 million 5o million 125 million 110 million 10,499 crore 84.4 million

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