Long-term solutions to rural woes, but no quick fixes

Agriculture and rural development are areas on which this otherwise frugal Budget has bestowed a great deal of largesse.

Unlike in the past, where budget measures to uplift rural India usually stopped with writing out bigger cheques for irrigation, MGNREGA and other usual suspects, this Budget also looks at a score of other non financial-interventions for a holistic solution to the ongoing rural distress. Therefore, disclosures tagged to the Budget speech show allocations for Agriculture and Farmer’s Welfare doubling (₹44,485 crore in 2016-17 against ₹25,917 crore in revised estimates for 2015-16) and those for Rural Development up by 10 per cent (₹87,765 crore for 2016-17 against ₹79,279 crore). These numbers have again doubled in three years.

The rural economy is in dire need of a lifeline this year, after two consecutive years of poor monsoon (which have dented agri output), a meltdown in global farm prices, measured increase in minimum support prices and low rural wage growth as well. Such distress had contributed not just to agricultural GDP averaging a measly 0.4 per cent in the last four quarters; it has also led to rock bottom realisations for farmers and a resulting compression in rural spending on everything from fertilisers to tractors.

Budget proposals to jolt the rural economy out of its rut are three-fold. One, while allocating funds, care has been taken to bump up funding specifically for those programmes which have succeeded in reaching benefits to the last mile, in the past.

Therefore, the Pradhan Mantri Gram Sadak Yojana, which has managed to deliver on-road connectivity to the most under-developed States, has bagged a massive ₹19,000 crore in 2016-17, more than doubling its share of ₹8,000-9,000 crore in previous years. This will allow hitherto unconnected rural folk in villages and hamlets to travel and find a market for their produce in more affluent markets than their own. Schemes dedicated to irrigation (Krishi Sinchai Yojana) and agricultural development (Krishonnati Yojana) have bagged a combined ₹18,697 crore, with specific targets on the arable land to be covered laid down in black and white.

These initiatives, taken with the rebooted crop insurance scheme (allocation ₹5,500 crore), strive to ring fence Indian agriculture from the vagaries of the monsoon.

Two, monetary allocations apart, the Budget seeds a host of other ideas to conserve water (ponds and rainwater harvesting), promote balanced fertiliser use (through soil health cards and organic manure) and enable easier credit access. MGNREGA has seen an 11 per cent increase in allocations to ₹38,500 crore with some of these allocations to be used in water conservation projects.

Finally, there are other interventions to ensure that farmers get better prices for their produce through free agricultural markets and a safety net in the form of government procurement. So, individual States and not just the Centre will take up procurement of foodgrains and pulses at MSPs, ensuring that farmers across the States and not just affluent ones up North are able to benefit from the MSPs. The push to rural electrification and roads arms farmers with both the information and market access necessary to drive a better bargain with the all-powerful middlemen.

Overall, this package of measures may succeed in delivering a boost to agricultural output, crop prices and farm incomes over a 3-5 year timeframe. But to expect them to immediately revive rural prosperity or trigger a spending binge on tractors and two-wheelers would be unrealistic.

For a quick kicker to rural consumption, one just has to pray that India is blessed with a La Nina event in 2016 which (the Economic Survey asserts) usually leads to a bumper harvest in India. Survey data shows that India’s agri output in La Nina years has averaged an 8 per cent growth versus 3 per cent in normal years.

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