Budget 2018 targets the Real India

LokMarg’s quick take on Budget 2018

Many have quickly labelled Finance Minister Arun Jaitley’s Budget 2018 as being “pro-rural”, “pro-farmer”, or one that is “election-ready”, given that Parliamentary polls loom large on the horizon. Perhaps Budget 2018 is all of those. But the problem is that most budget analyses and experts’ views that we get in the mass media, particularly on news TV channels, are perspectives that are innately urban. Consider first the fact that 7 out of 10 Indians live in rural areas. Now consider that of the estimated 474 million Indians that are gainfully employed, only 100 million have manufacturing jobs; and 142 million are employed in services businesses. That leaves 232 million people. Where do you think they work? On farms in India’s villages. These working Indians who make up nearly half of the country’s employed citizens try to eke a living out of agriculture. And, if you take India’s population in totality, including those among the 1.3 billion who don’t work, more than 70% live in rural India and also depend on farms to make a living.

There’s a third fact to consider: while 69% of India’s GDP comes from services, and 17% from manufacturing, agriculture, which employs the largest number of people, contributes just 14%, a proportion that is declining every year. There are other factors too to consider. Agricultural productivity has been declining in India; and even as global farm produce prices have been increasing, Indian farmers are unable to get good market prices for their output domestically and are restricted from exporting their produce. More than 90% of India’s farmers are small or marginal and burdened by loans that come with usurious rates of interest. This, in short, is the farm distress that India faces today.

Mr. Jaitley’s Budget strongly focuses on rural India. If you’ve followed the drift provided by the numbers above, it is actually the real India. Budget 2018 aims to enable India’s rural citizens, especially those that are under-privileged and impoverished, to go to markets more efficiently; benefit from infrastructure and credit; and have access to roads, power, toilets, and free cooking gas. And while “pro-farmer” and “pro-rural” are catchwords guaranteed to work as hooks for an urban audience, the more apt label for Budget 2018 would be “pro-Real India”.

Of course, the Budget also eyes the polls that are in the offing. Officially those elections are scheduled for the summer of 2019, but there is also speculation that they might be advanced quite aggressively and be held within 2018. If 70% of Indians live in rural areas, there are no prizes for guessing where the bulk of votes during those polls will come from. But strip off the cynicism of politics and focus on the reality of economics. If Budget 2018’s proposals indeed bear fruit and life for the majority of Indians who live in its 640,867 villages improves, it will also spur the economy to grow faster. As India’s poor are able to get better incomes, they’ll spend more, triggering growth for manufacturing and services sectors.

For far too long, Indian agriculture—the mainstay of most Indians—has been given the short shrift. Budget 2018 is a step in the right direction that could help correct that aberration.

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