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  • Union Budget 2018 for Rural Population Highlights

    Reforms announced by the Finance Minister on 1 Feb 2018

    The Finance Minister of India, Arun Jaitley, in the Union Budget 2018 has clarified that the government will lay special focus on the rural segments of the country. The various measures on this front include:

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    • In the case of infrastructure, the government will focus on roads in rural regions. The government is also looking to encourage private investments for infrastructure projects through Alternative Investment Funds (AIFs) and Infrastructure Investment Trusts (InvITs). The proposed spending for the rural infrastructure development is Rs.14.34 lakh crore.
    • Rs.19,000 crore has been set aside for PM Rural Road Plan for the financial year 2018-19.
    • Focus on improvement in rural roadways, rural housing, and rural infrastructure will improve the employment figures.
    • The rise in the rural income is expected to increase the demand for cement, which currently stands at 33%.
    • There is a plan to set up rural roadways for 3.7 lakh kilometres. This could be a huge boost to the business of construction companies.
    • Micro-pension and insurance penetration schemes introduced in this budget will help in boosting financial inclusion.
    • Micro-entrepreneurs will be benefited from the growth in Mudra loan targets by 23%.
    • The Swachh Bharat Mission has resulted in the creation of 6 crore toilets throughout the country today. Additionally, 2 crore toilets will be created in the coming 2 years. This will be beneficial in addressing the pressing issue of defecation in the open, particularly in rural segments.
    • Rs.5 lakh will be allocated for each family as part of medical reimbursement on an annual basis under the National Health Protection Scheme.
    • Organic farming will be encouraged to a great extent. Women self help groups (SHGs) will be encouraged to adopt organic farming practices under the National Rural Livelihood Programme.
    • Under the Pradhan Mantri Awas Yojana, 51 lakh houses will be constructed in rural areas in 2018-19.
    • Under phase I of the Bharatnet project, broadband access has been given to 20 crore rural citizens in the country. The government will set up 5 lakh wi-fi hotspots and offer broadband internet connectivity to 5 crore rural citizens.
    • Strong regional rural banks will be allowed to raise capital from the market to increase the amount of loans provided to the rural economy.

    The Union Budget 2018 will be announced in a few days, and this budget expects to introduce several landmark reforms in the country. The significance of the budget lies in the fact that it is the first one to be presented after the implementation of the GST reform. It will also be the last full budget of the current government before the 2019 General Elections. The Union Budget 2017 has been widely referred to as the budget of reforms; the Union Budget 2018 is likely to be called the populist budget.

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    Expected Reforms – Union Budget 2018

    The 2018 budget will bring about the following reforms:

    • It is expected to provide incentives to rural population and farmers from the agrarian sector. There will be direct focus on investment in infrastructure projects and job creation for the rural and agricultural sector. The government will take all possible measures to consolidate on major steps in the final year of its term.
    • According to the Union Budget 2017, Union Budget 2016, and Union Budget 2015, the expenditure allocation for the Ministry of Rural Development and the Ministry of Agriculture saw a sharp rise. The increase was in the range of 5.8% for the financial year 2014-15, while it stood at 7.6% in the financial year 2017-18. The 2018 Union Budget is also likely to abide by this trend as rural spending has a definitive effect on the increase in rural wages.
    • The Finance Minister is expected to strengthen the healthcare and social security provisions offered to the underprivileged and poor sections of the society. Allocations for affordable housing for such families will also be included in this budget.
    • The budget is likely to focus on fulfilling the dreams of the youngsters, the building blocks of the nation. Developments will be planned for the urban and rural sectors with special focus on energising the youth through skill improvement, education, and employment.
    • The rural demand is likely to show an upward growth post 3 years of slow development, owing to two good monsoons back-to-back. Rural wages have recently shown a revival. In September 2017, the nominal rural wages rose by 7.1% year-on-year (YoY), while the actual rural wages saw a growth of 4.5% YoY. The government will improve the allocation for rural development by doubling farm income.
    • The government’s move to provide fertilisers at subsidised costs will increase the disposable income of the rural agrarian section. This will subsequently, drive the pattern of consumption in the country.
    • The budget will also look to establish effective governance and service delivery initiatives through the participation of the common man.
    • Optimum deployment of appropriate resources and the preservation of financial stability are other points that the budget will touch upon.
    • Another area where there would be new initiatives is the banking sector, particularly focussed on the rural segment of the country. The government will push for reforms in this sector and infuse fresh capital.
    • Apart from the above, the government could introduce other programmes and policies that benefit the rural economy.
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