Union Budget for 2016-17 trashes criticism by NDA rivals that Modi Government is for rich
At the end of the day, a Budget is a political document. On February 29, Union Minister for Finance Arun Jaitley used the Budget he presented for 2016-17 to take the fight into the Opposition camp, which had dubbed the Narendra Modi Government a suit-boot ki sarkar unconcerned about rural India. In what must be some sort of a precedent, Mr Jaitley began his Budget speech with proposals on revitalising the rural sector, including agriculture and social welfare measures. He opened the floodgates to new incentives and massive outlays that should effectively silence criticism on this count — though the opponents will never be satisfied.
The overwhelming emphasis on rural economy and social welfare should not come as a surprise, though. The farm sector has been in distress for years and the crisis was pulling down the country's overall economic growth, directly and indirectly. Moreover, the vast section of the population dependent on agricultural and allied income is an important constituent without whose support no party can sustain or regain political power. The third aspect in the current context is that the Finance Minister had to urgently correct the perception that the Government was treating rural India like a step-child while extending multiple benefits to industry. Mr Jaitley's announcements go a long way in addressing these issues. And, now that the Government has put its money where its mouth is on kick-starting agricultural growth, it is important for it to ensure that the funds promised and the projects announced materialise in time for the benefits to begin showing.
The good part is that Mr Jaitley has taken a comprehensive view of the farm sector — from irrigation to soil health to job creation to minimum support prices to credit facilities to value-addition on organic farming to transparent procurement at fair prices. His proposal to establish a long-term irrigation fund with an initial corpus of Rs20,000 crore, coupled with the idea of having a sum of Rs15,000 crore to tackle the farmers' burden of loan-repayment (through ‘interest subvention'), and the promise to pump in as much as Rs86,500 crore over the next five years on irrigation needs, will address, at the very least, stressed farmers who suffer from crop failure due to poor irrigation facilities and are unable to repay their loans (even the interest amount on occasions). These two have been the primary reasons for a large number of farmer suicides. The new measures, along with the recently announced crop insurance scheme, should bring relief to the farming community. Besides, with agricultural credit to be dispersed, targeted at a record high of nine lakh crore rupees, farmers hopefully will not have to run from pillar to post to get their funding requirement met when they need it most.
But farm income alone, especially for the large majority of small and medium land-holding farmers, is not sufficient to meet the growing aspirational needs. Besides, there is the landless farmer. The Finance Minister has, thus, turned to the Mahatma Gandhi National Rural Employment Guarantee Scheme (which had gained notoriety during the UPA regime for mismanagement), giving it a record allocation of Rs38,500 crore. He is not throwing good money anymore, since the MGNREGA's functioning has been revamped for the better in the past two years, both in terms of assets created and wages disbursed.
Given that the agricultural sector has been beset by the evil of an often opaque and inequitable procurement policy, the Finance Minister's move to tackle the minimum support price mechanism head-on is welcome. A decentralised procurement policy and the creation of an online system for the procurement of products such as pulses, are steps in the right direction. These ought to have come years earlier but never did even in the reign of parties that are now claiming to be messiahs of the farmers. Mr Jaitley's thrust on rural India did not end with funding the farming community; it encompassed social sector measures as well. An outlay of Rs2,000 crore to ensure the availability of cooking gas to 1.5 crore women in the Below Poverty line category — with a target to cover five crore BPl homes over the next two years — is a masterstroke. The decision to open as many as 3,000 new drug stores to provide reasonably priced medicines, and the proposal to make renal dialysis affordable to the needy (among others, by reducing or doing away with Customs duty on certain medical equipment) at various district hospitals, are thoughtful measures.
Three other proposals that need to be mentioned for their potential to change rural India's face are: legislation of the Aadhar mechanism, enhancement of rural electrification to 100 per cent by May 1, 2018, and use of the Direct Benefit Transfer to encompass fertiliser subsidy benefits. like the MGNREGA, the Aadhar system too is a UPA legacy, and there had been doubts about its legality. One does hope that the Opposition will see the requisite legislation through in Parliament and not treat it the way it has dealt with the Goods and Services Tax regime. After initial reservations, the Aadhar mechanism has come to be recognised as a robust means to plug loopholes in subsidy outflow and thus ensure that only the deserving, who have been targeted, get the benefit. On rural electrification, since the project’s success rests significantly on the cooperation from State Governments, it is expected that the State regimes, regardless of their political affiliation, will take advantage of the Centre’s new thrust.
The question that will be asked, and is being asked, is: Where will Mr Jaitley find the money for these ambitious schemes, given that the Government is additionally burdened with implementing the recommendations of the Seventh Pay Commission and the commitment to meet the One-Rank-One -Pension outgoIJ A resourceful Government which enjoys the confidence of investors shouldn't have problems in raising money. Moreover, continuing fiscal prudence will offer the Government elbow room to manoeuvre. While Mr Jaitley has tantalisingly hinted at adopting a ‘fiscal deficit range’, rather than having a fixed ‘fiscal deficit target’ as at present, he confirmed that he would stick to the 3.5 percentage target for fiscal 2016-17. This should cheer proponents of fiscal consolidation.