Opinion: Budget 2016 Counts On Prayers, Not Policy - By Mani Shankar Aiyar

"Achche Din" was premised on "sabka saath, sabka vikas". But the Economic Survey released on Budget eve confirms that the Modi years have been the worst for that half of India's population that is primarily dependent on agriculture. It has not been that much better for others because manufacturing has also dragged and unemployment is rampant. But it is rural India that has had to bear the brunt. The Survey attributes this to Acts of God, specifically El Nino that has caused an estimated shortage in rainfall of some 13 per cent. And bases its hopes for the year to come on El Nino's sister, La Nina, which it hopes will reverse the current disaster in agricultural production. Prayer rather policy has thus overtaken the Modi government.

Whereas earlier estimates were that agricultural production would have grown by 1.1 per cent in 2014-15, the latest information is that it actually fell by 0.2 per cent. By a curious coincidence, the initial estimated growth rate for the subsequent year, 2015-16, is also 1.1 per cent, so the final figure could yet be negative. Put together, the two Modi years have seen agriculture grow at an average snail's pace of under half of one per cent a year. Whereas the Twelfth Plan projected an annual average growth rate of agriculture of 4 per cent per year, the first four years of the Plan have yielded an average of under 1.5 per cent. Rural India thus grows at one-sixth to one-seventh of overall GDP. No wonder then that rural India is up in arms, rejecting the ruling party in panchayat poll after panchayat poll, with the agricultural communities - the Patels in Gujarat, the Jats in Haryana and the Sikhs in Punjab - rising in revolt against the state. They've never had it so bad.

Unsurprisingly, therefore, Jaitley's budget speech prioritized agriculture and rural development in presentation - but in presentation only. For, in terms of actual allocations, there was a total mismatch between his rhetoric and the budget grants he doled out. The most glaring example of this was his claim to have virtually doubled farm sector allocations to Rs 36,000 crore. A close scrutiny of the budget reveals that this was pure sleight of hand, for all Jaitley has done is transfer half that sum - Rs 15,000 crore - for credit subventions from the Department of Financial Services to the Department of Agriculture. In real terms, therefore, farm sector allocations remain virtually where they were.

Similarly, he has claimed to have set aside Rs 17,000 crore to fast track 89 projects at present languishing uncompleted under the Accelerated Irrigation Benefits Programme (AIBP). Indeed, he has claimed that 23 of these projects will be finished by the end of the next fiscal. But search as one might, it has not proved possible to find where in the budget this allocation has been made. Any significant increase in the share of irrigated farmland from the current depressing level of 33.9 per cent is, therefore, a pipedream. We will continue to be slaves to the rain gods.

Equally, Jaitley seemed to be taking the credit for an allocation of Rs 2.17 lakh crore of untied funds to the panchayats and urban local bodies. But this has nothing to do with Jaitley's ministry. The credit for this goes entirely to the 14th Finance Commission, whose recommendations the Government is bound to accept. Had Jaitley added a khota paisa to this, he could have "put in his thumb and pulled out a plum and said, 'What a good boy am I!'" But as that was the measure of financial devolution the 14th FC had decided on, there is no room for the Finance Minister to say it his policy decision. What is slightly worrying is that while the recommendation was that these sums were to be devolved as "untied" grants, Jaitley's government is now preparing "guidelines" for panchayats to determine how to spend the Rs 80 lakh over a period of 5 years each is getting. That raises the danger of untied funds getting tied to Government priorities instead of its being left to the panchayats and gram sabhas to determine their own priorities based on local needs.

While it is commendable that Jaitley & Co have ended their tirade against the UPA-conceived MGNREGA and now propose to leverage MGNREGA to provide five lakh ponds and dug wells to rainfed areas, the BJP are yet to admit that their outright condemnation of the programme was entirely misplaced. But even though Jaitley's nominal allocation for MGNREGA of Rs 38,500 crore is the "highest ever", as he has claimed, given inflation, the real allocation has not really seen any significant advance. This means the programme will chug along at under 50 days assured employment per year instead of 100 days as was the initial intention.

Total rural development expenditure is to be nearly Rs 88,000 crore but when one sees that total budget expenditure is to be of the order of Rs 19 lakh crore, it does seem rural India is being short changed. There is nothing "transformational" about Jaitley's budget proposals for rural India. It is largely business as usual.

This is tragic because the Economic Survey, on which Jaitley has clearly based the paragraphs on agriculture in his budget speech, drew an alarming picture that warrants much more than the lip sympathy it has been shown. The Survey underlines the urgent necessity of augmenting capital formation in agriculture which has steadily declined as a share of total gross capital formation from its already pathetic level of 8.6 per cent in 2011-12: "the declining trend needs to be arrested and reversed...given the significance of the sector in employment, income and inclusive growth." As it is agreed on all hands that a steep step-up in public investment in agriculture - now stagnating at an all-time low of 17 per cent of all investment in agriculture - is the need of the hour to kick-start growth in manufacturing by reviving rural demand, this was Jaitley's opportunity to reverse the declining trend in public contribution to capital formation in agriculture - a bus that Jaitley has clearly missed.

How then is the government's promise to double farm incomes in five years to be redeemed? With sown acreage shrinking, yields declining, timely access to short- and long-term credit from formal channels inadequate or unavailable, extension services in disarray, no miracle seeds or GM, little progress in drip and sprinkler irrigation, and paralysis in Minimum Support Prices, farm incomes can only be raised if the subsidy:investment ratio in agriculture, at present ranging around 80:20, is reversed. Nothing has been done by Jaitley to fundamentally alter this anomaly.

Farm incomes will, therefore, just stagger along whatever Jaitley's bogus pronouncements about doubling farm incomes by 2022. This calls for 12-16% growth in agriculture every year when present performance ranges from negative to one per cent. Whom is the FM kidding? Or is this is just another jumla in line with the Rs 15 lakh of repatriated black money for everyone's bank account touted in the last Lok Sabha election?

There is a wise old saw: "You can fool some of the people all of the time, and all of the people for some of the time, but you cannot fool all of the people all of the time." The BJP is, and will continue paying, an increasing political price for its repeated attempts at drawing the wool over the eyes of the people. A stern reckoning awaits them.

(Mani Shankar Aiyar is a Congress MP in the Rajya Sabha.)

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