Himanshu: Will the budget’s proposals help revive India’s rural economy?

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Subscribe to enjoy similar stories. That the Indian economy is going through a difficult phase is no longer a matter of speculation. The Economic Survey not only made that clear, but went further by offering evidence of a decline in earnings of the self-employed in the last six years.

For regular and casual workers, wages have been declining for almost a decade, leaving little doubt whether India’s slowdown is cyclical or structural. This isn’t the first such episode for this government; its first term saw sharper declines in India’s GDP growth rate between 2016-17 and 2019-20, even before the pandemic hit. Back then, the distress was driven by rural pain.

Two years of back-to-back drought followed by demonetization and the GST rollout hurt an already-fragile rural economy. The pandemic made it worse. The current slowdown also has roots in rural distress, which has extended for almost a decade now.

This was bound to spill over to the urban economy and hurt overall demand. With growing uncertainty under US President Donald Trump’s policies and weaker demand in most advanced countries, exports are unlikely to drive a growth revival. That leaves domestic demand to do the job, and from rural areas in particular.

The Economic Survey flagged these challenges. Still, neither did the budget offer anything new to boost agricultural incomes or worker productivity, nor did it allocate enough to revive the non-farm economy. The finance minister’s speech did list agriculture as a top priority.

But the budget offers no concrete plans. Most of the schemes either got no actual allocation or were a repeat of existing ones. The formation of a Makhana board in Bihar, for example; there already exists a National Research Centre for Makhana