Irrigation and village road construction are likely to be the key focus areas in the upcoming budget, a move aimed at creating jobs, raising incomes and boosting demand for manufactured goods such as motorbikes in rural areas.
Top government sources told HT it was critical for the rural economy to grow at a sustained high pace for manufacturing sector output to increase further.
When rain-dependent farm output is robust, rural income, and therefore spending on almost everything – from television sets to gold – goes up.
This creates demand for manufactured goods, which in turn helps the general economy. At present, rural India accounts for about 48% of all motorcycles and 44% of TV sets sold across India. Without this demand, industrial growth would slow down. About 40% of cement demand comes from rural housing.
Sources told HT Prime Minister Narendra Modi and finance minister Arun Jaitley have been focusing on the need to raise incomes of people in villages—both from core farm activities as well as non-farm vocations.
Several rounds of discussions have already taken place among Modi, Jaitley and agriculture minister Radha Mohan Singh.
BJP president Amit Shah has also held several rounds of meetings with the agriculture minister, stressing the need for focussing on the farm sector in the broader growth framework.
Jaitley, who will hold pre-budget parleys with various stakeholder groups including agriculturists from next week, is likey to discuss ways and means to boost the farm economy before finalising the details.
Sources said irrigation has been zeroed in as a key priority, aimed at creating infrastructure to make India’s agriculture less dependent on monsoon.
At present, 63 million hectares, or about 45% of the net cropped area, is irrigated. “Over-exploitation of water resources is leading to alarming reduction in the water table in the rice bowl of India,” a source said.
Besides, irrigation and rural road projects have a direct bearing on job creation.
According to Crisil, a credit rating and research firm, 12 million people will join the agriculture workforce by 2018-19, compared with a decline of 37 million in agriculture employment between 2004-05 and 2011-12.
Sources said the objective is to create additional rural jobs outside farms. This will improve productivity and bring down disguised unemployment.