The Gist of Kurukshetra: November 2014

The Gist of Kurukshetra: November 2014

Budget 2014-15 is there a shift in policy direction?

The Union Budget 2014-15 was presented amidst a high expectation-ridden environment where the people of India anticipated the government’s maiden budget announcements to be statements of its policy directions, vision and the principles of economic management for the next few years. While the Economic Survey 2013-14 released a day before the Budget day advocated instant management of inflation, revival of economic growth, fiscal management and stability in the regulatory and policy framework for creating enablers in the so called sluggish economic environment, the immediate challenge before the government was the impending drought like situations in Indian States due to deficient monsoon 2014-15.

Wage Guarantee and Self-employment

The Budget 2014-15 (hereinafter the Budget) has reposed faith in the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and National Rural Livelihood Mission (NRLM) - the existing wage and self-employment programmes, respectively. While under NRLM, the expansion of interest subvention (i.e. 4% rate of interest on SHG loan upon prompt repayment) to an additional 100 districts would be beneficial to the diligent and disciplined rural SHGs, implementation of a start-up village entrepreneurship programme would create a catalytic local entrepreneurial ecosystem and would encourage the rural unemployed youth to take up local enterprises. On successful and sustained implementation, these initiatives would not only help in identifying and impartingtraining to prospective youth entrepreneurs, but would also provide support in guiding, facilitating and enabling these budding rural entrepreneurs to network with the businesspersons around the world.

MGNREGA has often been criticised for generating assets of inferior quality. In the recent past, the quality and durability of assets under MGNREGA have been compromised due to less focus on asset creation, faulty work design, improper selection of projects and work sites, lack of survey of works, inaccurate work design estimates, inefficient work execution and inadequate supervision. Keeping this in view, the Budget has aimed at creating more productive, durable and quality assets under this wage-employment initiative and. at linking these works to agriculture and allied activities. To realise this policy direction of the Budget, not only is there a need to design and implement policy directives on convergence at the district/block/village level with the all-round co-operation of the district/Block level sectoral line departments, but also a need to frame standardised quality parameters for public works permissible under MGNREGA. Further, the need of the hour is to raise a cadre of quality monitors both at the National and State levels to guide and supervise the quality, usability and durability of the assets so created under this public works programme.

Rurban Push

The Budget witnessed a Rural-Urban (Rurban) push following Rurban development model of urbanisation of rural Gujarat. This initiative will not only create an enabling and productiveenvironment and a fervent platform for attaining a balanced growth with social equity in rural areas, but would also ensure implementation of efficient and integrated civic infrastructure and basic amenity projects in rural areas on a Public Private Partnership (PPP) mode. The basic and associate services in the rural areas call for convergence of financial resources with technical inputs so as to create a vibrant, productive and quality rural infrastructure base.
The real challenge in translating the dream of Rurban development is to learn from the factors causing sluggish progress in the implementation of PURA and to take timely and adequate action to remove all the operational roadblocks to ensure quality of life of the rural people.

100 Smart Cities

The intent of the Government in announcing the development of 100 smart cities as satellite towns of large cities or by modernising the existing mid-sized cities is to ensure better living standards and to address the age-old complex problems of rural-urban migration and rapid urbanisation. With an allocation of Rs. 7,600 cr. in 2014-15, it is expected that the new smart cities so created would be able to provide adequate livelihood options to millions of rural-urban migrants and accommodate the civic needs of burgeoning number of people.

Sanitation for All

The Government of India, in the 12th Five Year Plan (2012-17), has restructured the erstwhile Total Sanitation Campaign (TSC) into Nirmal Bharat Abhiyan (NBA). The NBA has adopted a strategy to transform rural India into ‘Nirmal Bharat’ by adopting community-led, people-centred and demand-driven approach with a clear emphasis on awareness creation and demand generation for sanitation facilities in houses, schools and for creating cleaner environment. Keeping in view the slow progress and the emerging need for sanitation to make India an open defecation free country, the Budget intended to cover every household by total sanitation by the year 2019 through a mission- Swatchh Bharat Abhiyan.

Rural Housing

The Budget articulated its commitment to ensure housing for all by 2022. In this context, the Finance Minister (FM) not only extended additional tax incentive on home loans to encourage people to own houses but also reaffirmed his faith on the existing rural housing scheme. The FM allocated Rs. 8,000 crore for National Housing Bank to expand and continue its support to rural housing in the country.

Watershed Development

Department of Land Resources is implementing the Integrated Watershed Management Programme (IWMP) to take up contiguous micro-watershed in rain-fed and degraded areas. The Budget proposes to start a new programme called ‘Neeranchal’ with an allocation of Rs. 2,142 cr. in the current fiscal would ensure completion of watershed projects following a multi-tier ridge to valley approach. This endeavour, however, calls for utilisation of appropriate information technology, analysis of remote sensing and hydrological data along with timely and adequate community based planning, implementation and monitoring of these watershed development projects.

Concluding Remarks

The Budget announcements matched the need of the occasion for restoring the growth engine which appeared to have been on the verge of collapse during the last two fiscal years. Undoubtedly, the FM has diagnosed the problem areas on the country’s development sphere and the utilisation of public resources on such development intervention. The Budget has laid down the broad contours of economic policies and prepared a realistic roadmap for a journey towards a positive and sustained growth. Focus on the key rural development areas such as rural connectivity, income and employment, sanitation, skill development and irrigation indicated the broad development vision of the government.

Agriculture Research And Education Gets Major Boost

Every year Union Budget is a ray of hope for different sectors of our developing economy to accelerate growth and create job opportunities to our people. {Agriculture is the prominent sector of our economy as it still accounts for about 54.6 per cent of total employment (Census 2011). The sector needs increased budgetary support as there has been a decline in the absolute number of cultivators, which is unprecedented, from 127.3 million (Census 2001) to 118.7 million (Census 2011). The disillusionment of the people from farming is a worrying factor for growth of our economy and in turn for our food security. The share of agriculture and allied sector in gross domestic product (GDP) declined to 15.2 per cent during the Eleventh Plan and further to 13.9 per cent in 2013-14 (provisional estimates). This is indicative ‘a, shift from farm to non-farm employment. However, implementation of area specific schemes like Rashtriya Krishi Vikas Yojana (RKVY), National Food Security Mission, National Horticulture Mission and Initiative of Bringing Green Revolution to Eastern India (BGREI) of the Central Government has brought rich dividends to this critical sector of our economy. The resilience of Indian agriculture is now evident as from the negative growth’ in 2002-03, the sector now has registered a remarkable average growth rate of 4.1 per cent during the Eleventh Five Year Plan (2007-08 to 2011-12).

Horticulture has become a major growth booster of agriculture economy as the sector contributed 30.4 per cent of agriculture GDP. Further, the livestock sector contributed over 4.1 per cent of the total GDP in 2012-13. All these policy changes has resulted in substantial strides in agricultural production in the last few years. There was an increase of around 40 lakh ha in overall area coverage under foodgrains in 2013-14 as compared to 2012-13. As per the third Advance Estimates, a record foodgrains production of 264.4 million tonnes is estimated in 2013-14. Keeping in view these realities of this sector, the Central Government has announced several schemes in the budget of 2014-15 to boost agriculture and related sectors.

Highlights of the Budget

In all, the allocation for the Agriculture Ministry has been increased substantially from Rs 19,306.82 crores in the last fiscal to Rs 22,652.25 crores. Technology up gradation is a major challenge to boost agriculture production and to make it more climate resilient. Some studies have indicated that a one percentage growth in agriculture is 2-3 times more effective in reducing poverty than a one percentage growth in non-farm sectors. An amount of Rs. 100 crores set aside for “Agri-tech Infrastructure Fund”. This issue has been addressed substantially in this budget and agriculture research and education got a substantial hike from Rs 4,881.08 crores to Rs 6,144.39 crores this fiscal. The Government intend to usher in technology driven second green revolution with focus on higher productivity and “Protein revolution” will be area of major focus to address the problem of malnutrition.

Outlay of Rs. 1000 crores has been provided for “Pradhan Mantri Krishi Sinchayee Yojna” for assured irrigation. Interlinking of rivers has been the main thrust of the new Government which will channelize the water for irrigation and will also put curb on the floods. In this budget Rs. 100 crores has been provided toconduct the survey and feasibility studies for this purpose. However, it is gigantic task as it requires an investment of more than Rs. 2 lakh crores.

To meet the vagaries of climate change a “National Adaptation Fund” with an initial sum an amount of Rs. 100 crores will be set up. To make technology dissemination faster in agriculture, Rs. 100 crores has been allocated for dedicated Kisan Television. Inflation in food prices is major concern of every government which affect the common man. To mitigate the risk of Price volatility in the agriculture produce, a sum of Rs. 500 crores is provided for establishing a “Price Stabilization Fund”. Central Government to work closely with the State Governments to re-orient their respective APMC Acts.

The ambit of the MGNERGA will be further widened and it will now also focus on productivity and asset creation, primarily in fields related to agriculture. A target of Rs. 8 lakh crores has been set for agriculture credit during 2014-15. Farmers will get loan at 7 per cent and will get 3 per cent incentive for timely repayments. To provide institutional finance to landless farmers, it is proposed to provide finance to 5 lakh joint farming groups of “Bhoomi Heen Kisan” through NABARD. The budget proposes to raise the corpus of Rural Infrastructure Development Fund (RIDF) by an additional Rs 5,000 crores from the target given in the Interim Budget to Rs 25,000 crores in the current fiscal. The NABARD operated RIDF helps in creation of infrastructure in agriculture and rural sectors. It is proposed to set up “Long Term Rural Credit Fund” in NABARD for providing refinance support to cooperative banks and regional rural banks with an initial corpus of Rs 5,000 crores. To increase credit flow to farmers and avoid high-cost market borrowings by NABARD, he proposed to allocate Rs 50,000 crores for STCRC (Short Term Cooperative Rural Credit). It is also proposed to supplement NABARD’s Producers’ Organization Development Fund for Producer’s development and upliftment called ‘PRODUCE’ with a sum of Rs 200 crores which will be utilized for building 2,000 producers organizations across the country over the next two years.

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