Rhetoric doesn't make it shine !

K R Sudhaman

Finance Minister Arun Jaitley has attempted to do what he ought to have done long ago because he cannot ignore the sentiments of farmers, informal sectors and rural folk, who have been in distress. Imperfect rollout of GST, and demonetisation have rattled the farm and rural sectors, mainly dependent on cash economy.
Taking the cue from the Economic Survey, which had highlighted three areas that needed attention immediately, Jaitley has outlined the intent to uplift the sagging morale of farmers and rural poor but without making necessary allocation.This is surprising indeed in what is an election year. Result: Yet another grand promise like Narendra Modi's 2014 campaign promise of putting Rs 15 lakh in every poor family's bank account by getting back the black money stashed abroad.
Jaitley has tried to provide an impetus to the rural economy, which would be a force multiplier for overall growth to surge towards eight per cent. One of these measures is 150 per cent increase in Minimum Support Price (MSP) for the forthcoming Kharif crop with a promise to ensure 1.5 times more farm income. Cost plus 50 per cent profit formula, as suggested by the Swaminathan committee,would help in moving towards doubling farm income by 2022. Four years have passed since Prime Minister Modi had held out the promise but not much headway has been made so far.
The proposed MSP hike is just a beginning. Huge resources have to be tied up as otherwise it will remain an intent. It is going to be a tough task as calculation of cost taking into consideration land value will be difficult since there is big variation in cost of land across country.

The budget script on rural India is good but lacks seriousness. There are no answers as to how the government is going to get the wherewithal for implementation. The new health care scheme may cost the exchequer at least Rs 1.5 lakh crore. No allocation was made for this.

MSMEs account for nearly 40 per cent of manufacturing and 45 per cent of exports. These small and medium companies' employ many times more compared to large industries, which are increasingly becoming capital intensive.The budget offers a package to pump-prime their growth through better access to finance; it helps to spur both employment and growth in this vital segment of the economy. This will also help to solve the problem of disguised unemployment in rural areas.
Measures to step up irrigation, particularly minor irrigation and linking of peninsular rivers, are long overdue to bring more area under irrigated farming. Though India has largest irrigated area in the world, still only 45- 50 per cent of the arable land is irrigated. More irrigation in the long run will minimise rain-fed farming.

P Chidambaram Water management, too, is equally important in view of growing scarcity of water and the budget caters to stepping up drip and sprinkler irrigation across the country. Boost to rural livelihoods proposed in the budget is a welcome development. The total amount to be spent by various Ministries will be Rs.14.34 lakh crore, including extrabudgetary and non-budgetary resources of Rs.11.98 lakh crore.

Arvind Subramanian Water management, too, is equally important in view of growing scarcity of water and the budget caters to stepping up drip and sprinkler irrigation across the country. Boost to rural livelihoods proposed in the budget is a welcome development. The total amount to be spent by various Ministries will be Rs.14.34 lakh crore, including extrabudgetary and non-budgetary resources of Rs.11.98 lakh crore.
Apart from employment due to farming activities and selfemployment, this expenditure will create employment of 321 crore person days, 3.17 lakh kilometers of rural roads, 51 lakh new rural houses, 1.88 crore toilets, and provide 1.75 crore new household electric connections besides boosting agricultural growth.
Accordingly, the Government substantially increased the allocation of National Rural Livelihood Mission to Rs. 5750 crore in 2018-19. Loans to Self Help Groups (SHGs) of women has been increased to about Rs. 42,500 crore, up by 37 per cent over previous year. The Government is confident that loans to SHGs will increase to Rs.75, 000 crore by March, 2019. This is something positive and a realistic development for rural India.
The government would have done well had it revived the move to allow FDI in multi-brand retail. Nearly 70 per cent of the sales in multi-brand retail are food items and encouraging this sector would have helped farmers get remunerative prices. This would have eliminated middlemen to a great extent.
Multi-brand retail today is around $ 500 billion industry; it is expected to double to $1000 billion in the next five to seven years considering India grows at a rate of around 7-8 per cent. This is one area the BJP does not seem to be interested in looking at as traders are the saffron party's core constituency.
In short, the budget script on rural India is good but lacks seriousness as there are no answers how the government is going to get the wherewithal for implementation.
Like for the new health care, which is a grandiose intent by all means. It may cost the exchequer at least Rs 1.5 lakh crore. No allocation was made.
Some six states already have a more modest version of the health scheme. Tamil Nadu has been implementing its universal health care since 2008; it is working well because the state already has a good hospital network. Many government hospitals are able to pay for their upkeep from the money they get from insurance companies. Hitherto Tamil Nadu hospitals used to wear a pathetic look because of inadequate government funding.
Many of states in the north, east and northeast India do not have a good hospital network. In Uttar Pradesh and Bihar even government hospitals and primary health centres (PHCs) are in a bad shape.For a successful launch of national health scheme, hospital network needs to be first improved in these states. It will take several years to accomplish the task.
The health care scheme, to be known as Modicare, just as Obamacare, may take years to be rolled out fully as huge resources

would have to be found even if states were to share a part of the burden as proposed.
Also, experience shows any Central programme implemented in collaboration with states tends to be tardy as the level of implementation and quality vary from state to state. The rollout, therefore, is going to be difficult and it could lead to serious fiscal slippages just when the economy is showing robust growth and broadbased revival.
Such mega plans for rural India are good if India is to shine for all. But the question is: Can it be implemented without glitches and spreading thin the scarce resources ahead of elections next year? The answer is big no.
Arun Jaitley's health scheme for 10 crore below poverty families, which translate to 50 crore persons, is like the UPA government's food security programme announced ahead of the 2014 elections. Food subsidy bill was estimated at a whopping Rs 1.25 lakh crore but the UPA-2 made no proper provisioning in the budget. Rural people saw through the game and the UPA lost the elections.
It would have been better if the Modi government had held discussions with all stakeholders and created necessary infrastructure and resources before announcing the scheme.
Perhaps, Modicare could have been a good promise in the manifesto for 2019 elections as failure to implement it in the short span of one year could cost the ruling party dearly at the hustings.

Former finance minister P Chidambaram is right in saying that Arvind Subramanian, the chief economic advisor, who authored the Economic Survey, is a good doctor as he has rightly flagged the ills of the economy but the Modi government seems to be a bad patient as it has failed to listen to the advice of the doctor.

The writer is formerly Economic Editor at Press Trust of India (PTI) and The Financial Chronicle