Aiming to please with Rs 35000 cr: Modi government's 'Jai Kisan' budget signals election thinking

Finance Minister Arun Jaitley gave credit to Rahul Gandhi for accepting his recommendation on incentives for braille users. But Rahul Gandhi may deserve more credit than that. His oft-repeated jibe calling Prime Minister Narendra Modi’s government a ‘suit-boot ki sarkar’ (a government for corporate India) seems to have hit home, as reflected in the special care taken by the finance minister to keep the focus on rural India. A major portion of the budget speech was directed towards rural economy and promoting a populist agenda, while India Inc didn’t have all that much to really cheer about. As Business Standard’s TN Ninan observed, “Budget speech had several references to the poor, none to the neo-middle class that was the government’s earlier focus.”

Having lost the election in Bihar, an agrarian state, the government is clearly trying to cover lost ground in time for the next round of electoral battles in key agrarian states, including West Bengal this year, and Uttar Pradesh in 2017. “This is the most political budget in years,” declared Shekhar Gupta on Twitter, “Tone echoes a hard Agro-povertarian swing.”

We highlight five announcements in the budget speech that suggest government has its sights firmly focused on winning rural hearts, minds and, most importantly, votes.

1.       Irrigation for farmers: For the farmers, the main vote base in rural India, FM has spoken of reorienting its interventions in the farm and non-farm sectors to double the income of the farmers by 2022. Total allocation for Agriculture and Farmers’ welfare is Rs 35,984 crore. Irrigation is a critical input for increasing agriculture production and productivity. Government is also working in improving irrigation facility in the country, especially after back-to-back famines of two years. The ‘Pradhan Mantri Krishi Sinchai Yojana’ is being strengthened and will be implemented in mission mode. A dedicated Long Term Irrigation Fund is being created in NABARD with an initial corpus of about Rs 20,000 crore. At least 5 lakh farm ponds and dug wells in rain fed areas and 10 lakh compost pits for production of organic manure will be taken up by making productive use of the allocations under MGNREGA.

2.       Insurance and loan repayment for farmers: Further, to support farmers in the aftermath of natural calamities, Government has revised the norms of assistance under the National Disaster Response Fund. Special focus has been given to ensure adequate and timely flow of credit to the farmers. To reduce the burden of loan repayment on farmers, a provision of Rs 15,000 crore has been made. Resources have been allotted to the Crop Insurance Scheme, namely, Prime Minister Fasal Bima Yojana. FM has also given farmers relief by improving his income from dairy activities. To make dairying more remunerative four new projects have been announced. These projects will be implemented at a cost of Rs 850 crores over the next few years.

3.       Windfall for gram Panchayats:  Most importantly a sum of Rs 2.87 lakh crore – a jump of 228 per cent over previous five year period, has been given as Grant in Aid to Gram Panchayats and Municipalities. These enhanced allocations, the FM said are capable of transforming villages and small towns.

4.       LPG for poor: In order to improve the access of LPG connection to rural population FM has set aside a sum of Rs 2,000 crore to meet the initial cost of providing these LPG connections. This will benefit about 1 crore 50 lakh households below the poverty line in 2016-17. The Scheme will be continued for at least two more years to cover a total of 5 crore BPL households.

5.       Health insurance for poor: In order to help poor families who get affected by sickness of a family member government is launching a health protection scheme which will provide health cover up to Rs One lakh per family. For senior citizens of age 60 years and above belonging to this category, an additional top-up package up to Rs 30,000 will be provided

All of the above adds up to a hefty 9 lakh crore spend on the rural sector alone. It’s a ‘jai kisan’ budget indeed!