Budget 2019: Will The Government Maintain Spending On These Key Schemes?

The interim budget, announced on February 02, had raised the budget outlays for six key schemes targeted at the rural economy.

Villagers hold up their job cards with no entries for the Mahatma Gandhi National Rural Employment Guarantee Act in Tikamgarh, Madhya Pradesh, India, on February 8, 2016. (Photographer: Prashanth Vishwanathan/Bloomberg)
Villagers hold up their job cards with no entries for the Mahatma Gandhi National Rural Employment Guarantee Act in Tikamgarh, Madhya Pradesh, India, on February 8, 2016. (Photographer: Prashanth Vishwanathan/Bloomberg)

The Narendra Modi-led government will present the first budget of its second term on Friday against the backdrop of an economy where rural growth has slowed significantly due to falling food prices.

The interim budget, announced on February 2, had raised the outlays for six key schemes targeted at the rural economy. Economists expect this theme to persist even in the final budget.

In a June 27 note, economists from Morgan Stanley said that the government will maintain its expenditure on schemes as allocated in the interim budget. That, together with the outlay for the farm cash transfer scheme, could lead to a fiscal deficit of 3.5 percent of GDP, Morgan Stanley said. In the interim budget, the government had set a fiscal deficit target of 3.4 percent.

Pradhan Mantri Kisan Samman Nidhi

In the interim budget, the government announced a new farm income support scheme, the Pradhan Mantri Kisan Samman Nidhi, which would provide farmers with Rs 6,000 per year. The scheme was expanded to cover all farmers after the Lok Sabha elections.

“The revised Scheme is expected to cover around 2 crore more farmers, increasing the coverage of PM-KISAN to around 14.5 crore beneficiaries, with an estimated expenditure by Central Government of Rs. 87,217.50 crores for year 2019-20,” the government said in a press release.

The total cost of the scheme adds up to about 0.4 percent of GDP, according to Morgan Stanley. This will mean that central government expenditure will rise to 12.5 percent of GDP in FY20 as against 12.2 percent in FY19.

Mahatma Gandhi National Rural Employment Guarantee Act

MGNREGA, the country’s rural employment guarantee programme, was the flagship scheme of the previous government led by the Indian National Congress. The scheme, introduced in 2005, provides at least 100 days of work with daily wages to every household.

The Modi government has continued to expand outlays on the scheme.

In the interim budget the government had earmarked a spend of Rs 60,000 crore, a little below the revised spend in FY19. The government, in the last two years, has increased the allocation to MNREGA programme mid-year in order to support the rural economy.

Data from the MGNREGA website shows that there are 25.9 crore registered workers under the programme, of which only 11.7 crore are active.

Pradhan Mantri Awas Yojana-Gramin

The PMAY-G, launched in November 2016, provides incentives for state governments and local developers to build affordable homes, in order to achieve the government’s mission of “Housing For All”. Through the scheme the government has set a target of building 20 million affordable houses by March 31, 2022.

The highest allocation to the scheme was in 2017-18, immediately after its launch. Since then, allocations have been falling as the capacity to build houses remains constrained. In the interim budget, the government had allocated Rs 25,853 crore to the scheme.

Swachh Bharat Abhiyan

The government has also made the Swachh Bharat scheme a focus, in order to improve the standards of sanitation infrastructure across the country.

However, allocation for this scheme fell sharply by nearly 25 percent in the interim budget.

According to the Swach Bharat Mission website, over 9.67 crore toilets for rural households have been built since October 2, 2014. Further, around 5.67 lakh villages are now open defecation free, whereas back in 2014 only 47000 villages were open defecation free.

A recent report by the Accountability Initivate, found that the available central government funds towards the scheme have been decreasing since FY16. Since more funds were being spent than what was available, many states have large negative balances on account of the scheme.

Pradhan Mantri Fasal Bima Yojana

In January 2016, the government introduced the PMFBY to provide farmers with a safety net against natural calamities, volatile market prices and other exigencies.

The allocation for this scheme expanded by about 8 percent in FY20 over the previous year, based on the interim budget.

In the Kharif season of 2015, around 30.9 million farmers were registered with under PMFBY. This shot up by 30 percent in 2016. However, enrollments had fallen to 34.8 million by Kharif season 2017. Data beyond that is not available.

The Pradhan Mantri Jan Arogya Yojana

The PMJAY scheme or the Ayushman Bharat scheme was launched as a universal health insurance scheme for the poor by the Prime Minister his Independence Day speech in 2018.

As of June 18, 2019, 29.16 lakh beneficiaries have been admitted at hospitals across the country, show the PMJAY website. A total of 3.74 crore beneficiaries have been issued e-cards to access health services under the scheme. Further, 15,623 hospitals have been empaneled under the scheme, data from the website shows.

Since the scheme was launched mid-way through FY19, a big jump in allocations towards the scheme was seen in FY20, when Rs 6,000 crore was allocated to it.

Pradhan Mantri Gram Sadak Yojana

The Prime Minister’s rural roads scheme was introduced in 2000 with an aim to improve rural road infrastructure.

Allocations to this scheme have remained high and saw a jump of 22 percent in FY20, based on interim budget estimates. Construction activity on roads and houses is seen as a way to provide support to the rural economy when farm incomes are falling.

In its two decades of existence, the PMGSY programme has completed constructing around 6,01,327 kilometers worth of rural roadways, comprising of 1,49,835 road projects, data from the scheme’s website shows.