A thrust on major spending on the rural economy could well be the hallmark of this year’s union budget. Many believe finance minister Nirmala Sitharaman’s focus on the budget to be unveiled on February 1 in Parliament could be a major accent on big-ticket capital expenditure on agriculture, agri-tech as well as infra.
The infra could range from rural roads and connectivity to major business and trading centres, as well as warehousing and other storage facilities for agricultural produce to reduce wastage. The latter is something Sitharaman has paid attention to, both in earlier budgets as well as in the Atmanirbhar Bharat stimuli packages announced after Covid.
“This budget is all going to be all about the rural economy,” noted economist and former chairman of the Bombay Stock Exchange Sethurathnam Ravi was emphatic in an interview with ‘THE WEEK’.
Many believe it will be a seamless extension of the capex push on infra seen in last year’s budget. With the rural economy still not fully out of the doldrums after the second wave of Covid, making agriculture and the economy of the hinterland could help catalyse private consumption, something crucial to creating the domino effect where private citizens (especially in the rural regions) start spending again, which will enthuse industry to themselves increase their capital investments and ramp up capacity, which will spawn more jobs and economic activity.
Such a push, the logic goes, will not only save the economy from the tail lash of a global recession expected in 2023, but it can also help the overall GDP (and jobs) grow hopefully in time for summer 2024 when the nation goes to polls.
Said Rajesh Aggarwal, managing director of Insecticides India, a leading agrochemicals manufacturing company, “Agriculture and its allied sectors are the largest sources of livelihood in the country. The sector employs almost half of India's population, accounting for about 16 per cent of the country's GDP. The government should make budgetary allocations and develop more aggressive awareness missions for new technology and new crop avenues.”
Last year’s budget, besides the Atmanirbhar Bharat announcements, had placed a major emphasis on agriculture, warehousing and agroforestry. Ranjit Barthakur, founding director of the Assam-based social enterprise Balipara Foundation believes it would be a natural progression for the government to expand further on that in this year’s budget. “We need to capitalise on it and also focus on building a broader ecosystem of incentives around processing and connecting farmers to markets for produce. Farmers also need greater clarity on the materials they can access in agroforestry, the insurance they will receive for crops and support during the maturation period. The budget should also capitalise on international momentum in nature-based carbon markets to incentivise land restoration (and) build new green income streams for the rural economy.”
The rural economy push is something many analysts, economists and even urban industrialists have been saying is the right thing to do at this juncture — and not just so their markets expand. Electric mobility company Omega Seiki Mobility’s founder and chairman Uday Narang sums it up best. “We have an opportunity to make India the third largest economy in the world. I want to see more and more opportunities for rural India if we want to convert this country to where we want to go. I don’t want to see this country run by a few. There are opportunities in tier 3, and tier 4 cities for businesses. And small businesses hire more people than the IBMs and Tatas.”