Windfall allocation may raise rural spending power

The Budget for 2016-17 is expected to deliver extra to rural India, with increased spending on irrigation, crop insurance, roads, the employment scheme, and perhaps a new legal framework on leasing of farmland.

Consecutive droughts and a record fall in farm-gate prices has necessitated this thrust.
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The previous Budget allocated the agriculture sector Rs 16,646 crore, around 13 per cent less than the revised estimates of 2014-15 as states' share rose on account of the 14th Finance Commission devolution.

The revised estimate for 2015-16 is expected to be Rs 15,500 crore and in the next financial year officials said the department of agriculture might get an increase of 30 per cent over the revised estimate.
 
"The ministry is pursuing with the finance ministry to allocate more to achieve the desired growth. It is indicated that the plan budgetary allocation for DAC may cross Rs 20,000 crore in 2016-17," officials said, according to a PTI report.

Around Rs 15,100 crore was allocated under the Pradhan Mantri Gram Sadak Yojana in 2015-16 after the first two quarters, which included additional allocation of Rs 5,000 crore. The ministry hopes this will be further improved in 2016-17.

In total, the rural development ministry was granted around Rs 72,000 crore in 2015-16, which will go up if allocations to the Mahatma Gandhi National Rural Employment Scheme (MGNREGS) are increased.

For the Krishi Sinchaee Yojana, Rs 5,300 crore was sanctioned in 2015-16 and the Centre plans to spend Rs 50,000 crore on it in the next five years.

Crop insurance could get Rs 8,000 crore, up from Rs 2,000 crore last year.

Programmes for creation of houses in rural areas and civic amenities are also expected to receive substantially more.

Many within the government expect a significant jump in allocation for the MGNREGS, which recently completed 10 years. The Centre has now accepted its utility in boosting rural consumption, and officials said the budgetary allocation could be over Rs 40,000 crore.

The Centre first allocated Rs 34,699 crore in the 2015-16 budget and then topped it up by another Rs 7,000 crore through supplementary demands for grants during the year, taking the total to over Rs 41,000 crore. A rise in BE for 2016-17 is also expected. The food subsidy might have to be increased if the Centre plans to roll out the Food Act in most parts of the country by April 2017, as announced by Food Minister Ram Vilas Paswan a few months ago. In 2015-16, the Centre provided Rs 125,000 for the food subsidy, of which around Rs 65,000 crore was exclusively earmarked for the NFSA.

Last year's allocation was made when just 11 states were willing to be part of the NFSA. Now with the number of states poised to double, the subsidy in 2016-17 is bound to climb.

However, some officials said substantial savings were expected from the NFSA after nationwide rollout because the main condition for states to join the NFSA platform was they should digitise their ration cards.

"The 2016-17 Union Budget should work towards enhancing farmers' income, which has dipped to historic lows. Enhancing credit disbursal targets is fine, but that does not impact many small farmers because of low profitability of farm produce. The rate of farm credit should be linked to agriculture growth. That apart, I feel that the allocation of Rs 500 crore for the Price Stabilisation Fund in 2015-16 Budget is too little as this year almost the entire corpus was spent on onions and other farmers did not receive any benefit," Sudhir Panwar, member of the UP Planning Commission and President of the Kisan Jagriti Manch, told Business Standard.

He said rural demand needed to grow to give a strong push to the manufacturing sector and that would come by pumping more money into rural areas. "Linking MNREGA wages to the consumer price index will ensure farm labourers get a big financial boost," Panwar said.

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BUDGET BOOSTERS

• Public spending in irrigation, rural roads and agriculture sector
   
• Budgetary allocation to MGNREGA
   
• Schemes for building houses in rural areas and providing urban civic amenities
   
• Improving consumption power in rural India
   
• UPA's National Food Act might be rolled out from April 1 with extra budgetary support