What Does the Rural Economy Need?

The agricultural sector has performed worse than the other sectors over the years. The shares of non-agricultural employment and output have increased, while70% of agricultural householdscannot meet their low consumptionneeds even after diversification of sources of income. An analysis of budgetary provisions for the rural economy suggests that the government has not done enough to address some of these well-documented problems, and does not have the required vision to substantially increase rural employment opportunities.

After the high economic drama of demonetisation and the resulting shocks to the economy, the 2017–18 budget, the fourth one presented by Finance Minister Arun Jaitley, could be seen as an attempt to regain some credibility for the government and calm the general populace as well as international investors. It has been seen as a “routine” budget but also a “pro-growth” one, promising large increases in public investment in social and physical infrastructure and cutting taxes, while being fiscally prudent.

Like the previous budget, this one has also been seen as giving a “push” to the rural economy. Is there a vision implicit in the budget commensurate with the challenges that the rural economy is facing. Here, I will speak of one of the biggest challenges, that of generating livelihoods capable of providing regular, living incomes for every household in rural India. Two major prongs can be recognised in the budget to raise rural incomes and create employment opportunities: raising agricultural productivity and creating non-farm employment. This is complemented by provisioning of public services such as health, roads, and housing.