Union Budget 2020-21 : Betrayal of Peasants and Rural Economy

Bhalachandra Shadangi

The Union Budget 2020-21 presented by the Finance Minister on Saturday is in continuation with the disastrous policies of Modi led BJP-RSS Govt and has offered no relief to the common people reeling under severe unemployment, steep rise in prices, agricultural distress and crashing of rural wages. The Budget speech is full of jargon and rhetoric and even failed to announce any concreate measures to address the declining purchasing power of the people and particularly rural consumption. It has missed the opportunity to address the economic slowdown by failing to put money in the hands of people ensuring income to the peasants, workers and other labouring masses.
Though the FM in her Budget speech has repeatedly mentioned the Govt’s target of doubling peasants’ incomes by 2022 with 2015 as the reference year, but she failed to present any roadmap to achieve this much propagated target. Ultimately without any policy support and budgetary allocation, this seems like a mere rhetoric and there is very little posibility of realisation of it in the coming two years. Rather the Budget proposals will increase agricultural distress.
In the background of economic slowdown, it was quite expected that the Govt will spend huge money in the Budget outlays for rural job scheme, food subsidies, assured irrigation and the minimum support price for farmers to kick start rural demand and consumption. But the steps announced in the Budget will not lead to any improvement of peasant incomes, savings, food security or employment. Figures show that there is a sharp reduction in rural spending. As per data, in comparison to 2011-12, the Monthly per Capita Expenditure in rural consumption has come down by nearly 8.8% in 2017-18.
Corporate ‘Development’ of Agriculture
The FM has announced a 16 point programme which is nothing but a continuation of liberalization measures in the Agriculture sector paving the way further for big corporates to take over Agriculture and agricultural lands.
The budgetary speech of FM not only failed to announce any concrete measures to overcome agrarian crisis, but also proposed to increase the penetration of MNCs and Corporate investment in agrarian economy. From input supply, to procurement of crops, storage, agro-processing, insurance and marketing of crops, Govt has allowed corporate investment in every aspect of our agriculture. It could not give any relief to our peasant community from high input costs, low crop prices, indebtedness, distress sale, crop losses and lack of agricultural infrastructure.
In the Budget, the FM has assured help to the states which enact the three Model laws relating to Land leasing, Farmers’ Produce and Live stocks and Contract farming and for investments in marketing, food processing, storage and transport. It has proposed single crop clusters in each district for marketing and exports. Apart from this dry land is to be given to commercial companies for solar farms. This is nothing but pushing peasants to the mercy of corporates. It will increase their exploitation by companies through leasing of their land, indebting them, buying their crops at cheaper price and earning huge profits in food processing and marketing. The much publicized Kisan rail and Kishan Udan will do nothing to help the peasant in increasing their income as crops once sold by the peasants are no more under their control; rather it become a commodity of the businessman or company and it is he who decides whether to dump it or export it. It totally depends on him and is not related to peasants’ income. So the so called Kishan Rail and Kishan Udan, though they seem to be lucrative, but will in no way be helpful to our peasants.
There is no concrete proposal in the Budget about increasing the peasants’ income, rural wages, social security pension, irrigation and subsidies for imputs like diesel, electricity, seeds and fertilizers or on any worries of the landless peasants, agricultural workers and share croppers. Rather the cut in the fertilizer subsidies will certainly increase the input cost of peasants.
Another big problem ignored by the FM is that of monoculture leading to ecological and environmental imbalance. Private companies never safeguard safety of the environment because safety of their profit is their only motive. Another related aspect is the erosion of seed security and biological diversity. On this the FM spoke of ‘Dhanlakhsmi’, to promote Women’s SHG to store and market seeds. With the govt itself promoting GM seeds and subjugating India’s interests to the seed MNCs, obviously this is diversionary.
Budget for Agriculture and Rural Development
The decline of budgetary allocation in the Agriculture and Rural developement sector has shown the Govt’s lack of understanding of the seriousness of the situation. The allocation for Agriculture, allied sectors and irrigation for 2020-21 is Rs 1.58 lakh crore which is 5.2% of the total budget of Rs 30.4 lakh crore, while the same sectors in 2019-20 had been allocated Rs 1.52 crore or 5.45% cent of that year’s total budget. When combined with the allocation for Rural development, the total outlays for the rural economy for 2020-21 make up about 9.3% of the total budget compared to 9.8% in the last year.
The Govt has budgeted Rs 2.83 lakh crores for Agriculture, Irrigation and Rural Development, which is an increase of only Rs 15,000 crores or 5.6% over last year’s Rs 2.68 lakh cr. This increase is also less than the rate of inflation. Even allocation for various flagship schemes under the rural developement department were marginally reduced to Rs. 1.2 lakh cr from last year’s Rs.1.22 lakh cr.
Rather the 11% cut in the fertilizer subsidy, reducing the amount to Rs 71,309 crores will certainly increase the input costs of peasants. Fuel subsidy has been allocated Rs 40,918 cr., a rise of 6% from Rs 38,568 cr, much lower than the inflation rate. Rise in cost of all these will further burden agriculture inputs and domestic life and will also restrain rural aspirations.
Govt’s callousness towards rural unemployment and rural economy can be clearly understood by its heavy cut in the allocation for MGNREGA. In the context of declining rural wages and demand, Govt could have pumped more money to rural area through MNREGA so that it would have generated more employment and more money can go to the people. Even the wages under MGNREGA, which have been very less for years in comparision to the market wage, could have increased so that it can be lucrative for rural workers and check their distress migration. But unfortunately the Govt, displaying its insensitivity, has reduced allocation for this scheme by a huge 13%. Allocation under MGNREGA has reduced from the revised estimate of Rs. 71,002 crores in 2019-20 to 61,500 crores. Even while the total demand from states for MGNREGA this year is nearly Rs 1 lakh crores, the Govt has allocated only 60% of it in its latest budget proposal.
Another agri-based scheme, the Pradhan Mantri Fasal Bima Yojana (PMFBY), which the government had focussed on in the previous years, has failed to get much attention this time. Though the Govt has done a small increase in its allocations, it has not addressed the issues which ail the scheme. The scheme is of limited benefit to peasants as payments for claims are delayed by months. During last 3 years private companies have earned Rs 18,830 crores from this crop insurance scheme, while peasants have suffered a lot.
Responding to the nationwide peasants’ agitations, the Govt in the past had started PM-Aasha scheme which sought to compensate peasants when they sold their produce at less than MSP. Though implementing this scheme would have costed Rs 75,000 cr, Govt spent only Rs 4,100 crore in 2018-19 and slashed its allocation to Rs 1,500 crore in 2019-20 and to Rs 500 crore in the 2020-21 Budget. It is quite surprising that when the Govt is ready to spend Rs 4,000 crore on the futile and unnecessary National Population Register (NPR) exercise, it has allocated just Rs. 500 crores towards crop price to crores of our peasants.
Peasant organizations have been demanding since long to waive off all kinds of farm loans of peasants to provide them some relief from indebtedness. But the Govt, instead of doing this, has simply increased the farm credit to Rs 15 lakh crores in the budget. This will never be helpful in increasing peasants’ incomes, rather will promote the sale of costly inputs and machinery of the Companies. One should remember that only recently the Govt had waived off more than 2 lakh crores of bad debts of corporations and had given them additional Rs. 1.45 lakh crores in the form of tax and surcharge concession.
There is no anouncement to increase or even improve the implementation of PM-KISAN scheme which gave all 3 instalments of Rs 2000 to only 26.6% of the 14.5 crore peasant families, while 48% got no money at all. Agricultural input costs have risen by 33-100% in the past five years and cost of living has more than doubled. In 2019-20, the Govt expected to spend Rs 54,000 crore till March 2020 against an allocation of Rs 75,000 crore. However, it has again allocated Rs 75,000 crore under the income support scheme. The scheme has started last year and has been able to achieve only about 50% of its targets. The Budget speech has not addressed the issues which are plaguing the scheme.
This Budget symbolises how little the Government is committed towards ensuring a dignified right to life for its people with food security and nutrition for all. Though in the 2019-20 Budget, it had allocated Rs 1,84,220 cr towards food subsidies, it could spend only Rs 1,15,569.68 cr. While a large number of poor people are reeling under acute poverty and food prices are sky rocketing and at a time when starvation deaths and malnutrition are growing, the Govt has prefered to reduce Rs.70,000 cr. on food security spending. Even the UNICEF Report of 2019 clearly stated that more than half of India’s children are facing some form of malnutrition which includes 35% stunted and 17% wasted children. In the recently released Global Hunger Index, India has fallen from 95th to 112th among the 119 countries. In 2020-21 Budget also, it has reduced this allocation further to Rs.1, 08,688.35cr which is 37% less the amount allocated in the last year’s Budget. This amount is not enough to provide subsidized rations to the estimated 79 crore people in households across the country that rely on the public distribution system for their daily food needs. At a time when food inflation has increased over the past six months, it is disappointing to see this cut being proposed.
Similar is the story of Mid Day Meal Scheme. As part of National School Meal Programme which is designed to better the nutritional standard of school going children, there is no increase in allocation for this scheme. As of last year this year’s allocation was Rs.11,000 crores which is in real term decreased if we take inflation into account. Last year also the Govt had spent only Rs. 9,912 crore which was quite less than the allocated amount of Rs. 11,000 cr.
Like many other pro people schemes, in Anganwadi service allocations also we can see a drop of 10.7% of the budgetary allocation i.e from Rs.19, 834 to Rs.17,704 cr last year. In this year’s Budget we can see a mere increase of 3.5% which is less than the inflation rate..
NSAP provides a monthly pension to 33 million individuals but the Centre’s contribution is capped at Rs 200. The amount was hiked from Rs.150 to Rs.200 in 2006 during UPA rule and since then it remained unchanged till today. This amount seems ridiculous for a scheme which supports the most vulnerable people of our society like old people, widows and disabled people. In stead of declaring an universal Old age pension of least Rs.5000 per month, the government is more interested in pushing contributory schemes with a very meagre amount.
The expenditures on Central Sector Schemes in 2019-20 has been slashed by 11 per cent and Centrally Sponsored Schemes by 4.5 per cent – covering areas like food subsidies, agriculture and allied activities, Development of the North-East, Social Welfare, Energy, etc. Even the flagship schemes like PMJAY-Ayushman Bharat, Swachh Bharat and PM-Kisan have suffered major cuts. When there is an acute urgency to invest much more in the rural economy to increase purchasing power the Govt has preferred to cut allocations in comparision to previous years.
Even allocations for the welfare of Scheduled Castes and Scheduled Tribes, already way below the statutory requirements, have been cut in 2020-21. The Gender Budget allocation for 2020-21 is not encouraging. Women’s budget allocation in this year’s budget is Rs 1,43,461 crores which is a neglible increase compared to the revised estimate of last year i.e Rs 1,42,813 crores. An increase of only just 0.45% is well below the rate of inflation. Even the share of women’s budget allocation has been further cut to 4.7% of total expenditure as compared to 4.9% in last year’s budget and 5.1% in 2018-19.
At the end of the day one can conclude that this Budget of Modi Govt has failed to address the urgent need of rural people and the acute crisis prevailing in the rural economy. It is completely in line with the disastrous and anti-people policies of this Govt.