Development From Doles

Context

It is a brave move to reorient support in the agri-food-rural space from doles towards development. The budget has done well to reorient government spending on subsidies towards rural infrastructure schemes.

Relevance

GS Paper-3: Inclusive growth and issues arising from it, Government Budgeting

Mains Question

The most recent budget realigned government spending on infrastructure projects in rural areas and away from subsidies. Is it a brave move? critically assess (250 words).

Main points

• The proposal calls for a significant reduction in food and fertiliser subsidies as well as a decrease in MGNREGA spending in 2023–24 compared to the RE for 2022–23.
  • The total cost of these reductions comes to about Rs 1.7 lakh crore.

Agricultural sector growth

• Between 2015 and 2022, the Union government failed to double farmers’ real incomes.
• According to official data, real incomes from cultivation decreased after 2015.
• Annual growth rates in the agricultural and related sectors have remained constant between 3% and 3.5% between 2020–21 and 2022–23.

How will development be facilitated by the government’s reorientation of spending on subsidies towards programmes for rural infrastructure?

• The savings from these doles have been invested in more productive projects like Jal Shakti, rural housing, railways, and roads, which will benefit rural India through their multiplier effects.
  • The capital expenditure for Railways and Road Transport is up 48.6% from the revised estimate of Rs 1.62 lakh crore in 2022–2023 to Rs 2.41 lakh crore in 2023–24.
    • Highways and road construction will cost Rs 2.70 lakh crore in 2023–24 as opposed to Rs 2.17 lakh crore in 2022–23. (RE).
• The government’s emphasis on Gati Shakti to lower logistics costs is evident from this.
  • Compared to the global average of 8%, the cost of logistics and supply chains makes up about 12% of India’s GDP.
  • Improving connectivity via rail, road, air, and waterways will undoubtedly boost the competitiveness of Indian goods, including agricultural produce, in international markets and also aid in containing inflation.
  • PM Awas Yojana (Gramin): o The total expenditure for PM Awas Yojana has increased by a net 172.4% to Rs 54,487 crore from the budgeted amount of Rs 20,000 crore for 2022–23.
    • The programme was introduced in 2016 with the goal of providing housing for everyone. However, it also guarantees permanent asset creation for rural households, promotes life dignity, and increases employment opportunities in rural India.
    • This represents a significant advancement in shifting subsidies to support the construction of rural infrastructure.
  • Jal Jeevan Mission (JJM): o The Jal Jeevan Mission (JJM) saw a 27.3 percent increase, from Rs 55,000 crore in RE of 2022–2023 to Rs 70,000 crore for 2023–2024.
    • The main purpose of this is to provide clean drinking water at taps, primarily in rural areas.
    • Not only will this help prevent water-borne illnesses, but it will also save the time and energy of women who must travel great distances to fetch water.
  • Pradhan Mantri Kaushal Vikas Yojana: o Within the next three years, lakhs of youth are to be given skills through the Pradhan Mantri Kaushal Vikas Yojana (4.0).
    • It envisions on-the-job training, forming alliances with business, and adjusting curriculum to meet business needs.
    • The expenditure for this purpose increased by 85%, from Rs 1,902 crore (RE) in 2022–2023 to Rs 3,517 crore (BE) in 2023–2024.
    • The Pradhan Mantri Kaushal Vikas Yojana aims to provide new industry training in fields like coding, artificial intelligence, robotics, mechatronics, and 3D printing.
    • Thirty Skill India International Centers will be built in various states.
  • Innovations and Technologies: The FM has announced the creation of an Agri-Focused Accelerator Fund to support innovations and technologies in the agricultural industry.
    • By offering information services for crop planning and health and enhancing access to farm inputs, credit, and insurance, this will enable inclusive and farmer-centric solutions.
    • Farmers will be able to estimate crops more accurately and receive market information.
  • Atmanirbhar Clean Plant Programme: o The Atmanirbhar Clean Plant Programme, which aims to increase the availability of high-quality, disease-free planting material, was announced as a positive step towards promoting high-value horticultural crops.
    • The programme has been given a budget of Rs 2,200 crore.

Overall Effects of Subsidy Cuts:

• These cuts will make farmers more vulnerable to the whims of the world market and weaken the agricultural economy.
  • Rural landless households may also suffer as a result of the Mahatma Gandhi National Rural Employment Guarantee Scheme’s budget being reduced from 73,000 crores in 2022–2023 (BE) to 60,000 crores in 2023–2024. (BE).
  • There was no room for higher net incomes as a result of the increase in minimum support prices between 2020–21 and 2021–22; it merely served to offset the increase in input costs.
  • The government has been promoting different types of “natural farming” while reducing fertiliser subsidies.
  • Even 459 crores have been set aside in the budget for a new national mission on natural farming. However, natural farming lacks scientific support and will probably result in a 25–30% reduction in crop yields.

Conclusion:

• These are positive steps, but we need to monitor how well the funds allocated to these schemes are actually used.
  • Building storage facilities and value chain infrastructure in rural areas is still difficult.

To make India’s agriculture more productive, climatically resilient, and competitive, investment in agricultural research needs to be doubled.