FM's rural push may not see fruition

Sustained rural poverty can't be eradicated without capacity building

The Union Budget for 2016-17 has a greater focus on rural areas and local government than many of its predecessors. This is to be applauded, especially as much of the push will be given to wealth-generating and network-building activities like construction of road, electrification, and irrigation. Two successive deficient monsoons have stressed rural parts of the country that were already suffering from a slowdown in wage growth. Slower increases in minimum support prices, although they had the salutary effect of helping moderate food inflation, have nevertheless also contributed to economic stress in rural areas. This is not only a problem for the Bharatiya Janata Party politically, but it also means that the engine of rural demand that had powered India's economic recovery has ground to a halt. Meanwhile, the devolution of funds to local governments, especially village panchayats, has gathered pace in line with the recommendations of the Fourteenth Finance Commission, which substantially increased the recommended award to panchayats by the previous Commission. This too is important, as many solutions to local problems must be found and implemented locally for accountability and efficiency.

But the problem when it comes to eradicating sustained rural poverty in India has never been entirely one of allocations. It is also one of capacity. While local bodies have been given Rs 2.87 lakh crore in this Budget, a question mark remains over their ability to use these finances in the best possible way. Most panchayats lack the capability to devise methods to improve the basic services these funds are supposed to provide, such as water supply, sanitation, and the maintenance of community assets including roads. The Centre has stepped up its capacity-building in panchayats including through a special programme, the Rajiv Gandhi Panchayat Sashaktikaran Abhiyan, which sanctioned and trained more than 75,000 village-level officials in 2014-15. But more needs to be done. Much energy is being wasted on distractions such as the formulation of "village-level Plans". Instead, the focus should be on training and building of physical and human capacity.

The rural push is evident in the fact that spending on agriculture and irrigation - the latter the focus of a new scheme in this government - went up by 85 per cent. The finance minister used the word "rural" 25 times in his speech, and there was a promise to electrify every village by 2018; the rural roads programme received an increased allocation of Rs 27,000 crore. But the question here comes down to the quality of administration in many of these schemes. The new irrigation scheme is largely an unknown quantity. An amount of Rs 15,000 crore has been set aside for interest subvention on crop loans - but the crop insurance scheme has serious flaws when it comes to sustainability, and will strain the state-owned insurance companies. Payouts will still depend on the responsiveness and honesty of local administration. The rural push will only be effective if, as for panchayats, last-mile capacity is built to implement the various forms of schemes planned. In the end, empowering rural residents is the best choice. Education of farmers is one way to achieve that goal - and it is unfortunate that extension services, once a mainstay of rural policy, continues to be largely ignored in the Budget.