IMPRI Team

According to the Population Census of 2011, the percentage of people residing in rural areas is close to 69% of the Indian population. As per another report by the Government of India, the percentage of the Indian population that was situated Below the Poverty Line (BPL) in 2011-2012 amounted to 21.9%. Needless to say, people affected by rural poverty contribute a large chunk of the percentage. Therefore, the development of rural areas in terms of economy and viability of professional options is much needed. Hence, having a look at the Rural budget separately becomes of utmost importance.

To discuss the story of the rural realities, a panel discussion on Rural Realities and the Union Budget 2022-23 was organized by the IMPRI Center for Habitat, Urban and Regional Studies (CHURS), Impact and Policy Research Institute, New Delhi under the series The State of Villages – #RuralRealities in the presence of Dr. J. Dennis Rajakumar, Director, Economic, and Political Weekly Research Foundation (EPWRF), Mumbai as the chair; Prof. C.S.C Sekhar, Professor, Institute of Economic Growth (IEG), New Delhi; Himanshu Shekhar Mishra, Senior Editor (Political & Current Affairs), NDTV India and Dr. Jyotsna Jha, Director, Centre for Budget and Policy Studies (CBPS), Bengaluru as panelists.

Rural Realities and Union Budget 2022-23

Economic and Demographic Background

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Dr J. Dennis Rajakumar initiated the discussion by explaining the importance of the rural economy, which in some way represents the Indian economy and hence, has always been a central subject in the Budget of the Government. He drew attention to how the Budget 2022-23 will impact the rural realities. He stated that the GDP has risen by 9.2% in 2021-22 against a 6% fall in 2020 due to massive lockdown and in 2022-23 is expected to grow by 8 to 8.5%. Discussing the reasons behind this increase, he spoke about the rise in the private final consumption level, which was drastically affected during the pandemic, and gross capital expenditure.

In rural India, almost 69% of the total population resides and 67% of the households are located in rural areas. So, the drop in private final consumption was a rural or urban phenomenon and remains a question. The dependence of almost 90% of the rural population on the informal sector with 80% on cash on employment led to an increase in the hardships for the poor due to the pandemic-induced lockdown and thus, there is a need to discuss how this ‘booster budget’ would help in improving the present plight of the rural economy.

Employment Creation and Capacity Building

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Dr. Jyotsna Jha talked about the problem of unemployment rates, which are expected to be much higher than what was shown in the data. She also highlighted the fact that during the pandemic, women’s unemployment has grown much higher than men’s unemployment. She also expressed concern about the reduction in the allocation for MGNREGA, which has always been a source of rural unemployment for unskilled workers and has the ultimate aim of building infrastructure and maintaining the rural economy in line.

One of the main reasons behind the declining GDP during the pandemic is a fall in consumption expenditure. Hence, as compared to the need for capital expenditure, which will help to increase employment in the long run, we need direct benefit transfers into the hands of those who will spend the complete amount and MGNREGA is a major scheme for the same.

She also drew attention to education and nutrition which are of immense importance with the objective of increasing employment in the country. Programs like E-Vidya announced in the financial blueprint would not benefit the students in the rural areas and there are many bottlenecks with the same, like an inadequate number of teachers staffing and recruitment and hence low income in rural areas.

Expanding her conversation to nutrition, she spoke about Aanganwadi which has always been a major employer of rural women but in the Budget, there hasn’t been any change or improvements in the same. The only sector which maintained steady growth during the pandemic is the agriculture sector and given the money and technology in their hands, it could help them to perform more efficiently. Hence, the rural sector shouldn’t be looked like a place for passive investment but as a high potential space for inclusive growth.

Status of Agricultural and its Potential

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Prof. CSC Sekhar talked about two parts of agriculture growth which are:

  • What led to growth in agriculture and
  • Growth in the subsections of agriculture

It is expected that agriculture would see a growth of 3.9% but disappointingly, there hasn’t been any specific allocation for the same. Along with agriculture, livestock and fisheries are also extremely important for the rural economy which wasn’t given the requisite attention. Additionally, stating the major sectors of income for rural India, he told that with a 55% increase in the income from livestock there has been a decline in income from the crop sector by 40%.

He also seemed to praise the Government’s step towards increasing capital investment in agriculture through doubling the allocation for Rashtriya Krishi Vikas Yojana, increasing agriculture infrastructure fund by 150%, clubbing various projects under Krishi Unnati Yojana, and ample allocation for Animal Disease programs which is of utmost importance for the animal husbandry sector playing a major role in India’s rural economy. He also welcomed National Livestock Mission, Production Linked Incentive schemes that are immensely helping food processing industries and small-scale industries.

Furthermore, the government’s concern towards food storage and warehousing is also appreciable and it could be evidenced by the Budget itself. However, the reduction in the allocation for the MGNREGA program is premature. Talking about reforms and improvements for the agricultural growth, sir suggests increasing the use of the latest technology as the Government already seems to work for the same but at the same time, there is a need for the young population to build interest in farming and encouraging them to accept this sector with innovation.

Key Takeaways from the Budget 2022-23

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Mr. Himanshu Shekhar Mishra shared his experience with the farmers of western Uttar Pradesh and how, for the first time, Indian farmers have been at the forefront of Indian economical debate with the Agriculture Acts of 2020. On the basis of such interactions, he put forth the expectations of the farmers from the Union Budget, 2022-23; some of them for increasing the fertilizer subsidy, having a strict rule for MSP allocation as the cost of production exceeds the income they are getting and containment of inflation, especially in rural areas, to ensure sustenance.

Moving on, he highlighted pointers from the latest Budget concerning agriculture: an increase in the Ministry of Agriculture’s budget from 1,23,000 crores in 2021-22 to 1,32,000 crores in 2022-23; 2,37,000 crores of MSP payment to 1,63,000 crore farmers; 1,400 crores for the Ken Betwa Link project with more than 9,00,000 hectares of land being irrigated; chemical-free natural farming; NABARD facilitating supply of more funds; use of Kisan Drones while spraying insecticides and pesticides; a rationalized scheme to increase oilseeds production in the country; declaration of the year 2023 as the international year of millets, enhancing consumption of millet products; and finally, reducing the budget for MGNERGA.

Although the farmers were expecting more subsidies with respect to fertilizers and pesticides, there was a cut for the same this year. Mr. Mishra also explained how the demand for MGNREGA-related incentives went up during the first wave of COVID-19 as the country witnessed reverse migration and 1.14 crores of migrant workers returned to their homes, as per the February 2021 data by Mr. Santosh Gangwar. Thus, on one hand, unemployment was shooting skies during the pandemic and on the other hand, there was an increase in allocation of 40,000 crores under the COVID-relief package announced by the Finance Minister.

He also mentioned the lack of official real-time unemployment data which hampers the assessment and way forward. The Economic Survey for this year presented right before the Budget, also shows increased targeted cash flow, Rs 16,50,000 crores, from agriculture due to the increased focus on infrastructure developments in agriculture.

Way Forward

Post the panel discussion, questions were raised regarding the flexible nature of budget allocation under MGNERA. To which, Mr. Mishra replied how MGNREGA is a demand-driven scheme and inversely proportional to many variables, such as the state of the monsoon. While answering another question, Mr. Mishra explained the complex situation of MSP. Throughout the negotiation talks between the farmers’ unions and the government, one of the major demands was the implementation of a rational law for MSP. Although the government promised to formulate a new committee solely devoted to the issue, there have been no formal updates.

Extending this further, Prof SCS Sekhar suspended that MGNERGA, being a legal initiative confirms some incentive to those registered with it, be it in the form of employment or as an unemployment allowance. However, if MSP is legalized, the failure is not getting satisfactory revenue or there is a lack of deficiency payments, the farmers will incur huge losses as the cost of production in agriculture is much higher, making it a risky bet.

Answering the questions raised by our Chair, Dr. Jyotsna Jha explained how the gap between the wages from MGNREGA and wages from other work has deteriorated over the years. She also elaborated on the implications of health insurance schemes for the rural population due to the lack of infrastructure and awareness. The event was concluded with closing remarks by each panelist on whether the Union Budget 2022-23 will heed the revival of rural employment scenario and rural demand.

Acknowledgment: Diya Goswami is a Research Intern at IMPRI.

YouTube Video for Rural Realities and Union Budget 2022-23