Budget and the rural sector

The 2023–24 Budget was presented amidst global uncertainties and slowdowns, and the upcoming elections at the state and national levels in India.

The rural sector, about 65 per cent of the population, is of considerable importance to the Indian economy. We first come to the most important sector within the rural segment, viz., agriculture. There are announcements in the budget about green farming and increasing millet production. In the case of millets, the finance minister announced the intention to make India a global hub; terming millets “Shree Anna,” Finance Minister Nirmala Sitharaman said the Indian Institute of Millet Research in Hyderabad will be supported as the Centre of Excellence for sharing best practices, research, and technologies to develop this sector. These are undoubtedly welcome moves.

However, budget allocation-wise, agriculture does not record any major improvements. In particular, the total allocation to the crop husbandry sector is Rs 71,378 crore in 2023–24, compared to Rs 80,137 crore in 2022–23. In 2022–23, the sector’s revised estimate was Rs 69528 crore. Thus, in real terms, allocation has in fact been reduced.

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Farmers in India face two major uncertainties: price and weather. In the past, the finance minister spoke of the prices that farmers could get. This is of critical importance as it is a major problem faced by farmers. However, there is no mention of that in this current budget.

As for weather-related uncertainties, there has been no improvement in the land covered under crop insurance and has remained at around 25 per cent for some time. Thus, there is a need to enhance the adoption rate. If we look at the allocation for crop insurance in this budget, it is at Rs 13,625 crore and was
Rs 15,500 crore during 2022–23, showing a decline.

Farmers are provided an interest subsidy on their loans, and the subsidy amount has also shown a minor increase from Rs 22,000 crore in 2022–23 to Rs 23,000 crore in 2023–24. Thus, in many areas of agriculture, the budget allocation has not shown any improvement.

However, modernising primary agricultural credit societies is a welcome move in the budget. In the area of credit, small and marginal farmers often lag behind. The recent NSSO Debt and Investment Survey shows this clearly by revealing that farmers with higher land holdings have much better access to credit, while small farmers continue to depend on money lenders. In this regard, small and marginal farmers have much better access to the cooperative banks than scheduled commercial banks. Thus, improving the infrastructure of primary agricultural credit societies will have beneficial effects for the farming community. Whether these measures will help move towards doubling farmers’
income and thereby generate rural demand or not is yet
to be seen.

The much-needed rural demand, however, may improve due to enhanced infrastructure (capital expenditure) spending. This, in turn, may bring some increase in income for the rural populace through construction activities, but the extent of this is yet to be seen.

Another significant aspect of the budget is the complete redesign of women’s self-help groups in rural areas under the Deendayal Antyoday Yojana - National Rural Lilvelihoods Mission (DAY NRLM) scheme. Women’s self-help groups are small, affinity-based institutions where they jointly save and access banking services. This has many positives as these women gain financial literacy and inclusion.

With the funding that they get through their access to banks as a group, they also start income-generating activities. But these activities are at an individual level, hence home-based and small. Thus, the incomes that women get under this scheme are limited, and an additional major problem that they face is marketing.

The women are usually equipped with appropriate training in traditional activities such as pickle and paapad making, which are difficult to sell
as there are large firms in
operating in that market segment for long. The announcement in the budget in this regard is noteworthy.

The budget looks to “enable these groups to reach the next level of economic empowerment through the formation of large producer enterprises or collectives, with each having several thousand members and being managed professionally. They will be given assistance to procure raw materials and for the design, quality,
branding, and marketing of their products.”

Such a programme, if implemented effectively at the grass-roots level, can help
generate rural income, achieve gender parity and economic empowerment of woment.

(The writer is a professor at the Institute for Social and
Economic Change, Bengaluru)