More money for states in budget to boost to rural economy

  • Chetan Chauhan, Hindustan Times, New Delhi
  • Updated: Feb 29, 2016 20:41 IST

By the time irrigation network and better roads would be in place, Jaitley proposed electricity for every village by May 2018, crucial to boost rural economy. (Vipin Kumar/HT Photo)

The Indian states can take a lot from finance minister Arun Jaitley’s budget aiming to transform rural economy by better road connectivity, improving irrigation and empowering Panchayats by pumping around Rs 3 lakh crore.

All this has a target --- doubling the farmer’s income by 2022.

Rajasthan, which has already announced Jal Swabhiman scheme to improve watershed management, can hope to increase its irrigation network as 28.5 lakh hectares of farm land will be brought under the ‘Pradhan Mantri Krishi Sinchai Yojana’ in the next two years.

Most of it would be in the traditionally ‘Bimaru’ states of Uttar Pradesh, Rajasthan, Madhya Pradesh, Jharkhand, Bihar and Odisha, where agriculture is largely dependent on rain water. In addition, states can also borrow money Nabard, where an irrigation fund of Rs 20,000 crore will be set up.

These states can now rely more on rural employment guarantee scheme to create durable watershed management assets as the scheme has got higher allocation of Rs 38,500 crore for next fiscal. Just 46% of India’s farm land has irrigation facility.

The increased focus on rural roads under Pradhan Mantri Gramin Sadak Yojana for which Rs 19,000 crore has been proposed as against Rs 9,805 crore in 2013-14 will also improve rural connectivity in states, especially hilly states like Uttarakhand.

“The pace of construction which is currently 100 km per day, as compared to the average of 73.5 kms during 2011-14, will be substantially stepped up,” the minister said. It will mean additional 65,000 hamlets getting roads, half to be in these Bimaru states.

By the time irrigation network and better roads would be in place, Jaitley proposed electricity for every village by May 2018, crucial to boost rural economy. Around 30% of villages did not have power till 2015 end.

That’s not all as Jaitley will increase direct funding to states by Rs 64,144 crore in next fiscal as compared to 2015-16, resulting in states getting Rs 5,70,337 crore, a 50% jump from actual funding in 2014-15.

The engines of rural growth and governance --- panchayat and urban local bodies --- will get a grant of Rs 2,87,000 crore as recommended by 14th Finance Commission, a jump of 228% compared to the previous five year period. Panchayats will get Rs 655 crore from next financial year to develop capacity to implement Sustainable Development Goals.

All this raise a poignant issue --- whether local bodies have capacity to absorb so much money. Analysis by Delhi based advocacy group Accountability Initiative showed states spent 10% less funds by December 2015 compared to their spends in the five-year period preceding 2014.

Chhattisgarh, Maharashtra and Jharkhand were, however, exceptions. This year Rajasthan and Madhya Pradesh could be added to the list as they already have prepared plans to absorb additional Central aid.

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