All geared to boost farm income
A multi-dimensional approach to reduce farm distress could lead to faster economic growth.
THIS IS PERHAPS the first budget which brings the farmer and rural India to the centre of economic policy and fiscal allocations. It lays the foundation for India to achieve a high rate of economic growth, because all along what the country missed was increasing farmer’s income at a sustained rate. Unless the rural sector incomes and productivity levels improve, we will not be able to make use of the potential demand that exists for consumers and consumer durable products.
Farmers’ incomes go up and down depending on shortages or plenty. Once we achieve a sustained rate of rural income growth and take steps to eliminate the dualism between Bharat and India, only then can India progress without plunging into crisis now and then. The difference that this budget makes is to shift policy attention from talking about expanding production to increasing farmer’s income and improving rural livelihood. It has brought four government agencies – the Ministry of Agriculture, Ministry of Agro-processing, Ministry of Commerce and NITI Aayog – together and charged them with the task of working to achieve the objectives of increasing agricultural income and improving rural livelihood.
So for the first time you see a multi-dimensional attack on farmer distress. Several people have said that it is impossible to double farmer’s income in five years because the rate of growth of agriculture has been just 2.5 per cent over the last few decades. This assumes that farmer’s will remain the producer of unprocessed primary commodities and will be at the mercy of intermediaries.
NITI Aayog is working to telescope the whole process of farm production and agro processing to ensure that farmers gain. Our farmers are often seen throwing away surplus tomatoes because they can’t afford to sell them in the market as transport cost is higher than the price the tomatoes will fetch. But, at the same time we import ` 6000 crore worth of tomato puree used in all sort of food items. It’s an irony that while farmers are throwing surplus tomatoes, we continue to import. If steps are taken to setting up tomato processing plants, then the same tomatoes can be converted into tomato puree and can sold in the market, doubling farmer income. Similarly we are aware of many examples where farmers have raised their incomes by shifting to higher value crops, by shifting to floriculture, by shifting to new forms of horticulture or by shifting to new forms of dairies and fisheries. This needs to be replicated and scaled. If that is done, then there is no reason to believe that farmer’s income cannot be doubled or tripled.
Two people, one from Gujarat and the other from Pune, have patented technology for providing nano-technology micro nutrients to the soil. They have a database of 4,000 farmers whose output has doubled in one season. NITI Aayog is already engaged with 10 pilot projects in different agro-climatic zones. This is the time that we are taking steps to modernise our agriculture and make it into an enterprise. That’s the big game changer in this budget. Once we succeed, we will see transformational change happening in the Indian economy. The second big change is the provision for national health protection which provides for universal health coverage. This is something that should have been
UNLESS RURAL SECTOR
INCOMES IMPROVE, WE WILL NOT BE ABLE TO MAKE USE OF THE POTENTIAL DEMAND THAT EXISTS FOR CONSUMERS AND CONSUMER DURABLE PRODUCTS
done decades ago because in all advanced economies or in competing economies such as China, Vietnam and others, basic education and health has always been the mandate of the government. And these are the part of the worker’s consumption baskets that is why they don’t have to be paid nominal wages and that is where we become uncompetitive with them. These are the part of the worker’s consumption basket. In our country 83 per cent of our medical costs are borne out of pocket as soon as any middle-class or poor person finds herself needing secondary or tertiary level medical care. So for the first time the government has been bold to say the entire medical expenditure, the entire responsibility of a medical welfare of 10 crore households, which means 500 million people will now be borne by the government.
This is not a new scheme. It has existed in some forms before but at very much lower level of ambition. It has raised the cover to ` 5 lakh per year per family from ` 30,000. Since not all 500 million people are going to fall sick at the same time, there is ample provision made in this budget. We have done some calculations in NITI Aayog and in the ministry of health. The cost of the full scheme as announced in the budget for the whole year is approximately less than ` 5,000 crore. The health sector budget has been increased by more than ` 6,000 crore and the 1 per cent cess the finance minister has charged has levied and expected to generate ` 11,000 crore for education and health. The scheme is fully financed and because it was already in existence and we have done all our preparatory work.
It will be implemented soon and this government has implemented the Jan Dhan and Ujjwala schemes. There is the new strong emphasis on promoting labour intensive sectors and for the first time again in the history of post-independence India, the government has offered to absorb 12 per cent of the wage cost by meeting the contributions due to the EPFO’s. We hope this will be used by all export oriented and labour intensive industries like textiles, carpets and handicrafts, leather, footwear, gems and jewellery. This will be a marked departure from only giving capital subsidies with great enthusiasm.
The middle class will get a huge benefit of expanded employment opportunities as the economy picks up. Around 6.5 crore families accounting for 300 million people will be covered under the new health protection scheme belong to this middle class.
The bigger problem with the middle class is that in the last five years they have not seen sufficient expansion of employment opportunities or good quality employment. With this budget and the economy firing on both engines now, the upturn in employment and in wages will soon happen.
Let me explain that we had a lowest GDP growth of 5.7 per cent in the first quarter of 2017-18, it improved to 6.3 per cent in the next quarter and we were expecting 7.1 per cent in the second half of 201718. We expect it to go on 7.5 per cent next year and private investment which has completely gone silent and dormant has started to pick up. Based on all of these factors, I am assured the economy is headed towards 8 per cent rate of growth which will benefit all of us. So, the budget is expected to meet people’s aspirations.
THE BIGGER PROBLEM WITH THE MIDDLE CLASS IS THAT IN THE LAST FIVE YEARS THEY HAVE NOT SEEN EXPANSION OF EMPLOYMENT OPPORTUNITIES OR GOOD QUALITY EMPLOYMENT