India is the second-most populous country in the world with about 65 per cent of her population living in rural areas. The rural economy, hence, holds significant potential in driving sustainable development and economic growth. In a developing country like India, Rural Development is synonymous with National Development. With this vision, Finance Minister Nirmala Sitharaman released a pragmatic and progressive budget that prioritises integrated and inclusive development of India’s villages and her people across interrelated dimensions: Economic, Social, Digital and Political.  

Union Budget 2022-23 allocated INR 1,38,203 crores to the Ministry of Rural Development. Table 1 gives the estimates for the Ministry of Rural Development and Table 2 gives the estimates for allocations to major centrally-sponsored schemes under the Department of Rural Development, Ministry of Rural Development. Figure 1 gives the trend of budgetary allocation over the past three years.  

Table 1: Budgetary allocation to the Ministry of Rural Development (in crores) 

Table 2: Allocation to Major Schemes under Department of Rural Development (in crores) 

Figure 1: Trends of Major Items of Expenditure

Note: BE is the budget estimate and RE is the revised estimate. 

The estimates above have left some critics arguing that MGNREGA. However, since the scheme is demand-driven, the actual expenditure could be higher than the budgeted amount since the government legally guarantees to fulfill 100 days of employment. In 2020-21, the government spent INR 1,11,169.53 crores, well above the budgeted amount due to increased reverse migration during the pandemic that forced many out of jobs.  

To understand the implications for the rural economy, we must go further than the Ministry of Rural Development and integrate the transformative initiatives announced in Railways, Agriculture, Digitization, Health, Education, Housing and, MSME that is beyond the scope of the Ministry of Rural Development’s budget but, nevertheless provide better prospects for economic development and social transformation in rural areas to bridge the rural-urban divide. 

Railways are set to see the highest ever capital expenditure of INR 2.45 trillion for 2022-23 under PM Gat Shakti. Ministry of Road Transport and Highways also saw a 68% increase in budget allocation this year. This will be essential for boosting agricultural activity and productivity in rural areas. Vibrant Village Programme will see the inclusion of remote Border Villages in the development initiatives of the government.

Agriculture is also seeing a shift towards natural and organic farming with greater digitization and the use of disruptive technologies like Artificial Intelligence and Kisan Drones. The government is encouraging crop diversification and opportunities in beekeeping that will give thrust on capacity building of women farmers and also provide alternative sources of income to the household. Record 1,000 Lakh Metric Tonne (LMT) of procurement of paddy is also expected with about INR 2.37 lakh crore to be paid out as MSP to the farmers. 

As the world moves towards Digital Learning, the government has also expanded the scope of PM eVidya to enable coherent, multi-mode access to education. To promote skill development and vocational training, 75 skilling e-labs will be set up in addition to the present Technical and Vocational Education and Training (TVET) system. Digitization of healthcare will also promote the delivery of quality health care services to residents of rural areas in a safe, timely, effective and equitable manner.  

With the rise of digital banking and fintech innovations like Unified Payments Interface (UPI), the government proposed laying optical fibre in all villages, including remote areas, under the Bharat Net project through PPP in 2022-23 to strengthen financial and digital inclusion in the villages. Moreover, 100 per cent of 1.5 lakh post offices will come on the core banking system to enable access of e-services to farmers and senior citizens in rural areas.

These landmark announcements will not only promote livelihood opportunities but, also increase civic and political engagement of people at a larger scale.

This article was authored by Bhavya Tyagi.