INDIRECT THRUST

The Union Budget’s focus on capex and agriculture will have a multiplier effect on the rural economy, offsetting cuts in some rural-focussed themes

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Union Budget 2023-24 is being criticized by observers for not prioritizing the rural economy. The basis for this is the reduction in budgetary allocations for certain rural-focused schemes.

There is no denial that India’s rural sector is experiencing various challenges, including high inflation, unfavourable weather conditions, increased costs of agricultural inputs, and the after-effects of the Covid-19 pandemic. As a result, some people anticipated that the Budget would be more populist in nature, with measures aimed at increasing rural consumption.

But it is also true that the Budget’s focus on building infrastructure, while still adhering to the fiscal consolidation path, will have a multiplier effect on the rural economy too.

Simultaneously, the government has not shied away from allocating funds towards productive rural schemes such as drinking water, housing, and irrigation. Additionally, allocating sufficient funds to the agriculture sector will give a much-needed boost to the rural economy in the short term.

Many important provisions have been made in the Budget for the betterment of agriculture and farmers’ welfare. These include increasing the agriculture credit to 20 lakh crore for FY23-24 and promoting millets and start-ups.

ALLOCATIONS

The Rural Development and Agriculture and Welfare ministries are nodal ministries that are responsible for implementing developmental and welfare programmes in rural areas through various schemes.

In the Budget, the allocation to the Rural Development Ministry was cut by 2.1%. But budgetary spending for the Agriculture and Farmers’ Welfare ministry has been increased by 5.1% at ₹1,25,036 crore for FY23-24 as compared to the revised estimate for FY22-23.