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Will the Budget Cut Incapacitate the Rural Economy? – IMPRI Impact and Policy Research Institute

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<strong>Will the Budget Cut Incapacitate the Rural Economy?</strong> - IMPRI Impact and Policy Research Institute

Press Release

Fiza Mahajan

The #IMPRI Center for Habitat, Urban and Regional Studies (CHURS),  IMPRI Impact and Policy Research Institute, New Delhi hosted an interactive panel discussion on the topic “Rural Realities and Union Budget 2023-24” on 3 February 2023, under the IMPRI 3rd Annual Series of Thematic Deliberations and Analysis of Union Budget 2023-24, as part of IMPRI #WebPolicyTalk

The discussion was chaired by Prof Sunil Ray, Former Director at A. N. Sinha Institute of Social Studies, Patna and Advisor at IMPRI. He began by mentioning the changed allocation of the recent budget towards the rural sector and stressed the perpetual underdevelopment of rural areas as an immediate concern. He stated that the budget is prepared to stabilize the macroeconomy and hence, the rural economic development is pushed to the periphery. He questioned the growth that is based on the concept of the trickle-down approach and emphasized that such growth is not effective in the long run. He concluded by saying that unemployment, resource utilization and structural transformation need to be emphasized more rather than just focusing on growth and GDP numbers.

The discussion was taken forward by Prof Sekhar who is a Professor at the Institute of Economic Growth (IEG), New Delhi. He mainly focused on the implementation of various rural sector schemes in the past year and whether the current budgetary proposal is in continuation with the past budgets. He talked in detail about the activities that are integrated into the rural economy including agriculture, rural development, the Ministry of Animal Husbandry and Fisheries, consumer affairs and public distribution and the Ministry of Food Processing. He further mentioned that the revised estimates have been lower than the budgeted estimates for all rural schemes pointing towards the government’s failure in achieving its set target.

He talked about the major flagship schemes and their low budgetary allocation. He further stated the main objectives of agricultural policy: Food Security, Farmer’s Income and Natural Resource Degradation, and how the government has failed on all three fronts. He appreciated the budgetary allocation towards livestock, animal husbandry and fishery. He concluded his talk by stressing the need for the functional integration of the two ministries, namely, Rural Development and Agriculture, to see desired results.

Prof Krishan Raj, Professor, Centre for Economic Studies and Policy (CESP), Institute for Social and Economic Change (ISEC), Bengaluru began the discussion by pointing out that the emphasis has been on the production sector rather than the consumption sector in the recent budget as reflected by Capex and subsidies extended to various sectors. He talked about the recent initiative of Saptarishi and how it lags in providing sufficient employment, food security and natural resource management in rural areas.

He mentioned the decline in India’s performance in the Human Development Index (HDI) report, along with Multi-Dimensional Poverty Index Report released by NITI Aayog. He pointed towards the reduced allocation of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) program to 60,000 crores and thus, concluding the increased focus of the budget towards high-income groups, the corporate sector and the production sector and further stating the access to basic needs being highly skewed towards the richer income groups.

He stressed the gap between allocation, implementation and achievement. Continuing further, he appreciated the program for support towards artisans i.e., Vishwakarma, to help them pursue their profession with new technology and find a market for their products. While concluding his talk, he stated that Rural India has been neglected in the budget and that the government should have reviewed its policies pursued since 2014 and worked accordingly.

The discussion was proceeded by Dr Jyotsna Jha who is the Director at the Centre for Budget and Policy Studies (CBPS), Bengaluru. She began by mentioning that the agricultural real income has actually gone down between 2015-22 while the fertilizer prices have gone up tremendously post-war and subsidies have gone down. She mentioned the major problem for such lags and gaps as development being non-aligned and that the government keeps on looking at these as various departments rather than sectors that need to be interlinked to make planning effective. She further talked about NREGA as an important livelihood security program because of its linkage with decentralized planning and thus, criticized the decline in budgetary allocation towards it.

She also highlighted the growing tendency of the government to state any failed program as a result of low absorption capacity rather than its own failures and bad implementation. She also talked about the feminization of the workforce and low provisions in the recent budget for the workers in the informal and semi-formal sectors except for the artisans. She concluded her talk by stressing the need for the integration of rural non-farm and farm economies and that investment needs to be done in public health and public expenditure as it has a far more distributive multiplier effect and works better for rural areas.

The next panellist, Dr Samuel Thomas, Chief Operating Officer (COO), SEESHA NGO, Chennai, focused his discussion on three main areas of Employment, Education and Health. He mentioned various facts following the recent budget including the slashing of the MGNREGA scheme and stagnant allocation in the agricultural sector. He condemned the new schemes for not having any connection to the previous announcements and rebranding-renaming and the coining of new term that has been happening under the government.

He further stated that there has been no proposal for a structural development plan for new rural India and that the holistic development growth in rural India, education, health and employability lacks vision. He emphasized the need for implementation and impact analysis before the announcement of any new program. He further mentioned the slash in the allocation towards National Health Research when the country is amidst recovery from COVID-19. He talked about various flagship programs and the drawback these face in the light of poor implementation. He emphasized the need to focus not just on bringing in new programs and schemes but on the implementation and impact of the schemes.

Dr G V Ramanjaneyulu, Executive Director, Center for Sustainable Agriculture, Secunderabad, Telangana began his discussion by talking about two schemes, namely, Natural Farming and PM-PRANAM. Taking a dig at the allocation of 459 crore rupees to help 1 crore farmers shift towards natural farming with 459 rupees on average, he wondered about the drastic shift that it would make. Talking about PM-PRANAM, which focuses on paying for ecosystem services by reducing the use of chemical fertilizers, he appreciated the government’s move but was sceptical of the investment that the scheme requires. He further gave clarification on the scheme by taking the example of Punjab. Thus, he concluded that while the intention behind the schemes is justified, there is no practical approach to these programs.

He further talked about the challenge of increasing farmers’ income. He mentioned because of the inequitable distribution of funds to different states, the price of crops in some states remains low resulting in low farm income. He stressed the need for change in the cropping pattern and the shift of focus towards crops other than rice, wheat and cotton. He mentioned decentralization of the procurement system as a step towards this transition. He further stressed the need for cutting down the cost of production for farmers through extension services.

After a question and answer session, the program was concluded with closing remarks by Prof Sunil Ray, who thanked and praised the team at the IMPRI Impact and Policy Research Institute for hosting a successful panel discussion and for ensuring the smooth functioning of the event. The event was concluded with a final vote of thanks by Ms Fiza Mahajan on behalf of IMPRI Center for Habitat, Urban and Regional Studies (CHURS).

Watch the Event at IMPRI #Web Policy Talk

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