Things You Must Know Before Union Budget 2019: The growing discontent among the farming community has led to many protests and suicides in the recent past. The sluggish agricultural growth combined with rising cost of living in rural areas has made the life of rural folks miserable. Therefore, the government is required to take concrete steps to address the issue.
The Modi government is expected to announce a relief package for farmers, similar to Rythu Bandhu Scheme-based Telangana Model, in the upcoming budget. Any such scheme to support income would be better than a loan waiver, provided it is introduced as a centrally-sponsored scheme, says a report by India Ratings and Research.
With the general elections around the corner, there is a high probability that the focus of both centre and state governments would be on addressing rural distress. However, apart from the fiscal challenge, it may also pose implementation issues, as it depends on proper land records. For instance, Telangana could implement it due to the presence of such records.
According to the estimates given by the report, if the budget provides income support of Rs 8,000 per acre per annum to marginal and small farmers, then on an average, the amount received by small farmers would be Rs 7,515 each while marginal farmers would get only Rs 27,942 each. This support would cost the central government Rs 1.47 lakh crore (0.7 per cent of GDP).
However, if the scheme will be rolled out as a core centrally sponsored scheme, the cost to the union government would be 0.43 per cent of the GDP, while the remaining 0.27% would be borne by the state governments combined, the report added.
The states that would be largely affected, owing to the fiscal challenge it poses are Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Telangana, and Uttar Pradesh. Only Chhattisgarh and Jharkhand might accommodate such expenditure, the report added.