Budget 2019: PM Modi may have to lean on the rural sops he once derided; here’s why

By: |
New Delhi | Updated: Jan 21, 2019 5:27 PM

Budget 2019: With existing schemes failing to mitigate farm distress by raising incomes,PM Narendra Modi may have to depend on doles to woo rural voters ahead of Lok Sabha elections.

Interim Budget 2019 on Feb 1,2019Budget 2019

Budget 2019: Political compulsions of the election year may force Prime Minister Narendra Modi to make a tactical retreat from his farm policies that relied on creation of better infrastructure facilities and an efficient marketplace. After allocating Rs 85,000 crore for 10 key rural sector schemes last year, the Prime Minister may turn to handouts to convince farmers to vote for him as he seeks re-election in April-May this year. His government’s response to farmer protests across the country will find reflection in the Union Budget that will be presented by finance minister Arun Jaitley on February 1.

The Prime Minister has always been vocal about his strong dislike for handouts. When a demand for a countrywide loan waiver was made following the defeat of BJP in three Hindi heartland states, Modi and his cabinet colleagues made it clear that farm loan waivers were not a permanent solution to address the rural distress. Earlier in his tenure, he termed rural employment guarantee scheme MGNREGA a relic of inept policies followed by the UPA government.

Prime Minister Modi has been working to double farmers’ income through horticulture and other allied activities, but these initiatives have failed to produce the desired results. Through the country’s first ever agri export policy last year, the government announced steps to boost farm exports, but this also may not offer a instant boost in rural incomes.

In the interim budget, Prime Minister Modi may be forced to follow the previous governments’ example of election year doles in form of a loan waiver or a fixed subsidy on the lines of those implemented by Telanagana and Odisha governments. Under the Ryuthu Bandhu scheme, Telangana gives an assistance of Rs 4,000 per acre to eligible farmers for buying seeds, fertilisers and pesticides. UPA’s victory in 2009 Lok Sabha elections was partly attributed to Rs 60,000 crore farm loan waiver announced by the then finance minister P Chidambaram.

It is speculated that Modi government will announce a fixed subsidy scheme for farmers in addition to announcing some kind of a universal basic income plan to woo farmers and the youth. In an interview with ANI, the Prime Minister talked about his vision of increasing farmer’s income by creating necessary infrastructure in irrigation, storage, transportation and providing quality seeds, fertilisers, affordable credit and market for produce. The measures he enlisted include testing of soil and issue of soil health cards on a large scale to encourage scientific farming.

Responding to the Congress President Rahul Gandhi’s demand for announcing a countrywide farm loan waiver, Prime Minister Modi had clarified that waiving farm loans was not the right approach to help farmers to come out of the vicious cycle of poverty and subsistence farming. He had blamed the previous governments for not creating necessary infrastructure in rural areas that kept Indian farmers dependent on monsoon rains.

Failure of monsoons often lead to failure of farming, sometimes leading to large number of suicides of farmers. However, farm loan waivers announced by the Congress governments in Madhya Pradesh, Chhattisgarh and Rajasthan may force Modi to follow suit to win back the support of the farming community. In the last budget, finance minister Arun Jaitley has allocated Rs 16,772 crore for Green, White and Blue revolutions for supporting staple crops, milk and fish production. The government also allocated Rs 9,429 crore for Prime Minister Irrigation Scheme and Rs 19,000 crore for rural roads.

In addition to these, the NDA government also allocated Rs 13,000 crore for crop insurance and Rs 15,000 crore for giving interest subsidy to farmers for short-term loans, taking the total allocation to Rs 73,201 crore. The government also allocated Rs 3,200 crore for giving LPG connection to poor families under Ujjwala scheme and Rs 3,800 crore for Deen Dayal Upadhyay Gram Jyoti Yojana and Rs 2,750 crore for rural electrification under Saubhagya scheme. It also gave Rs 721 crore for empowerment of Panchayats and Rs 1,313 crore for Kisan Sampada Yojana.

Read Also: India Budget 2019: Modi government’s big decision on Economic Survey 2019; read here

Allocation for these 10 rural sector schemes out of total 83 central government schemes was Rs 84,785 crore. This figure is exclusive of money spent on Pradhan Mantri Awas Yojana (Rural) and Swachch Bhart Mission. These schemes may see significant increase in allocations in this year’s Budget, in addition to the big ticket announcements expected for agriculture sector. In a Facebook post, finance minister Arun Jaitley has reveled the government’s intention to make some big announcements before the elections even at the risk of breaching fiscal deficit target.

Do you know What is Finance Bill, Short Term Capital Gains Tax, Fiscal Policy in India, Section 80C of Income Tax Act 1961, Expenditure Budget? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Budget 2021: Over 70 pc industry respondents expect Budget to hike standard deduction limit, says KPMG survey
2IMF favours extension of pandemic support measures, thrust on infra investment in Budget 2021
3Budget 2021 Expectations: Real estate looks for policy support for recovery, smooth functioning