Home >Politics >Policy >Nirmala Sitharaman announces 10,000 crore to boost rural employment

NEW DELHI : Finance Minister Nirmala Sitharaman on Thursday announced an additional 10,000 crore to boost rural employment and accelerate growth in the rural economy.

The 10,000 crore is to be funnelled into the rural sector through the Pradhan Mantri Garib Kalyan Rozgar Yojna, the minister said. This money is expected to be used for the rural jobs programme – ie the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) -- and the rural roads programme ie Pradhan Mantri Gram Sadak Yojna.

Among the announcements made in May, as part of the 20 lakh crore covid-19 relief package, the minister had announced an extra 40,000 crores to the MGNREGS. This was in addition to the 61,5000 crores announced by Sitharaman in the budget in February bringing the total outlay to over 1 lakh crore.

In June, the Modi government had announced 50,000 crores worth projects to be implemented in 116 districts of 6 states under the Garib Kalyan Rojgar Abhiyaan, an employment and rural public works campaign to provide livelihood opportunities in villages that saw the return of a large number of migrant workers affected by covid-19.

On Thursday, the minister said 73,504 crores had been released to states under MGNREGS that had resulted in the creation of 251 crore person-days of employment.

“This will accelerate growth of the rural economy," she said.

The rural jobs programme is seen as helping in reducing rural distress during the months of the lockdown that resulted in migrant labour going back home to their villages given the closure of factories and businesses.

With Thursday’s announcement, the total allocation for the rural sector added up to 1,60,000 crores, something analysts welcomed.

“It is good that the finance minister is promising more money," said Himanshu, associate professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi.

“But the government should focus on increasing the pace of spending under this programme," he said adding that states had already spent all the money released to them and that there were only few more months left in this calendar year.

Higher demand across rural India was seen as a major silver lining for economic growth over the next months which has led to consumer companies to focus on the hinterlands. A good monsoon and higher rural wages through packages unveiled by the government have been seen as factors for this.

On Thursday, Sitharaman also announced a 65,000-crore fertilizer subsidy for farmers as part of her stimulus package to boost the economy. This money was being provided to ensure adequate availability of fertilisers to farmers and to enable timely accessibility of fertilisers in the upcoming crop season, she said.

However it was not clear if this amount was over and above the approximately 70,000 crores announced in the budget earlier in February.

According to K Ravichandran, senior vice president and group head- corporate ratings of ICRA, the “additional allocation of Rs. 65,000 crore for the fertiliser subsidy is a big positive for the fertiliser industry."

“It will be a landmark decision for the industry as it will resolve the issue of subsidy delays being faced by the industry over the last several years. The subsidy backlog had resulted in elevated working capital borrowings and significant interest outgo for the industry weakening the credit profile and profitability of the industry. With this additional allocation over the budgeted subsidy of Rs. 70,000 crore, Indian fertiliser industry will witness improvement in its profitability. As per ICRA estimates, the subsidy backlog would have reached around Rs. 57,000 crore to Rs. 60,000 crore by the end of FY2021, given the strong volume growth being witnessed in fertiliser sales in the current fiscal. Such large backlog would have significantly weakened the liquidity position of the industry," he said.

Sitharaman said that there was an estimated increase in fertilizer usage of 17.8 % over the actual usage of 571 lakh metric tonnes in this financial year. Fertilizer consumption was going up significantly and an increased supply of fertilizers would ensure that the forthcoming crop seasons would not be affected for want of adequate fertilizers, she said.

As per estimates, fertilizer consumption which stood at 499 lakh metric tonnes in 2016-17 is expected to rise to 673 lakh metric tonnes in 2020-21.

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