As the countdown for Union Budget begins market expert Akash Jindal makes a plea for rural uplift and Budget provisions for this. He shares the plight of villages in this interview given to Abid Shah and has a prescription like rural-infra-bonds for Arun Jaitley to try. Excerpts:
The farm sector is stagnating. So what should the Government do in the forthcoming Budget to revive the rural economy?
India still lives in villages and there is no reason for disparities between the urban and rural India. It is a social obligation of the Government to eliminate this disparity. People living in the rural areas should have the same economic ability as the people of the urban or metro parts of the country. I come from a village in Punjab and shifted to Delhi 25 years ago. I drive today a car worth Rs 20 lakh but some of my school friends who stayed back in Punjab, which is a relatively prosperous State, are still struggling to buy and maintain a motorbike.
Why couldn’t the zeal for economic growth take rural India under its warm fold?
We are targeting a growth rate of 7.5 percent a year whereas the world is still looking at 3.5 percent growth. But can we ever achieve the magical figure of double digit GDP growth? I think as an economist we can if we grow our rural economy. Even corporate sector is realising this and it is very much evident from the chocolate and two wheelers ads that are targeting the rural folks. Ultimately if India has to grow the rural economy would have to be lifted. This is our social responsibility also.
Rural economy is mainly associated with Agriculture. How can we improve agriculture?
Right the rural economy is closely associated with agriculture. So this has to be firstly made viable and then profitable. There are so many unfortunate incidents of farmers’ suicide amid debt. The Annadatas (bread givers) are forced to commit suicide due to debt. So we must wake up and do everything to change this sad state of the farm sector.
So how can the agro sector be made profitable?
This is an irony that if you want to buy a car the credit facilities is available from zero to six percent. At times you want to buy a luxurious house credit is also available for around seven percent. But a ruralite needs credit for agriculture, he has to borrow from money sharks where the rate of interest varies from 15 to 24 percent. Why cannot be subvention for agriculturists. The Government can allocate funds in this Budget through nationalised banks. Government can reimburse to the bank. The farmer should have facility of credit from banks or other financial institutions at the rate of four to six percent. So the money should be given at an economic rate to our agriculturist brothers.
Apart from the credit facility to the farmers what other steps can be taken by the Government to boost this sector?
We need to increase yield. What we need to do is firstly improve irrigation. After 69 years of independence our farmers are still dependent largely on monsoon. Why should it be so? I think the solution is connecting rivers through canals to ensure availability of water round the year. Here one part of the country often grapples with floods while another reels under drought. Farmers should also get better seeds, fertilisers and automation. So we should make these affordable for the peasantry. Technical knowhow through experts should also be imparted in simple and easily understandable language through direct interaction with farmers. Technology should flow from lab to field.
Apart from these what are other ways to uplift the rural economy?
As an economist I think that the Government should instead of MGNREGA and other social schemes focus on industrialisation. For example if we can motivate private sector to put a plant in rural area through different incentives this will generate ample scope for employment in rural areas. The local populace will be employed in different positions and this in turn will make them financially strong. This will also help in stopping migrations to urban areas. This way an organised sector will be created in rural areas.
Why industries are not going to the rural India?
This is because of problems in our policies. We have failed to incentivise and motivate our industrialists to go to rural parts of the country. Red tape-ism in the Government is not allowing this. The Government should make attractive policies for them. If one industry is set up in rural area so many other ancillary units would spring up automatically. Maruti’s manufacturing unit for cars in Gurgaon is a good example of this.
With the advent of Modi Government the focus is on smart cities but the rural thrust is missing. Why is it so?
Smart city is good but the focus should also be on rural economy. The growth of economy will be possible with the upliftment of rural sector. This has been realised by the corporate. And they have started manufacturing to keep up with the needs of rural India. Therefore, the Government should focus more on rural economy. Good urban cities are also important as we are inviting foreign companies to invest or set up their establishments here. So the good infrastructure for cities is also required.
But how can good infrastructure in rural parts be created?
Creation of infrastructure in far off rural parts would create direct and indirect employment. Suppose a highway is constructed, this would improve connectivity and lifestyle of rural inhabitants in terms of education, health and employment. They would be able to commute to nearby cities without having to migrate. This will also improve their buying capacity as the cost of living in rural areas is far less than in urban areas. So infrastructure will bring life to the rural sector. The country must be sufficient in electricity. Without 24 hours uninterrupted power supply the industry cannot survive.
Any other steps that you have in mind about improving the rural scene?
Education of girl child is very important. Educating system has to be job oriented so that the girls after completion of basic degree should get gainfully employed. If the females of rural India start earning like their counterparts in cities, the rural economy will grow.
It is Budget time. In nutshell what should Arun Jaitley exactly do to uplift the rural economy?
The Government should provide credit at reasonably cheap interest rates to farmers. Lots of money should be allotted for setting up rural infrastructure and more provisions for girls’ education be made either by aiding State Governments or other institutions. More incentives should be given to those industries that are willing to go to rural areas.
But the question is from where will these funds come?
I have a set of ideas that I have sent to Government also. As the infrastructure needs huge funds the Government should come out with infrastructure bonds. A few years ago there was a provision of tax relief in infra bonds. It should be revived once again. Hopefully people would invest as this may give tax exemption to them. So the people’s money can be used for people’s welfare and betterment.