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India to Spend Nearly $13 Billion on Rural Welfare Projects

  • Anjana Pasricha

An Indian farmer on the outskirts of Bhubaneswar, India, Feb. 29, 2016. Indian Finance Minister Arun Jaitely on Monday presented country's annual budget for 2016-17 where he proposed spending nearly $13 billion on rural development.

An Indian farmer on the outskirts of Bhubaneswar, India, Feb. 29, 2016. Indian Finance Minister Arun Jaitely on Monday presented country's annual budget for 2016-17 where he proposed spending nearly $13 billion on rural development.

The Indian government has pledged to spend nearly $13 billion on rural welfare projects to help millions of farmers who have struggled with monsoons and crop failures for two years in a row.

Presenting the annual budget Monday, Finance Minister Arun Jaitley outlined plans to double the income of the country’s 120 million farmers by 2022.

“We are grateful to our farmers for being the backbone of the country’s food security, we need to think beyond food security and give back to our farmers a sense of income security,” Jaitley said.

The strong focus on rural welfare comes amid warnings that although India’s economy is posting brisk growth of over 7 percent, the rural sector, which supports nearly half the country’s 1.3 billion people, is facing widespread distress.

Infrastructure

The government said it will implement a slew of irrigation projects, construct roads in rural areas and speed up projects to bring electricity within two years to remote areas that fall dark after sunset.

Indian Finance Minister Arun Jaitley arrives at parliament house to present federal budget 2016-17, in New Delhi, India, Feb. 29, 2016

Indian Finance Minister Arun Jaitley arrives at parliament house to present federal budget 2016-17, in New Delhi, India, Feb. 29, 2016

It also plans to increase spending on a crop insurance program and a rural employment scheme.

Farm expert Devinder Sharma in New Delhi welcomed the government’s efforts to boost the rural sector, but felt that the measures outlined will bring no immediate relief to farmers facing distress.

“I don’t know why the farmer has to wait for five years to double his income and what income are we talking about? The Economic Survey tells us that the income of farmers from farming in 17 states of India is Rs. 20,000 ($300) per year. This is pathetic,” Sharma said.

Political analysts said the focus on rural welfare represents a politically strategic shift for the ruling BJP as it prepares to face five state elections this year and another one next year in India’s politically most crucial state, Uttar Pradesh.

The BJP’s rout in a crucial poll last year in Bihar – a largely agrarian state – has raised fears voter support is dwindling.

Independent New Delhi-based political analyst Neerja Chowdhury said, "The budget today, 2016, reflects an attempt to reach out to communities who they (BJP) feel may have been very critical electorally, but may have been moving away from them.”

People look at a screen displaying India's Finance Minister Arun Jaitley presenting the budget, on a facade of the Bombay Stock Exchange (BSE) building in Mumbai, India, Feb. 29, 2016.

People look at a screen displaying India's Finance Minister Arun Jaitley presenting the budget, on a facade of the Bombay Stock Exchange (BSE) building in Mumbai, India, Feb. 29, 2016.

Farmers, castes

Chowdhury said the focus is just not on wooing the farmers, but also lower castes – communities that feel little has improved for them despite promises made of “better days to come” when the party took power in 2014.

The government countered criticism that its effort to boost rural welfare was politically motivated, saying it was helping the most vulnerable section of the economy.

“Whether it is political considerations or economic considerations, both converge in that direction, that you must help that sector of the economy,” Finance Minister Jaitley said.

Calling the country one of the “bright spots in the world economy,” Jaitley also underlined that the economy remains strong.

He said India will sustain growth of around 7.6 percent this year, despite global headwinds, and he committed to fiscally prudent policies saying he will stick to the fiscal deficit target of 3.5 percent.

Although the Indian economy is growing strongly, efforts by the BJP government to usher in labor, land and tax reforms have been largely thwarted by a combative opposition, raising fears in some quarters the growth momentum could slow down.

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