Boost to farm sector, rural infra

Boost to farm sector, rural infra

New Delhi: Rural infrastructure and farmers got a boost in Budget 2011, with the government introducing significant fiscal measures aimed at fuelling consumption in villages.

Also See | Reduced Spending (PDF )

Allocation for the Congress-led United Progressive Alliance (UPA) government’s marquee rural job guarantee programme, however, remains mostly unchanged.

In last year’s budget, the government “significantly scaled up the flow of resources to rural areas to give a more inclusive thrust to the development process. The impact is visible in the new dynamism of our rural economy", finance minister Pranab Mukherjee said in his budget presentation in Parliament on Monday.“It has helped India navigate itself rapidly out of the quagmire of global economic slowdown."

To develop rural infrastructure, the budget has enhanced allocation for the government’s flagship Bharat Nirman scheme by Rs10,000 crore to Rs58,000 crore.

Bharat Nirman includes the rural road development programme Pradhan Mantri Gram Sadak Yojna; the accelerated irrigation benefit programme; rural electrification scheme Rajiv Gandhi Grameen Vidyutikaran Yojna; housing scheme Indira Awas Yojna (IAY), and the national rural drinking water and rural telephony programmes.

The government has also increased the corpus of the rural infrastructure development fund—an instrument for routing bank funds for financing rural infrastructure—to Rs18,000 crore from Rs16,000 crore in 2010-11.

In addition, the budget has outlined a plan to provide rural broadband connectivity to all 250,000 village panchayats in three years.

“There has been a great push for rural consumption and related issues in this budget," said Anirban Roy, founder and executive director of Seed Financial Services, a business correspondent, which is a bank-appointed firm to provide financial services in unbanked areas.

“The finance minister’s putting out the Swabhiman campaign (which brings banking services to rural areas) and other such measures will give a huge boost to rural demand," Roy said.

The budget’s thrust on villages “will not only spur rural demand but also create the right ecosystem to sustain the growth... The Indian growth story which started in the urban areas is now shifting to rural India," he added.

The budget has increased the central Plan outlay for agriculture and allied activities by 2.6% to Rs14,744 crore.

It has increased allocations for the Rashtriya Krishi Vikas Yojana, an agriculture development programme, from Rs6,755 crore to Rs7,860 crore; and enhanced the additional subvention to farmers who repay their crop loans on time from 2% to 3%.

“The budget is proactive for the rural sector and will allow the flow of growth there to continue. For instance, enhancement in allocation to Bharat Nirman will promote infrastructure development which will impact wages and demand," said Keerti Misra, partner at MART, a rural marketing consultancy.

The budget has increased monthly remuneration for workers in anganwadis (government-sponsored daycare centres mostly in villages) from Rs1,500 to Rs3,000 and for anganwadi helpers from Rs750 to Rs1,500. About 2.2 million anganwadi workers and helpers are expected to benefit from this.

But for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which assures 100 days of work in a year to one member of each rural household, the budget has slightly reduced allocation to Rs40,000 crore from Rs40,100 crore.

Mukherjee, however, stressed that MGNREGS’ new indexed wage system would result in a “significant enhancement" in payment for workers across the country.

The ministry of rural development on 14 January revised the minimum wages paid under the job guarantee scheme by linking these to the Consumer Price Index for Agricultural Labour (CPI-AL) in each state. According to the ministry’s estimates, this indexation will significantly raise rural wages by 17-30%.

“The fact that allocation to (MG)NREGA has not been increased is not really an issue," said Misra. “One really has to see how much of the amount allocated to the scheme in 2010-11 has actually been used. Since minimum wages have been enhanced, it will continue to boost rural demand."