Union Budget 2023-24, with its implications on the Gross Domestic Product (GDP), health insurance and Pensions, has stirred up considerable debate. The pressing concern remains the impact of this budget on Rural India, its various challenges, and potential avenues for growth.
The Union Budget’s Impact on Rural India
The rural Indian economy’s state has been a sore spot, and the recent Union Budget 2023-24 has not offered substantial relief. The budget witnessed significant cuts on subsidy schemes with only minimal increases noted in pivotal schemes.
In terms of agriculture and allied activities, a slight increase was seen from Rs 1.36 trillion crore in FY23 to Rs 1.44 trillion crore in FY24 (5.8 % increase). However, the allocation for agricultural R&D remains a meager Rs 9,504 crore, a mere 0.4 % of the total agriculture gross value added. This allocation is low compared to other countries that spend 1-2% of their agri GDP in this sector. Major cuts were experienced in the subsidies section of the budget: food subsidy witnessed a 31% slash bringing it down to Rs 197,350 crore. The fertilizer subsidy experienced a 22% cut, now reduced to Rs 175,099 crore. In addition, subsidies on Liquified Petroleum Gas (LPG) for the poor have seen a drastic reduction of 75%, now only amounting to Rs 2,257 crore. Given these figures, the question arises – how will this impact the rural economy?
The State of the Rural Economy
Based on the Economic Survey 2022-23, 65% of India’s populace resides in rural areas, and around 47% depend on agriculture for livelihood. Interestingly, two-thirds of rural income today is generated via non-agricultural activities rather than agriculture. Yet, the volume of agricultural growth witnessed an average annual growth rate of 4.6% over the past six years. But with agriculture and rural incomes under pressure due to myriad reasons, the economic stability of the region is concerning.
Challenges to the Rural Economy
Several factors contribute to the rural economy’s deteriorating situation. Inflation has led to a reduction in the rural population’s purchasing power. Agricultural sector issues such as lack of irrigation facilities, insufficient credit facilities, poor pricing for agricultural produce, and unpredictable weather conditions pose significant risks. This is coupled with a lack of rural employment opportunities that force individuals to migrate in search of better prospects, leading to the social and economic dislocation of rural communities. Moreover, inadequate social protection facilities like health insurance, pensions, and disability benefits increase the vulnerability of rural households.
Constitutional Provisions Related to Rural Development in India
The Indian Government has specific constitutional provisions to support rural development. The 73rd Constitutional Amendment Act, 1992 made Panchayati Raj Institutions constitutional bodies, entrusting them with the task of rural development. Under this provision, as many as 29 functions, including agricultural extension, land improvement, implementation of land reforms, etc., fall under the purview of Panchayati Raj bodies.
Initiatives Related to Rural Empowerment
Multiple initiatives aimed at rural empowerment have been introduced by the Indian government, including Deen Dayal Upadhayay Grameen Kaushalya Yojana, Pradhan Mantri Kaushal Vikas Yojana, Pradhan Mantri Matru Vandana Yojana, Mahatma Gandhi National Rural Employment Guarantee Act, National Rural Livelihood Mission, and Pradhan Mantri Awas Yojana. These initiatives have the potential to significantly improve the current dismal state of the rural economy with effective implementation.
Way Forward
The Economic Survey 2022-23 highlights the need for reorientation in response to challenges like climate change, increasing input costs, and low productivity. It advocates increased investment in infrastructure and R&D, with an emphasis on diversification to millets, pulses, oilseeds, horticulture, animal husbandry, dairying, and fisheries. A focus on the rural non-farm sector and policies to revive income and employment for MSMEs is suggested. The Centre has been urged to work closely with states in improving incomes, ensuring inclusive growth, and promoting sustainability in agriculture and rural areas.
UPSC Civil Services Examination Previous Year Question (PYQ) Prelims: Given below are questions related to the topic (for reference).
