ASHA’s reaction to Budget 2020-21 of Government of India

Share of Budget for Rural Economy Falls from 9.83% to 9.30%

“Increasing rural demand & purchasing power would have boosted the sagging economy; Budget once again betrays India’s farmers,” says ASHA


New Delhi, February 1st 2020: A thorough analysis of the Budget shows that even though the Budget speech spoke much about Agriculture and Rural sector and a 16-point program, the allocations for the Rural Economy were in fact slashed in this Budget compared to previous year. The Budget allocation for Agriculture, Allied sectors and Irrigation in 2020-21 is Rs.1.58 lakh crores, which is 5.2% of the total Budget of Rs.30.4 lakh crores, while the same sectors in 2019-20 were allocated Rs.1.52 lakh crores which was 5.45% of the total Budget of Rs.27.86 lakh crores. When these sectors are taken together with the Rural Development, the Finance Minister stated that 2.83 lakh crores have been allocated for the Rural Economy. As a percentage, this is 9.30% of the Total Budget of 2020-21, whereas the allocation in 2019-20 was 9.83% of the total budget.

In addition, the Safety net for the poor has been cut by slashing the budget for Food Subsidy from Rs.1.84 lakh crores in Budget Expenditure of 2019-20 to Rs.1.15 lakh crores in 2020-21. The net result would be to deepen the economic crisis of the rural economy and indeed the entire national economy.

The Budget speech once again repeated the promise of Doubling Farmer Incomes by 2022, which was first made in Budget 2016 speech. However, after 4 years, there is no official position on the current farmer incomes, and how far they are from meeting the target of doubling. However, Economic Survey data shows that the growth rate of Gross Value Added (GVA) in agriculture which can be a proxy for farm incomes has in fact fallen from 6.3% to 2.8% in the past 4 years – whereas the farm incomes should have grown by 14% every year to meet the target of doubling in 2022. This shows the insincerity in such a major flagship promise.

Kirankumar Vissa, National co-convenor of ASHA said, “When the consensus among economic analysts was that the Indian economy is in recession due to lack of demand for goods, and the crying need is to increase the demand and purchasing power in rural areas by boosting rural incomes, the Budget has in fact cut the allocations in real terms (taking inflation into account). Many of the key schemes have been neglected – MGNREGS allocation is down from Rs.71,000 crores of Revised Estimate of 2019-20 to Rs.61,500 crores in 2020-21; even the flagship PM-Kisan scheme has reached only half of the intended beneficiaries. This shows the gross neglect and low priority given by the government to the rural economy despite the rhetoric.”

Kavitha Kuruganti, national convenor of ASHA said, “This budget, in numerous ways, has been more than disappointing. It has nothing that farmers can hope for, at a time when the crisis is acute. As the numbers in our detailed analysis show, the spending on many important schemes has been poor. On the other hand, the agriculture schemes where marginal increases in outlays have happened would not really benefit farmers in the medium or long term – for example, like in the case of farm mechanisation budgets. This is an intervention that is displacing poor women farmers and is likely to cause greater distress in the rural economy, given that other sectors don’t have opportunities for the displaced workers.”

Some glaring numbers of crucial schemes:

  1. The allocation for the biggest rural employment program MGNREGS has been slashed from Rs.71,001 crores (Revised Estimate 2019-20) to Rs.61,500 crores in 2020-21, a cut of Rs.9,500 crores when the total demand from states amounts to nearly Rs.1 lakh crores.
  2. The flagship PM-KISAN program was supposed to benefit 12 crore farmers in the first round, going up to 14.5 crore farming families. In reality, PM-KISAN official data shows that even the meagre annual support of Rs.6000 reached only 6.12 crore farmers. Tenant farmers and landless agricultural workers are not even included in the scheme. While Rs.75,000 crores was allocated, only Rs.54,370 crores was spent in 2019-20 and the allocation for 2020-21 remains at Rs.75,000 crores.
  3. In 2018-19, the big announcement was about Minimum Support Prices (MSP) in response to farmers’ agitations. Finance Minister promised that the MSP will reach every single farmer and PM-AASHA scheme was instituted. The requirement for nationwide implementation of scheme would have been more than 75,000 crores. In 2018-19, the expenditure was Rs.4100 crores. In 2019-20, the allocation was slashed to Rs.1500 crores and merely Rs.321 crores were spent. The Budget allocation in 2020-21 has now been slashed to Rs.500 crores. Meanwhile, during the past two years, in most of the crops across the country, farmers did not get the MSP declared by the government. This is shown by the government’s own data. This was the time for Market Intervention and Price Support, but as the Budget numbers show, the government failed to spend the necessary funds.
  4. In 2018-19, GRAM scheme was declared for better marketing facilities. It was promised that 22,000 rural haats will be upgraded to Grameen Agriculture Markets (GrAM) – but after two years, the implementation has not begun and only 0.5% funds spent out of Rs.2000 crores.
  5. Even as the government declared the National Kamadhenu Ayog and milk production as a priority, in 2017-18, the Budget speech announced “Dairy Infrastructure Development Fund” of Rs.10,881 crores to be spent within 3 years. After 3 years, actual expenditure so far has been only Rs.440 crores. Current Budget has only Rs.60 crores under this head.
  6. The Budget speech mentioned that the target for agricultural credit has been increased to Rs.15 lakh crores, but it is important to realize that this is NOT a Budget allocation of the government. This is only a target for the banks, and the Budget contribution is only Interest Subsidy which has increased by Rs.3,500 crores this year. The banks are free to give the loans to whoever they determine, and most of the credit goes to Agri business and non-farmers, instead of small and marginal farmers. The government hasn’t ensured that the credit goes to small and marginal farmers, tenant farmers and adivasi farmers, who are left out of institutional financing, pushing them to indebtedness and suicides. Therefore much of this credit will go to big agribusinesses.

ASHA’s budget expectations and demands sent to the Finance Minister during her pre-budget consultations are present here: https://kisanswaraj.in/2019/12/17/ashas-suggestions-related-to-agriculture-farm-livelihoods-for-budget-2020-21/ .


For more information, contact Kiran Vissa at 9701705743 or Kavitha Kuruganti at 8880067772

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