ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Rural Push in Budget 2016-17

Rhetoric versus Reality

Budget 2016-17 recognises that the rural economy is in crisis; however, it fails to address this with sufficient targeted rural spending. A perusal of budget documents reveals exaggerated expenditure claims, achieved through reclassification of budget heads. There has been an enduring neglect of agriculture, which is further exacerbated by this year's reduced subsidies for fertiliser and food. This will induce further vulnerabilities in the rural economy.

The focus on agriculture and rural economy in Budget 2016–17 was not a surprise despite the fact that this government came with an agenda against pro-poor expenditures and subsidies. The bias of this government against rural spending was obvious from the statement by the Prime Minister in Parliament mocking the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) as a monumental failure of the previous government. This bias was also reflected in the government’s delay in implementing the National Food Security Act (NFSA), due for implementation in July 2014.

It was obvious that the sudden volte-face by the government hailing the MGNREGA as a lifeline of the rural economy in February this year, and the push for reviving the rural economy were early signs of a government recognising the extent of crisis in the rural economy. It was also a recognition of the failure of government policies in the last two years in reviving the Indian economy. Despite the Central Statistics Office’s (CSO) claims of a growth rate of more than 7% of the economy, fundamental indicators of the economy on manufacturing, investment and exports continue to raise doubts. But the biggest failures of the present government has been its inability to gauge the extent of the crisis in the rural economy.

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