Opinion | Crisis of confidence bigger threat than farm distress

Farm income transfer scheme is unlikely to be executed in full in the absence of land records

Budget 2019 comes at a time when the agrarian crisis in the country is at its worst, with unemployment at its peak. Both of these are challenges which the budget was expected to address even though budget 2019 is an interim budget presented by an interim finance minister. It turned out to be a grand announcement of schemes and tax concessions, more like a manifesto. But even for a manifesto, the credibility of the present government is important for these to be converted into votes.

Anticipation of a farm income transfer scheme was already there—more so after rival Congress announced its own version of the minimum income guarantee. The proposal of income transfer of 6,000 for every small and marginal farmer is similar to the scheme in Odisha with half the amount and exclusion of sharecroppers and landless rural households. The government has used the budget to announce the implementation with retrospective effect with the first of three instalments delivered before elections.

The income transfer scheme is not only inadequate but is unlikely to be executed in full before elections in the absence of proper land records and identification of beneficiaries. But it will certainly not resolve the agrarian crisis. The crisis in agriculture is not a crisis of overproduction but it is a crisis driven by the collapse of the rural economy. The last four years have seen agriculture suffer two back-to-back droughts. But this has been exacerbated by the indifference of the government with real investment in agriculture declining along with shocks such as demonetization and GST. The crisis is not just for farmers but also for a large majority which is engaged in the non-farm sector, particularly manual casual workers who have seen their real wages decline in the last five years. The farmer income transfer not only excludes this significant poorest section of the rural economy but it is also at the cost of money that should have been used for investment to improve profitability in agriculture.

While it will certainly not resolve any of the problems in agriculture, its ability to sway voters will depend on the past record of this government. Not only has this government reduced investment in agriculture at a time when the rural economy is at its worst, but even its own promises and budgetary allocations for the last year have not been spent at a time the rural economy badly needed public expenditure. As against the budgeted 9,975 crore for 2018-19, it has managed to spend only 8,900 crore for the National Social Assistance Programme. NSAPis the oldest and largest income transfer scheme for which the monthly amount has remained unchanged at 200 per month since 2006. The other two favourite schemes of this government are the rural housing and rural roads schemes, which have seen underspends of 1,100 crore and 3,500 crore, respectively, last year alone. Even the Swachh Bharat Mission and Krishi Sinchai Yojana have seen underspending of 865 crore and 1,165 crore, respectively. These alone,which create rural infrastructure and generate incomes for the poor have seen an underspend to the extent of 9,217 crore. Including underspending on other rural and agricultural schemes, the total underspending is close to 20,000 crore, almost the same amount that the government plans to spend as income transfer to farmers, which also implies almost no additional income transfer in rural areas this year. However, the issue is not just budgetary allocations but also of credibility. A government which fails to spend the amount already budgeted at a time of crisis in rural areas for the poorest is unlikely to be taken seriously for its grand announcement at the end of its term. The real problem for this government is not that it cannot spend or lacks ideas, it is its lack of intent and political will.

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