Rural housing, MGNREGA get a leg-up

But no increase in PM-KISAN amount surprises experts

With the general elections just a few months away, Union Finance Minister Nirmala Sitharaman on Thursday promised to construct an additional 20 million houses in rural areas over the next five years.

But the agriculture sector received no major announcements, barring promises to encourage private investment in post-harvest technologies and allied activities, such as dairy and fishery. Though agriculture forms the backbone of the rural sector, the share of the crop sector in the average monthly income of an agricultural household has been steadily dropping over the past few years, even as wages are rising. Since 2014, the Modi government has constructed 30 million rural houses. The renewed focus on building another 20 million rural households underscores the current government’s commitment to providing basic necessities in rural areas.

The Centre estimated that the total cost of building 20 million new houses in rural India over the next five years is around ~418,200 crore at the rate of ~205,000 per unit of which Central share will be 63 per cent which is around 263,466 crore and the rest is state’s share.

In terms of budgetary allocation, the agriculture sector was earmarked ~146,819 crore in the Budget Estimates (BE) of FY25 — a marginal increase of 4.47 per cent from the Revised Estimate (RE) of FY24. In contrast, the rural sector received an allocation of ~265,808 crore in the BE of FY25, up 11.22 per cent from the RE of FY24. The Pradhan Mantri Awaas Yojanagramin, a rural housing initiative, received a budgetary allocation of ~80,671 crore, a significant 49 per cent increase from the RE of FY24, but nearly identical to the BE of FY24.

The last Budget of the current tenure of the Narendra Modi government also lacked any enhanced allocation under the flagship income transfer scheme of Pradhan Mantri Kisan Samman Nidhi (PM-KISAN). Under this programme, announced ahead of the 2019 general elections, the Central government pays an annual amount of ~6,000 in three equal instalments to all eligible farmers for purchasing inputs. So far, over ~240,000 crore has been disbursed to farmers through the programme as income support. In the run-up to the Interim Budget, media reports speculated that the government might increase this annual instalment by another ~1,500 or ~ 2,000.

For rural India, another major scheme that saw a significant upfront rise in budgetary allocation was the Mahatma Gandhi National Rural Employment Guarantee Scheme, or MGNREGS. The budgetary allocation for the scheme has been pegged at ~86,000 crore, the same as the RE of FY24, but higher than the BE of FY24. The Union Budget of FY24 had initially proposed an allocation for the MGNREGS at ~60,000 crore, but the Central government later topped it up first with ~10,000 crore and then again with another ~16,000 crore.

Being a demand-driven scheme, the higher BE for FY25 reflects the weakness in the rural job market.

A conservative estimate by civil society a few months ago showed that the budget required to provide at least 50 days of employment to all active households is around ~156,327 crore at current wage rates and expenditure per person. The MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) gives the legal right to a minimum of 100 days of average employment.

“The 43 per cent increase in the MGNREGA budget and stagnant agriculture budget expose the rural economy where farmers are increasingly becoming wage earners. Farmers were expecting an increase in the PM-KISAN on account of inflation and rationalisation of GST on agriculture implements. I hope that the Modi government is waiting for an opportune moment to announce the hike,” Sudhir Panwar, ex-member of the UP Planning Commission, told Business Standard.

Dharmendra Mallik, a spokesperson for the Bhartiya Kisan Union (apolitical), said farmers across the country were expecting some road map on higher MSPS for wheat and rice as promised for the farmers of Madhya Pradesh and Rajasthan in the recent polls.

Among other schemes, the Jal Jeevan Mission which promises piped water to rural households, gets an allocation of almost ~70,163 crore in FY25, almost the same as BE of FY24. In the past two financial years, the Central government has spent around ~125,000 crore on the scheme to provide clean drinking water in villages.

That apart, in agriculture, an ‘Atmanirbhar Bharat Abhiyan’ for oilseeds has been promised, building on a similar proposal mooted in last full Budget. It would cover high-yielding seed varieties, market linkage and other benefits for mustard, groundnut, sesame, soybean, and sunflower.

Schemes for dairy development, fisheries and value addition in farming also got a leg up in the Interim Budget.

The Centre also promised to push the number of ‘Lakhpati Didis’ from 20 million to 30 million under the existing scheme for self-help groups.