Doles to development | The Financial Express

Doles to development

Budget FY24 reorients spending away from subsidies and freebies and towards more productive overheads that can benefit Rural INdia

Finance Minster Nirmala Sitharaman
Instead, she has proposed a growth-oriented, asset-creating and inclusive budget to develop better infrastructure and more productive jobs. 

By Ashok Gulati & Ritika Juneja

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Union finance minister Nirmala Sitharaman must be complimented for taking a bold step towards reorienting support in the agri-food-rural space, away from doles and towards development. Despite assembly elections in nine states scheduled this year, and Budget FY24 being the last full budget before the 2024 Lok Sabha elections,  the FM has resisted the temptation to announce more freebies. Instead, she has proposed a growth-oriented, asset-creating and inclusive budget to develop better infrastructure and more productive jobs. 

She has proposed drastic cuts in food and fertiliser subsidies, as also the expenditure on MGNREGA, in FY24 compared with the revised estimates (RE) for FY23. Together, these cuts amount to roughly Rs 1.7 trillion (see graphic). But, does this mean that the FM has wielded an axe on agriculture-rural spending? The simple answer is ‘no’, because savings from these doles have been redirected towards more productive expenditures on railways, roads,  rural housing and Jal Shakti, which will help rural India through multiplier effects.

Take the case of railways. Its capital outlay is up by 48.6%, at Rs 2.41 trillion in FY24 versus the FY23 RE of Rs 1.62 trillion. Road transport and highways has a capital outlay of Rs 2.70 trillion in FY24 against `2.17 trillion in FY23 (RE). This clearly reveals the government’s focus on ‘Gati Shakti’ to reduce the logistics cost. It begs mention here that logistics and supply-chain costs account for around 12% of the GDP in India, compared with the global average of 8%. Improving connectivity through rail, road, air and waterways will surely improve India’s competitiveness in global markets, including that of agricultural produce, and also help in taming inflation. This is a well thought out strategy and will pay India handsomely in the years to come. 

Another critical asset-creating expenditure head is PM Awas Yojana (Gramin). The overall outlay for PM Awas Yojana has risen to Rs 54,487 crore from Rs 20,000 crore budgeted for FY23, a net increase of 172.4%! However, if one compares the FY24 PMAY-G outlay to the FY23 RE of Rs 48,422 crore, the hike in FY24 is a more modest 12.5%. The scheme was launched in 2016 to provide housing for all, but it also ensures permanent asset creation for rural households and dignity of life, even as it creates more jobs in rural India. This marks a big step forward in reorienting subsidies towards rural infrastructure development.

There is an increase of 27.3% in the allocation for the Jal Jeevan Mission (JJM), at Rs 70,000 crore in FY24 versus Rs 55,000 crore in FY23RE. This is primarily to supply safe drinking water through taps, most of all in rural areas. This will not only help contain water-borne diseases but also save the time and energy of women who often have to carry water to their houses from far-flung areas. 

Empowering the ‘Amrit Peedhi’ through Pradhan Mantri Kaushal Vikas Yojana (4.0) aims to skill lakhs of youth within the next three years. The FM has increased the allocation for on-job training, industry partnership, and alignment of courses with the needs of industry, etc, by 85%—up from Rs 1,902 crore (FY23 RE) to Rs 3,517 crore. The scheme targets to cover new-age courses for industry 4.0,  such as coding, AI, robotics, mechatronics, etc. The FM also announced that to skill youth for international opportunities, 30 Skill India International Centres will be set up across different states. This is a commendable step.

Besides this, to promote innovations and technologies in agriculture sector, the FM has announced an Agri-Focused Accelerator Fund, setting up digital public infrastructure as an open-source, open-standard and interoperable public good for agriculture. This will enable inclusive, farmer-centric solutions through relevant information services for crop planning and health, improved access to farm inputs, credit, and insurance, help for crop estimation, market intelligence, etc. All these steps are in the right direction, but we have to see how much funds are allocated for these schemes. A positive step towards promoting high-value horticultural crops has also been announced under the Atmanirbhar Clean Plant Programme that aims to boost the availability of disease-free, quality planting material, with an outlay of Rs 2,200 crore. However, the creation of storage facilities and value-chain infrastructure still remains a challenge in rural areas. And finally, there is need to double investment in agriculture research for creating more productive, climate-resilient and competitive agriculture in India.  The FM has somehow shied away from that.  

Ashok Gulati & Ritika Juneja, respectively, distinguished professor, and fellow, ICRIER. Views are personal.

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First published on: 06-02-2023 at 04:15 IST