Home >Budget 2019 >Opinion >Opinion | Budget 2019 misses an opportunity to revive economy

The first budget of the second tenure of National Democratic Alliance (NDA) came at a time of slowing growth, worsening demand and rural distress.

Acknowledging the gravity of the problem, the interim budget had announced several steps to stop a worsening of the situation, particularly in agriculture. Agriculture growth has declined from 6.3% in FY17 to 5% in FY18 and 2.9% in FY19, though all these were nearly normal years.

Rural wages have remained stagnant in real terms over the last five years. Since then, things have only worsened with the likelihood of a deficit monsoon and low agricultural prices. Direct cash transfers may have yielded electoral dividends, but has also led to a situation where there are hardly any new measures to revive the rural economy in the current budget.

The challenge is to revive declining agricultural investments. Real investment in agriculture in FY12 prices fell from 2,84,424 crore in FY14 to 2,73,755 crore in FY18 —gross neglect at a time of deep agrarian crisis. Subsequent budgets have also more direct transfers, but no increase in investment. The latest one has also given up the pretence of promising to double farm incomes, with agriculture getting hardly any mention. Meanwhile, the farmer is expected to fend for himself/herself and adopt zero budget natural farming with no additional support.

The rural non-farm sector, too, continues to suffer. The Economic Survey spoke of the efficiency and impact of Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS). This scheme, which continues to face neglect with minimum wages now almost half of private casual wages, has got a budget allocation of 60,000 crore for FY20, against the revised expenditure of 61,084 crore last year.

Other rural infrastructure programmes have seen a decline as well. Budget allocation for Pradhan Mantri Gram Sadak Yojana has declined from 15,995 crore in FY19 to 14,223 crore and for Shyama Prasad Mukherjee Rurban Mission, it has declined from 1,200 crore to 800 crore. Even the flagship housing programme Pradhan Mantri Awas Yojana has seen budget allocation decline from 22,572 crore in FY18 to 21,000 crore in FY19 and 19,000 crore for FY20. These programmes do not just contribute to rural infrastructure, but also significantly help non-farm employment.

The only income transfer for disadvantaged households unable to earn a living—the National Social Assistance Programme—has been a lifeline even though pensions in these have not been revised since 2006. But even for this meagre assistance plan, the budgeted provision for FY20 is lower at 9,200, compared to last year’s allocation of 9,975 crore.

While budget allocations are important to understand a government’s expenditure commitments, it is ultimately a political document outlining the government’s economic and political priorities. The government may have opportunities for revising expenditures and allocating more or less during the course of the year, but as far as priorities of the government are concerned, this budget has clearly missed the opportunity to revive the economy. Saving the agriculture and rural economy is not just important for political considerations, but is also crucial for an economy suffering from low consumption demand. Any goal of becoming a $5-trillion economy will remain only a dream unless rural economy is part of the growth story.

Himanshu is associate professor, Jawaharlal Nehru University, and a visiting fellow at the Centre de Sciences Humaines, New Delhi.

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