The Hindu Business Line : Will the aim of inclusive growth be achieved?

The UPA government has made a sincere effort to offer several benefits to the rural areas through the Budget allocations and schemes. But their successful implementation will depend on how effectively corruption can be kept at bay and how accountable the authorities are.

The in thing today is inclusive growth, and the United Progressive Alliance Government's main objective of accelerating growth and development of the economy by `including' the weaker sections is fully reflected in its Budget proposals.

Recognising that the crux of the problem is the poor performance of the farm sector, the Budget emphasises agricultural development and rural social infrastructure creation.

The indifferent showing on the farm front can be attributed to sluggish investment growth, lack of social infrastructure, including education, health and social security, and rampant corruption.

It is common knowledge that most farmers have no access to adequate credit. The Budget has targeted towards the sector a credit flow of Rs 22,500 crore compared to Rs 17,500 crore last year. The other important outlay, of Rs 22,452 crore, is on fertiliser subsidy. Interest subvention and insurance outlays will also go a long way in protecting the farmer incomes/cash flows.

The Government has not overlooked long-term investment either. For instance, accelerated irrigation, rural infrastructure and road construction have been allocated about Rs 35,000 crore.

Apart from this, Nabard has been permitted to raise funds by issuing bonds so that long-term investment can be financed in rural sector.

Training and skill development

Importantly, the Budget has allocated funds for training farmers and factory workers. The training for farmers will cover water management, harvest management, and so on. The Finance Minister has revived the `training and visit' extension programme, which played an important role in the Green Revolution of the 1960s.

It is expected that such training will cover crop-protection, crop-insurance, diversification of crops, warehousing and protection of foodgrains from pests.

In a growing economy and given the global competition in the domestic and international markets, it is an urgent necessity that India has a large, well-trained and highly skilled industrial work force.

To achieve this, the government has to run education and training programmes on a continuous basis, as the East Asian countries do.

Healthcare

Rapid development and efficient growth require high labour productivity and a hassle-free health environment. In this respect, the Budget has made the right moves in providing higher allocations for drinking water and sanitation, HIV/AIDS prevention, polio and integrated child development services.

For a package of programmes under the National Rural Health Mission, the Budget has proposed to increase the funds from Rs 8,207 crore in 2006-07 to Rs 9,947 crore in 2007-08. The Government should take this forward by being pro-active in setting up rural hospitals or health centres, staffed by good doctors and equipped with adequate medical equipment and medicines.

In the more efficient and productive villages, the private sector may also be persuaded to set up hospitals and medical centres, for which the Government can offer tax exemptions and other incentives.

Employment

The Government has continued with the National Rural Employment Guarantee Scheme and the Swaran Jayanti Gram Swarozgaar Yojana to provide employment and promote self-employment through Self-Help Groups, respectively. These programmes if pursued without the intervention of vested interests and corrupt officials, will help many families cross the poverty line and lead better lives.

However, the Government should have thought of framing self-help schemes that not only give employment but also generate permanent assets.

The Government cannot sustain the employment guarantee schemes for long; the right course would be to encourage more people to become self-employed, with the adequate financial support in terms of bank credit.

Eliminating corruption

The UPA Government has made a sincere effort to offer several benefits to the rural areas and rural poor in terms of investment allocations and schemes.

However, their successful implementation will be determined by the extent of corruption among the various authorities down the line and their sense of accountability.

Corruption has, over the decades, been the major stumbling block in the path of development. For instance, roads do not last one monsoon, village wells may be dug only on the drawing boards, and schools may provide mid-day meals merely in official documents.

Corruption dogs our day-to-day lives, whether it is in the obtaining of a driving licence or receiving subsidised credit. Most often, the poorer sections are the victims of such corruption and seldom the beneficiaries of what they are supposed to receive. And when the poor cannot get medical attention, when they are excluded from potential jobs and bank credit, when they are not paid their due in social assistance because they don't have the support of an influential authority or they cannot pay a bribe, they remain poor.

Truly, corruption is the crucial impediment in the path to eliminating poverty. In effect, elimination of corruption should be one of the Budget's chief targets.

Finally, it is advisable to ponder how fast the country can achieve rapid, investment-driven growth with improvement in the quality of the workforce and infrastructure in the rural sector, so that the growth imbalance can be corrected and development is more inclusive.

(The author is a former Economic Advisor to SEBI.)