The much-anticipated budget this year treads largely on the path set last year with the rural sector receiving more allocation than its urban counterpart. On the surface, the budget indicates an increase in rural spending under the rural employment guarantee, sanitation, water resources and agriculture sectors and an unchanged outlay in drinking water despite its significance. Besides, there is a silence on unachieved outcomes of many rural sector schemes in the implementation report of previous year’s budget announcement.
Sanitation stands to gain
The water and sanitation sector was in urgent need for funds to show results. The budgetary allocation for the Ministry of Drinking Water and Sanitation has increased substantially in 2017-2018.
The budget has upped the allocation by 43 percent for the rural component of Swachh Bharat Mission or SBM, the government's flagship programme on sanitation while the budget for SBM (Urban) is the same as last year. Finance Minister Arun Jaitley in his budget speech says, “The sanitation coverage in rural India has gone up from 42 percent in October 2014 to about 60 percent now. Open defecation free villages are now being given priority for piped water supply.” The budget for the rural drinking water under the National Rural Drinking Water Programme (NRDWP) is marginally high at Rs 6050 crore which, as per a report titled Water: At what cost? The state of the world’s water 2016 by WaterAid, a water and sanitation nonprofit, is highly inadequate for a country which has the highest number (75.8 million) of people in the world without access to safe drinking water. While the WatSan sector has been prioritised in the country’s policy agenda, the lion’s share of the allocation has gone to sanitation at the cost of lesser allocation to drinking water. For urban India, the allocation for the programme--Atal Mission for Rejuvenation and Urban Transformation (AMRUT), earlier called Jawaharlal Nehru National Urban Renewal Mission (JNNURM)--for water remains more or less stagnant at Rs 5000 crore.
High budgetary commitments have led to better coverage but that does not necessarily translate to better usage because of several reasons. Very often the new toilets are poorly maintained or are not operational. The key policy focus of the government should have been on encouraging behaviour change in people to ensure better toilet use.
The budget has important takeaways from the standpoint of water quality. There is a national sub-mission to NRDWP to address the fluoride and arsenic-affected habitations with additional central funding. Jaitley, in his budget speech, says, “It is proposed to provide safe drinking water to over 28,000 arsenic and fluoride-affected habitations in the next four years.” But questions are being raised on how the figure of 28,000 habitations has been arrived at. If it is based on the NWRDP data, it is inaccurate especially given the quality of the dataset and lack of seasonal information.
Sharp rise in allocations for irrigation and agriculture
The government has opened its purse strings for the rural sector with its strong focus on agriculture and irrigation. The new crop insurance scheme, Pradhan Mantri Fasal Bima Yojana has an increased coverage of 40 percent now while agricultural credit to the tune of Rs 10 lakh crore has been announced. Commenting on the budget, food and trade policy analyst Devinder Sharma, in his blog says that it is a strategy to move from subsistence to corporate farming. About the rise in agricultural credit, he points to a lesser-known fact that the “bulk of the farm credit, for which an interest subvention scheme of three percent is provided if paid back in time, is availed by the agri-business companies. Roughly Rs 8 lakh crore out of the Rs 10 lakh crore will eventually go to the agri-business corporations in the name of farmers”.
Last year PMFBY received Rs 5500 crore in budget estimates and Rs 13240.04 crore was allotted after the second supplementary. The budget estimate for this year is substantially higher at Rs 9,000 crore. The programme aims to benefit farmers through lower premiums and higher sums insured. The progress so far has been slow and until mid-2016, barely a fifth of the farmers and 23 percent of the total cropped area in India had been covered under the crop insurance scheme. It is not clear as to how the insurance penetration among the farming community will increase in the coming year. There was practically no participation of non-loanee farmers in the crop insurance scheme till recently. This, despite the fact that the premium has been kept very low at two percent for kharif crops, one and a half percent for rabi crops and five percent for horticultural crops. The saving grace of the scheme was the loanee farmers for whom it was mandatory to take a loan. The challenge now is to bring even the non-loanee farmers under the scheme. The budget does not suggest what would be done to encourage the states which are reluctant to implement the scheme and whether the financial burden on the states is expected to be lessened by way of sharing the premium jointly with the Centre. Yet again, tenant farmers and sharecroppers have not been brought under the ambit of PMFBY.
In the rural sector, as a part of Mission Antyodaya, an ambitious plan to make 50,000 gram panchayats poverty free by 2019 has been made. Some other key takeaways from the budget which reiterates the plan of doubling agriculture income in five years are the institution of a dairy development fund, bringing more regulated mandis (markets) on the electronic National Agriculture Market (e-NAM) platform, commodity market reforms and assistance to set up soil testing in Krishi Vigyan Kendras, among others. Agricultural marketing reforms are being given a push while the government goes headlong with a model law on contract farming that would be prepared and circulated among the states for adoption.
There is a 45 percent hike in the budget for the Ministry of Water Resources--from Rs 4755.5 crore to Rs 6887 crore. A micro-irrigation fund with a corpus of Rs 5,000 crore is being set up under the National Bank for Agriculture And Rural Development (NABARD) while another Rs 20,000 crore has been allocated for the long-term irrigation that was set up last year.
Marginal rise in MGNREGA allocation
A lot is being said about the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), a demand-driven employment generation programme which got an impetus this year with an allotment of Rs 48000 crore. However, the rise is marginal given the two supplementary allocations last year which took the total budget under MGNREGA in 2016-17 to Rs 47,500 crore. The allocation under MGNREGA as a percent of GDP has declined from 0.32 last year to 0.28 this year, as per an analysis by the Centre for Budget and Governance Accountability (CBGA), a Delhi-based think tank focusing on public policies and government finances. The work participation, too, has shown a decline with the average days of employment provided per household dropping from 46 in 2013-14 to 28 in 2016-17. This has huge implications on poor households who get to benefit most from the programme.
“The minister did announce an overall increase in rural spending within the agricultural sector but its relation with agricultural outcomes remains weak,” says Deepanshu Mohan, assistant professor of Economics at Jindal University in an article.
What seems missing from the budget is a comprehensive roadmap for farmers who were hit by demonetisation.
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