Budget 2023: Rural Economy, Social Welfare Key Thrust Areas : Radhika Rao

The rural economy and social welfare are likely to be two major focus areas of the budget for 2023–2024 with just one year left until the general elections.

After a year of spiralling inflation and an extreme heatwave that destroyed crops and reduced rural incomes, sentiment has improved. The non-farm economy in rural areas has profited from the increase in economic activity in urban areas. "The recent easing in rural inflation and a solid start to rabi sowing will help the near-term momentum. Besides, the non-farm rural sector is benefiting from backward linkages to a pick-up in urban business activity, and policy support is also likely,"  the DBS Bank's Radhika Rao, Executive Director & Senior Economist stated.

In comparison to the Rs 73,000 crore allotted in the last Budget, the government is likely to raise funding for the MNREGA programme, which guarantees rural employment. Additionally, schemes like crop insurance, rural infrastructure, and affordable housing will receive more attention.

"One potential area is increasing allocations towards the rural employment scheme, MNREGA vs FY23's INR 730bn (0.3% of GDP). Besides this, other focus areas include further impetus to allied schemes such as crop insurance, rural road infrastructure, low-cost housing, power and utilities, food-processing industry, etc," Rao added.

In its expectations for the Union Budget, SBI Research's most recent Ecowrap research noted a greater emphasis on agriculture and the growth of the rural economy. It has been recommended that paying the interest only, rather than the principal as well, should be the condition for renewing KCC loans to small and marginal farmers for up to Rs 3 lakh. A credit guarantee scheme for agriculture has also been requested, as well as the conversion of the Minimum Support Price to the Floor Price of Auction on the e-National Agriculture Market (eNAM).