Date: 07/02/2023

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

Key Phrases: revised estimates, MGNREGA, PM Awas Yojana (Gramin), Jal Jeevan Mission (JJM), Pradhan Mantri Kaushal Vikas Yojana, Gati Shakti.

Context:

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

Key Highlights:

• There is a proposal for a drastic cut in food and fertiliser subsidies, and also reduce the expenditure on MGNREGA in 2023-24 compared to the revised estimates (RE) of 2022-23.
• Together, these cuts amount to roughly Rs 1.7 lakh crore.

How the reorientation of government spending on subsidies towards rural infrastructure schemes will lead to development?

The savings from these doles have been redirected towards more productive expenditures on railways, roads, rural housing and Jal Shakti — this will help rural India through its multiplier effects.

• The case of Railways and Road Transport:
  • Its capital outlay is up 48.6 per cent at Rs 2.41 lakh crore in 2023-24, from the revised estimate of Rs 1.62 lakh crore in 2022-23.
  • Road transport and highways has a capital outlay of Rs 2.70 lakh crore in 2023-24 against Rs 2.17 lakh crore in 2022-23 (RE).
  • This clearly reveals the government’s focus on Gati Shakti to reduce the cost of logistics.
  • Logistics and supply chain costs account for around 12 per cent of the GDP in India compared to the global average of 8 per cent.
  • Improving connectivity through rail, road, air and waterways will surely improve the competitiveness of Indian products, including that of agricultural produce in global markets and also help in taming inflation.
• PM Awas Yojana (Gramin):
  • The overall outlay for PM Awas Yojana has increased to Rs 54,487 crore, up from Rs 20,000 crore that was budgeted in the 2022-23 budget — a net increase of 172.4 per cent.
  • The scheme was launched in 2016 to provide housing to all but it also ensures permanent asset creation for rural households and provides dignity of life while creating more jobs in rural India.
  • This marks a big step forward in reorienting subsidies towards rural infrastructure development.
• Jal Jeevan Mission (JJM):
  • An increase of 27.3 per cent is also seen in the Jal Jeevan Mission (JJM), from Rs 55,000 crore in RE of 2022-23 to Rs 70,000 crore for 2023-24.
  • This is primarily to supply safe drinking water through taps, mostly in rural areas.
  • This will not only help contain water borne diseases but also save time and energy of women who have to walk long distances to fetch water.
• Pradhan Mantri Kaushal Vikas Yojana:
  • The Pradhan Mantri Kaushal Vikas Yojana (4.0) aims to empower the “Amrit Peedhi” and provide skills to lakhs of youth within the next three years.
  • It envisages on-job training, forging partnerships with industry and aligning courses with the needs of industry.
  • The outlay for the purpose has gone up by 85 per cent — from Rs 1,902 crore (RE) in 2022-23 to Rs 3,517 crore (BE) in 2023-24.
  • The Pradhan Mantri Kaushal Vikas Yojana also targets to cover new age courses for industry like coding, AI, robotics, mechatronics and 3D printing.
  • 30 Skill India International Centres will be set up across different states.
• Innovations and Technologies:
  • To promote innovations and technologies in the agriculture sector, the FM has announced an Agri-Focused Accelerator Fund.
  • This will enable inclusive and farmer-centric solutions by providing information services for crop planning and health and improving access to farm inputs, credit, and insurance.
  • Farmers will be able to arrive at better crop estimates and get market intelligence.
• Atmanirbhar Clean Plant Programme:
  • A positive step towards promoting high value horticultural crops was announced under the Atmanirbhar Clean Plant Programme that aims to boost the availability of disease-free, quality planting material.
  • An outlay of Rs 2,200 crore has been allocated for the programme.

Overall Impact of Subsidy Cut:

• These cuts will expose farmers to the vagaries of the global market and render the economics of agriculture more fragile.
• Landless households in rural areas are also likely to be affected adversely, as the allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme has been cut from ₹73,000 crores in 2022-23 (BE) to ₹60,000 crore in 2023-24 (BE).
• The rise in minimum support prices between 2020-21 and 2021-22 just covered for the rise in input costs and did not leave any space for higher net incomes.
• The government, while decreasing the fertilizer subsidies, has been promoting variants of “natural farming”.
• The Budget has even allocated ₹459 crores to a new National Mission on Natural Farming. But natural farming has no scientific validation and is likely to reduce crop yields by 25-30%.

Conclusion:

• These are steps in the right direction but we have to see how much funds allocated get utilized properly under these schemes.
• The creation of storage facilities and value chain infrastructure remains a challenge in rural areas.
• There is a need to double up investment in agriculture research for creating more productive, climate resilient and competitive agriculture in India.

Source: The Indian Express

Mains Question:

Q. The recent budget has reoriented government spending on subsidies towards rural infrastructure schemes. Is it a bold step? Critically examine. (250 words).