Kurukshetra August 2019 : - Union Budget 2019-20 (Part 1) (Download PDF)

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Key Topics Included In This Article: - Around 3,100 FPOs are currently promoted in the country thru schemes of GoI, State Govt. and National Bank for agriculture & Rural Development (NABARD). The share of private investment in GCF shows a decline during this period. In the recent Union Budget 2019 - 20. The Digital India programme was launched by the GoI in July 2015 at an estimated cost of Rs. 1,13,000 Cr, with a vision to transform India into a digitally empowered society & knowledge economy, with three primary focus areas of creation of digital infrastructure. The Govt. also launched the Pradhan Mantri Karam Yogi Maandhan Scheme (PMKYM) in which pension benefits would be extended to about 3 Cr. retail traders & small shopkeepers having an annual turnover less than Rs. 1.5 Cr. Under the Ayushman Bharat-National Health Protection Mission (AB-NHPM) to reduce the healthcare costs of poor & vulnerable groups. The AB-NHPM is a concerted effort to accelerate India’s progress towards achievement of Universal Health Coverage.

Agriculture & Rural Prosperity

  • The annual average growth rate registered at 2.88 % during 2014 - 2018 in agriculture and allied sectors & was well below the prescribed target of 4 % per annum.
  • The Gross Value Added (GVA) of agriculture and allied sector during 2018 - 19 was recorded at 2.9 % was recorded at 2.9 % against 6.3 % in 2016 - 17.
  • Agriculture remains the mainstay of the Indian economy despite its shrinking share in the country’s Gross Domestic Product [55.4 % in 1950 - 51 to 17.4 % in 2018 - 19].
  • The Budget intends to re-orient govt. policy interventions in rural and agriculture sector and aims at re-establishing an enabling atmosphere for not only to achieve the objective of doubling farmer’s income by 2022.

Allocation to Centrally Sponsored Schemes

  • The number of CSSs was restricted to 30 for ensuring optimum utilization of resources w/better project outcomes thru location-specific interventions.
  • A glance at the Budget 2019 - 20 allocation on CSSs indicates that out of a total budget allocation on CSSs indicates that out of a total budget allocation of Rs. 3,31,609 Cr. for all schemes, Rs. 2,49,508 Cr. & Rs. 81,862 Cr. have been allocated (Table 1) to Cr. Schemes & core of the core schemes, respectively.

Rural Wage Employment

  • The Budget allocation for the scheme is pegged at Rs. 60,000 Cr. for 2019 - 20 against BE of Rs. 55,000 Cr. in 2018 - 19.

Rural Roads

  • The next phase of PMGSY would focus on construction and up-gradation of 1,25,000 kms of road length over the next five years w/an estimated cost of Rs. 80,250 Cr.

Zero Budget Farming

  • It is expected that govt. would devise an effective and smooth road map to cover India’s 14.1 Cr. Farmer households on the issues of organic farming & zero-budget farming.

Promotion of FPOs

  • Around 3,100 FPOs are currently promoted in the country thru schemes of GoI, State Govt. and National Bank for agriculture & Rural Development (NABARD).

Investment in Irrigation

  • Considering irrigation coverage of only 46 % of net cultivated area of 141 million hectares in the country and significance of irrigation in enhancing agriculture production & ensuring food security, the Budget continued its stress on strengthening Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) which targeted to irrigate the field of every farmer and to improve water use efficiency.

Rural Drinking Water Security

  • The Budget has also allocated Rs. 10,000 Cr. to National Rural Drinking Water Mission in 2019 - 20 which registered a massive 43 % increase.

e-NAM & Agri-marketing

  • Budget 2019 - 20 too has reposed its faith in e-NAM & vows to actively work with the State Govt. to allow the farmers to actualize the real price discovery benefits from e-NAM in a transparent manner.

Value Chain Finance

  • Budget 2019 - 20 expressed its will to invest widely in Agri-infrastructure by supporting private entrepreneurships in driving value-addition to farmers’ produce from the field & for those in the allied activities as well.

Agriculture & Farmers’ Welfare: An Overview

  • In terms of allocation, agriculture & allied activities were collectively allocated Rs. 1,42,299 Cr. In 2019 - 20 Union Budget, an increase of 80 % over 2018 - 19.
  • Building physical and social infrastructure;
  • Digital India reaching every sector of the economy;
  • Pollution free India w/Green Mother Earth & Blue Skies;
  • Make in India with particular emphasis on MSMEs, Start-ups, defense manufacturing, automobiles, electronics, fabs & batteries, & medical devices;
  • Water, water mgmt. , clean Rivers;
  • Blue Economy;
  • Space programmes, Gaga Nyan, Chandrayan & Satellite programmes;
  • Self-sufficiency & export of food-grains, pulses, oilseeds, fruits & vegetables;
  • Healthy society – Ayushman Bharat, well-nourished women & children. Safety of citizens;
  • Team India with Jan Bhagidari. Minimum Govt. Maximum Governance.

To attain the Sustainable Development Goals (SDGs) of ending poverty & bringing in inclusive growth, activities related to agriculture need to be closely integrated w/the SDG targets.

Gross Capital Formation in agriculture and allied Sector

  • The share of private investment in GCF shows a decline during this period. In the recent Union Budget 2019 - 20, the following provisions have been made for the major schemes related to agriculture & allied sector.

Increasing Irrigation Water Productivity (IWP) in Agriculture

  • The provisions have been made of Rs. 9,682 Cr. thru the Pradhan Mantri Krishi Sin chai Yojana which is 17.34 % higher than the previous Year’s budget provisions.
  • The programme is being implemented in 131 clusters covering 704 villages under RKVY & 1300 clusters covering 268 villages under PKVY. So far, 1,63,034 farmers are practicing ZBNF.

Adopting Appropriate Technologies for Smallholder farms

  • The provisions have been made of Rs. 600 Cr. for the promotion of Agricultural Mechanization for in-situ Mgmt. of Crop Residue, which is 1.35 % higher previous year.

Schemes/Initiatives to Improve Productivity of Livestock & Dairy Sector

  • During last 5 years various new initiatives were taken to improve productivity of livestock & dairy sector like Rastriya Gokul Mission (RGM), E-Pashu Hat Portal, National Livestock Health & Disease Control Scheme & Dairy Development Schemes
  • In the recent Union Budget 2019 - 20 the Rastriya Kamdhenu Aayog is proposed to set up to upscale sustainable genetic up-gradation of cow resources & to enhance production & productivity of cows.

Fisheries Sector

  • The sector is showing a steady growth in the total gross value added & accounts for 5.23 % share of agricultural GDP. Fish & fish product exports emerged as the largest group in agricultural exports & in value terms accounted for Rs. 47,620 Cr. In 2018 - 19.

MSP & Foodgrains Procurement

  • The SFURTI envisions setting up 100 new clusters during 2019 - 20 which should enable 50,000 artisans to join the economic value chain.
  • The Scheme contemplates to set up 80 Livelihood business Incubators (LBIs) & 20 Technology Business Incubators (TBIs) in 2019 - 20 to develop 75,000 skilled entrepreneurs in ago-rural industry sectors. GoI also hope to form 10,000 new Farmer Producer organizations, to ensure economics of scale for farmers over the next five years.

Agricultural Credit

  • In order to provide short-term crop loans up to Rs. 3 lakh to farmers rate of 7 % Per annum, during the year 2019 - 20 financial years, it is decided to offer interest subvention of 2 % annum to lending institution viz.
  • This also implies that the farmers paying promptly as above would get short-term crop loans@4 % per annum during the year 2019 - 20.

Corporate Investment In Agriculture

  • The current private corporate investment in agriculture as a % of the total annual investment in agriculture is about 2 %.

Significance of Private Sector in Agricultural R&D

  • The private sector is becoming increasingly active in commercial crops, such as hybrids of maize, pearl millet, sorghum & vegetables, tissue culture, transgenic, etc.
  • To product marketing, development of value chain, & commercialization of technologies, the private sector’s significance is gradually increasing in the agricultural sector, more specifically in agricultural R&D.

Case studies of a Few corporates

  • The results have been reviewed by institutes like the Indian agriculture Research Institute (IARI) & the International Rice Research Institute (IRRI). Punjab Agriculture University (PAU) has also included this technique in their package of practices & recommendations. This programme has helped save over 9.8 billion liters of water in Punjab alone.
  • The Confectionery has claimed that yields increased 68 % & water requirement fell by 23 %, saving an average of Rs. 6,222 over the course of the crop season.

Govt. Efforts to Encourage Corporate Investment

  • There is 100 % foreign direct investment (FDI) in food retail – this will encourage foreign investment in establishing appropriate post-production infrastructure to strengthen the food supply chains.
  • There is a budget proposal (2019) by the Govt. to form 10,000 farmer producer organizations (FPOs) in the next five years. This is believed to assist small & marginal cultivators to team up to get lower rates for inputs & sell produce at higher rates. The Finance Minister, Smt. Nirmala Sitharaman, has said that FPOs will ensure economies of scale.
  • With the help of our Govt. ‘s Farmer Producer organization (FPO) initiative, numerous collective, farmer-owned companies are now providing aid to marginalized farmers to earn stable livelihoods.

The Road Ahead

  • According to the Ministry of Agriculture & Farmer’s Welfare, in order to achieve the target of 10.4 % income of 2016 - 17 to 2022 - 23 (with 2015 - 2016 as the base year), the annual growth rate in investment required ‘in’ agriculture is 12.5 % & ‘for’ agriculture it is 16.8 %.

Revamping Of Farm & Non-Farm Rural Sector

  • Agriculture remains the mainstay of population where 60 % of population is still dependent but contributing only 14 % in the national gross domestic product. Rs. 80,250 Cr. Had been allocated to build 1.25 lakh kilometers of roads to link up the different areas & villages to become the basis for over all development of the non-farm rural sector.
  • The Budget referred to train 75000 entrepreneurs those would be concerned with agricultural & rural industrialization. Actually, the focus of the agricultural policy is to adopt the market-oriented approach instead of product specific agriculture.
  • The idea to float 10000 farm producers company would be very helpful to make the share of the farmers in the agricultural trade. These Producers Companies would be different from cooperative & corporate model. These companies would have maximum number of farmers those are themselves the producers of the product.
  • The budget has also proposed to promote zero-budget cultivation. The cost of farm product is thriving because of two factors; one of the escalating use of chemicals because of the early application of the law of diminishing marginal returns on agriculture & secondly the surge in prices of the chemicals.
  • The Central Govt. announce the minimum support prices for 23 crops in the kharif as well as Rabi season. But only wheat & paddy are procured by the Govt.
  • Women in the Self-Help Groups are to be provided Rs. 1 lakh as loan & the facility of over draft up to Rs. 5000 from the bank. Women have proved to be more successful entrepreneurs. While advancing towards awareness, 20 million farmers would be provided digital education that has become imperative in the modern agriculture & farm business.
  • The efforts shall be made that maximum universities of India may become globally competitive & may attract foreign students to study in Indian institutes rather the Indian institutes rather the Indian students seeking admission in foreign universities & colleges. Rs. 400 Cr. are being spared to develop the universities so that the maximum universities may be included in best 200 universities of the world.

Changing Landscape Of Rural Economy

DBT for Easing the Lives of poor

  • As on July 2019, it has broadened with 439 schemes on July 2019, it has broadened with 439 schemes under 55 Ministries.
  • In the current fiscal 2019 - 20 till July 14, the government has transferred Rs. 48.06 thousand Cr. to 58.6 Cr. eligible beneficiaries.
  • 8 schemes
  1. (MORD)
  2. (NRLM)
  3. (DDUGKY)
  4. (IGNDPS)
  5. (IGNOAPS)
  6. (IGNWPS)
  7. (NFBS)
  8. (MGNREGS)
  • The recent kantar IMRB Report (2019) reveals that the growth of internet usage in rural areas was 35 % in 2018 reaching to about 25 Cr. Population covering a penetration of 25 % in the rural population, & the same is expected to reach to 29 Cr. By the end of 2019.

Rural Connectivity

  • The launch of Meri Sadak App appears as a useful tool in monitoring the construction & maintenance activities as well as mitigating the grievance redressal of the community.
  • Considering these positive externalities, the Govt. has approved Phase III of the scheme to upgrade 1.25 lakh km rural road using green technology. The Budget 2019 - 20 has committed to spend Rs. 80.25 thousand Cr. In Phase III over 2019 - 20 to 2024 - 25.

Affordable Housing to Rural Poor: PMAY-G

  • About 35.64 lakh houses from 2016 - 17 (83.30%), 24.86 lakh houses from 2017 - 18 (77.58%), & 21.63 lakh houses from 2018 - 19 (85.95) have been completed. Out of total target, about 95.21 beneficiaries have received at least one installment of which 82.13 lakh have already completed their construction activities.

Rural Development in Budget 2019 - 20

  • The Budget 2019 - 20 allocates 1.92 lakh Cr. Compared to previous year’s revised estimate of 1.85 lakh Cr.
  • With a completion rate of 82 % in Phase I of PMAY-G, the Govt. has allocated Rs. 19000 Cr. for Phase II with a target of completion of 50 lakhs houses in 2019 - 20.
  • It kept provision for Rs. 5000 overdraft for one woman per SHG having a Jan Dhan Account, & a loan up to Rs. 1 lakh.

Rural Infrastructure In Union Budget 2019 - 20

  • The Income tax Department treats electricity, water supply, sewerage, telecom, roads & bridges, ports, airports, railways, irrigation, storage (at ports) & industrial parks/SEZ, as infrastructure.

Road Infrastructure

  • In 2019 - 20 Budget, there is a provision of Rs. 80,000 for the core network for upgradation of 1.25 lakh km of rural roads under the phase-III of Pradhan Mantri Gram Sadak Yojana, aiming to improve the ease of living for rural population.
  • There is a target to construct 7,000 km roads under PMGSY during the current year 2019 - 20, out of which about 3,000 km roads are being built under the green technology with use of cold mix, tera zyme, iron slag, cement stabilization, caste plastic panel & cell-filled concrete & nano technology & roller compacted concrete for Rs. 393504 Cr. Is targeted for the construction of all 7,000 km roads.

Communication infrastructure

  • The Digital India programme was launched by the GoI in July 2015 at an estimated cost of Rs. 1,13,000 Cr, with a vision to transform India into a digitally empowered society & knowledge economy, with three primary focus areas of creation of digital infrastructure.

Renewable Energy Infrastructure

  • With hydro power, it contributes about 33 %. The wind power capacity is about 34,046 MW as of 31 March 2018, making India the fourth-largest wind power producer in the world, & it is aimed to generate 100 GW of solar power by 2022.
  • The total allocation for the wind energy projects for the current financial year stands at Rs. 920 Cr, a 3 % decline over Rs. 950 Cr. Provided in the Revised Estimate of 2018 - 19, with a wind energy capacity addition of 4,000 MW in 2019 - 20.

Housing

  • Budget 2019 - 20 aims at 1.95 Cr. households under PM Awes Yojana to eligible beneficiaries to be provided in phase II now by 2022. It is also envisaged to complete the PMAY Houses in 114 days, which was talking about 314 days in 2017.
  • The period of exemption for capital gains arising from sale of house for investment in start-ups are to be extended to March 31,2021.

National Rural Drinking Water Programme

  • The 2019 - 20 Budget tries to provide water security with provision of water supply in an integrated & holistic manner, to promote achieve Har Ghar Jal (piped water supply) to all rural households by 2024, & Jal Shakti Abhiyan for improving the ground water availability.

Health & Education

  • Union Budget 2019 - 20 laid special focus on research & skill development along with plans to set up a Higher Education Commission with a total outlay of Rs. 94,853.64 Cr. education budget, out of which Rs. 56,536.63 Cr. is pegged for school sector while Rs. 38,317.01 Cr. Is allocated for higher education.

Storage & Warehouses

  • The Budget 2019 - 20 promote invest widely in agriculture & infrastructure & support private entrepreneurship for value addition in farm sector like storage & warehouses, agriculture infrastructure & support private entrepreneurship for value addition in the farm sector.

Economic Survey 2018 - 19: Insights, Imapacts & Inclusiveness

Vision India

  • The ‘blue sky thinking’ laid the foundation of the Economic Survey 2018 - 19 to achieve the set target goal & that can be sustained by a “virtuous cycle” of savings, investment & exports, supported by a favorable demographic phase. Investment, especially private investment, is the “key driver” that drives demand, creates capacity, increases labor productivity, introduces new technology, allows creative destruction, & generates jobs.

Focusing on Fiscal Discipline & Fiscal Management

  • The Finance Minister of India has kept the targeted fiscal deficit at 3.3 % of GDP in the current budget (2019 - 20). The fiscal deficit of the Central Govt. found decline from 3.5 % of GDP in 2017 - 18 to 3.4 % in 2018 - 19 as a symbol of fiscal discipline.

External Sector

  • During 2018 - 19, Indian rupee traded w/a depreciating trend against US dollar & touched a historical low of 74.4 % US$. Softer monetary policy stable across major central banks & easing of crude oil prices coupled w/return of risk on sentiment triggered FPI inflows & helped rupee to recover in Q4 of 2018 - 19. India’s foreign exchange reserves continue to be comfortably placed at US $422.2 billion, as on 14th June 2019.

Agriculture & Food Management

  • Organic & natural farming techniques including Zero Budget Natural Farming (ZBNF) can improve both water use efficiency & soil fertility.

Behavioral Economics for Social Change

  • The behavioral transformation includes ‘Beti Bachao & Beti Padhao’ to ‘BADLAV’ (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi); from ‘Give it up’ for the LPG subsidy to ‘Thinking about Subsidy’; from ‘Tax evasion’ to ‘Tax compliance’; from ‘Swachh Bharat’ to ‘Sunder Bharat’; similarly from ‘economic growth’ to ‘sustainable development’; from ‘implement’ to ‘impact’; & ‘output’ to ‘outcome’.

Concluding Remarks

  • The Goods & Services Tax have had on improving Ease of Doing Business (eoDB) in India, with the country being one of the biggest ‘improvers’ in the World Bank’s EoDB 2019, w/its rank jumping to 77 from 142 in the last four years.

- Published/Last Modified on: August 23, 2019

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