With elections round the corner, it is time to take stock of the performance of the outgoing United Progressive Alliance, or UPA, government. The UPA came to power in 2004 riding on the frustration and disenchantment of the rural poor with the economic policy of the previous National Democratic Alliance government. While farmers’ suicides manifested the gravity of the agrarian crisis in the rural areas in parts of the country, rising unemployment, stagnant wage rates, worsening malnutrition and increasing inequalities were equally serious concerns for the rural areas.
The UPA must be credited for some landmark initiatives that have been crucial in reviving the rural economy or at the least providing a cushion to the rural poor at times of crisis. The most important of these is the enactment of the National Rural Employment Guarantee Act, or NREGA, according to which the National Rural Employment Guarantee Scheme is to be implemented. The fact that this crucial component today accounts for more than 50% of the entire budget on rural development is in itself an important indicator of the success of NREGA.
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In a short span of time, the Act is now operational in all rural districts of the country having generated more than 1.55 billion person-days of employment benefiting 38 million households. However, the success of NREGS is not restricted to being an employment-generation programme. Some of the beneficial offshoots of the programme have been large-scale infrastructure creation in the most backward areas, financial inclusion of the rural poor (at least 30 million bank/post office accounts have been opened) and inclusion of the hitherto marginalized sections of the society such as women, schedule castes and schedule tribes. On all these indicators, NREGS’ performance is better than that of any other programme.
Rural areas also benefited from the UPA government’s farm loan write-off, under which loans worth nearly Rs64,000 crore were waived. This was complemented by higher flow of credit to rural areas, primarily to the priority sector. While due credit should be given for these initiatives, it must also be noted that most of these were short-term and populist, with little effort to find real and sustainable solutions to the problem of credit in rural areas.
The agrarian revival under the UPA regime has much less to do with the policies of the government. The UPA has been fortunate to have had an excellent run of four good monsoons which are largely responsible for the agrarian revival. The excellent agrarian performance of close to 4% rate of growth of agricultural output was also marred by mismanagement on the part of the government, particularly with regard to food security. High food prices inflation for a large part of the past three years, coupled with the lack of reforms in the public distribution system, had its effect on the food security situation. Most indicators of nutrition and hunger showed no real improvement during the UPA regime, despite record food production.
Another area which deserves mention is the ambitious programme for rural infrastructure creation under the umbrella of Bharat Nirman. The programme, focusing on six core areas of irrigation, rural roads, rural housing, rural water supply, rural electrification and rural connectivity, was to give a boost to rural areas in a time-bound manner to be completed by 2009. So far, less than 70% of the targets have been met in four of the components (irrigation, rural electrification, rural drinking water supply and rural roads) with only rural housing and rural connectivity reaching the targets.
Nonetheless, the situation is no better than what it was at the beginning of the UPA term. The rural areas are again in the midst of a crisis, this time driven by the global financial crisis. While some of it, such as large-scale job losses and slowdown in wages, is a direct effect of the financial crisis, the lopsided and myopic policy perspective of the UPA is equally responsible for the present situation in rural areas. Despite the fact that the five years of the UPA have been the best years of the economy in terms of the growth rate, which remains more than 8% on average, it is also true that the rural areas benefited less than their privileged urban counterparts.
Most indicators of inequality confirm the growing disparity between the growth of rural areas and urban areas. Compared with the severity of the crisis and the vulnerability of the rural population to such shocks, the fiscal stimulus does not do justice to the needs of the rural areas. A notable case of missed opportunity is the absence of any significant fiscal stimulus for the unorganized sector.
The performance of the UPA will not be judged only on the parameters set by the minimalist National Common Minimum Programme (NCMP), but will also be evaluated in the contemporary context of the global financial crisis, which requires a different approach to dealing with rural areas than what has been envisaged in the NCMP. While the UPA may pass the test on the parameters set by the NCMP, the financial crisis seems to have nullified some of the gains made by the rural areas in the past five years. Clearly, some of these gains were too cosmetic and populist to provide real, tangible, long-term gains to the rural poor. The only saving grace appears to be the NREGS, which has absorbed some of the shocks of the financial crisis.
Himanshu is assistant professor at Jawaharlal Nehru University and visiting fellow at Centre de Sciences Humaines, New Delhi. Farm Truths looks at issues in agriculture. Respond to this column at email@example.com