Can Budget 2018 address slowdown in rural economy?

Union Budget 2018 may be able to offer sops for big farmers but it would not be able to deal with the structural challenges facing India’s rural economy

business Updated: Jan 18, 2018 17:28 IST
Tadit Kundu
Tadit Kundu
Budget 2018,Union Budget 2018,Buget 2018-2019
Monsoon clouds loom over in the sky a farmer works in a paddy field in the Montali area of Agartala. (AFP File Photo)

The results of the Gujarat elections, in which the opposition Congress outperformed the ruling Bharatiya Janata Party (BJP) in rural constituencies, and the growing number of farmer agitations in the country have focused attention on rural India ahead of this year’s budget. But addressing the rural challenge successfully will depend on an accurate diagnosis.

While it is undoubtedly true that organized protests by farmers and agrarian riots have been rising in the Indian countryside over the past couple of years, the trajectory of overall rural distress has not exactly been the same.

In fact, the Mint index of rural distress has been declining over the past couple of years after it rose to its peak in 2015, when back-to-back droughts had hurt the rural economy. The Mint index of rural distress is a composite index based on normalized values of three high-frequency indicators—rural wage growth, agri-GDP growth, and tractor sales.

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First Published: Jan 17, 2018 16:22 IST