Bharat's Budget 2024-25: Balancing Growth and Efficiency with Strategic Allocations for Rural Economy!!

The fiscal policy for the year 2024-25 presents a carefully balanced approach by the Indian government, aiming to drive economic growth while ensuring efficient resource utilization. The total budget expenditure for this period is estimated at ₹48,20,512 crore, with a notable focus on capital expenditure, set at ₹11,11,111 crore. This represents a 16.9% increase over the Revised Estimate (RE) of 2023-24, highlighting a strong emphasis on infrastructure and development projects. Effective capital expenditure, projected at ₹15,01,889 crore, shows an 18.2% rise from the previous year, indicating robust investment in stimulating economic activity.

This analysis explores the various facets of the budget, including state transfers, subsidies, and allocations to key sectors such as agriculture, rural development, and social welfare schemes. Each section provides a detailed look at the changes and their potential impacts on the Indian economy and society.

Transfers to States

The total resources being transferred to the states in the Budget Estimates (BE) 2024-25 amount to ₹22,91,182 crore. This figure, which includes the devolution of the states' share, grants, loans, and releases under Centrally Sponsored Schemes (CSS), marks an increase of ₹4,82,766 crore over the actual transfers in FY 2022-23. The significant rise in transfers reflects the central government's commitment to financially empowering states, enabling them to undertake more developmental projects and welfare schemes.

Impact on State Finances

The increased transfers are likely to enhance the fiscal capacity of the states, allowing them to invest in critical sectors such as healthcare, education, and infrastructure. This, in turn, could lead to improved public services and economic growth at the state level. Additionally, the focus on decentralized financial management may result in more tailored and effective policy implementation, addressing the unique needs of each state.

Allocation to Rural Development, Agriculture and Allied Sectors

The allocation to rural development has increased by 11.2%, from ₹238,984 crore in RE 2023-24 to ₹265,808 crore in BE 2024-25. This increase underscores the government's focus on improving rural infrastructure, enhancing livelihoods, and reducing poverty in rural areas.

The allocation to agriculture and allied sectors has increased by 8%, from ₹140,533 crore in RE 2023-24 to ₹151,851 crore in BE 2024-25. This increment underscores the government's commitment to boosting agricultural productivity, ensuring food security, and improving the livelihoods of farmers.

Rashtriya Krishi Vikas Yojna (RKVY)

The Rashtriya Krishi Vikas Yojna (RKVY) allocation has seen a substantial increase of 22.8%, from ₹6,150 crore in RE 2023-24 to ₹7,553 crore in BE 2024-25. RKVY aims to promote the development of agriculture and allied sectors through state-level planning and implementation. The increased funding is expected to support innovative agricultural practices, enhance infrastructure, and provide better market access to farmers.

Krishionnati Yojana

The allocation for Krishionnati Yojana has increased by 16.8%, from ₹6,378 crore in RE 2023-24 to ₹7,447 crore in BE 2024-25. This umbrella scheme includes various programs aimed at the scientific and holistic development of the agriculture sector. The increased funding will likely support a range of initiatives, from improving soil health to enhancing agricultural mechanization.

Pradhan Mantri Krishi Sinchai Yojna (PMKSY)

The Pradhan Mantri Krishi Sinchai Yojna (PMKSY) allocation has increased by 32.8%, from ₹7,031 crore in RE 2023-24 to ₹9,339 crore in BE 2024-25. This program focuses on improving water use efficiency and water conservation in agriculture. The significant increase in funding will aid in expanding irrigation infrastructure, promoting water-saving technologies, and ensuring better water management practices in farming.

Pradhan Mantri Fasal Bima Yojana (PMFBY)

The allocation for the Pradhan Mantri Fasal Bima Yojana (PMFBY) has been slightly reduced by 2.67%, from ₹15,000 crore in RE 2023-24 to ₹14,600 crore in BE 2024-25. PMFBY is a crop insurance scheme designed to provide financial support to farmers in the event of crop failure due to natural calamities. Despite the reduction, the scheme remains a crucial component of the government's strategy to mitigate agricultural risks and support farmers' income stability.

Mahatma Gandhi National Rural Employment Guarantee (MGNREG)

The allocation for the Mahatma Gandhi National Rural Employment Guarantee (MGNREG) scheme remains flat at ₹86,000 crore in BE 2024-25. MGNREG is a social welfare measure that guarantees the right to work by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work. The sustained funding indicates the government's commitment to ensuring job security and income support for rural households, although a stagnant budget may limit its capacity to expand or enhance the program.

Pradhan Mantri Kisan Samman Nidhi (PM-Kisan)

The allocation for the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) scheme also remains unchanged at ₹60,000 crore in BE 2024-25. PM-Kisan provides financial assistance to farmers, with eligible farmers receiving up to ₹6,000 per year in three equal installments. The continuation of this allocation highlights the government's focus on providing direct income support to farmers to help them meet their agricultural and domestic needs, but the flat budget may restrict the program's potential growth.

Pradhan Mantri Annadata Aay Sanrakshan Yojna (PM-AASHA)

The allocation for the Pradhan Mantri Annadata Aay Sanrakshan Yojna (PM-AASHA) has increased significantly by 192.63%, from ₹2,200 crore in RE 2023-24 to ₹6,438 crore in BE 2024-25. PM-AASHA is an umbrella scheme aimed at ensuring remunerative prices to farmers for their produce. The substantial increase in funding reflects the government's intent to strengthen the pricing mechanism and provide better income security to farmers.

Modified Interest Subvention Scheme (MISS)

The allocation for the Modified Interest Subvention Scheme (MISS) has increased by 22.16%, from ₹18,500 crore in RE 2023-24 to ₹22,600 crore in BE 2024-25. MISS offers interest subvention to farmers on short-term crop loans, providing them with financial relief and encouraging timely repayment of loans. The increased funding is expected to benefit a larger number of farmers and improve the overall credit flow to the agriculture sector.

Subsidies in Agriculture and Food Sector

Fertilizer Subsidy

The subsidy for fertilizers has been reduced by 13.2%, from ₹188,894 crore in RE 2023-24 to ₹164,000 crore in BE 2024-25. This reduction aligns with the government's strategy to encourage efficient use of fertilizers and promote sustainable agricultural practices. However, it raises concerns about the immediate financial impact on farmers who rely on these subsidies.

Food Subsidy

The food subsidy, specifically under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), has been reduced by 3.3%, from ₹212,332 crore in RE 2023-24 to ₹205,250 crore in BE 2024-25. While the reduction may optimize subsidy mechanisms, it poses challenges to maintaining food security for vulnerable populations.

Subsidy Rationalization

Overall, the rationalization of subsidies reflects the government's effort to reallocate resources towards more productive sectors and enhance the efficiency of subsidy delivery. The aim is to create a balanced and sustainable fiscal environment, reducing dependency on subsidies while still supporting essential needs.

Conclusion

The Budget Estimates for 2024-25 reflect the Indian government's strategic priorities aimed at fostering economic growth, enhancing social welfare, and ensuring sustainable development. The significant increases in capital expenditure and transfers to states underscore the commitment to infrastructure development and decentralized governance. While subsidy rationalization may pose challenges, the targeted allocation increases in key sectors like agriculture, rural development, and social welfare schemes indicate a balanced approach to addressing immediate needs and long-term goals.

The focus on improving agricultural productivity, supporting farmers' incomes, and developing rural infrastructure is likely to have a positive impact on the economy and society. As the government continues to refine its fiscal policies and allocations, the emphasis on efficient resource utilization and targeted interventions will be crucial in achieving the desired outcomes for inclusive and sustainable growth.

About the Author

Deepak Pareek is a visionary in the agriculture trade and policy domain, renowned for his unparalleled expertise as a serial entrepreneur, investor, and ecosystem builder. With a rich tapestry of 25 years of diverse experience spanning 34 countries. His accolades speak volumes about his impact and dedication. Honored as one of the Top 10 Agropreneurs of 2019 by Future Agro Challenge, Greece, and recognized as a Technology Pioneer in 2018 by the World Economic Forum, Switzerland, Deepak’s contributions are globally acknowledged. His advisory roles with various private, public, and multilateral organizations have driven significant advancements in agriculture and technology.