Key Insights from Budget 2021-22 on Rural Infrastructure & Rural Health

1. Overall allocation in the rural development sector

As India’s economy struggles to recover from the COVID-19-induced lockdown, the Union Budget 2021-22 has made its way to the people of the nation. The Ministry of Rural Development has been provided the 4th highest budget allocation in 2021-22, at INR 1,33,690 crore. The intuitive representation in Fig.1 shows the distribution of rural development allocation over the past few years. It has a 4 percent hike compared to 2019-20 but shows a considerable reduction compared to last year. In 2020-21, the budget allocation was revised as 1,97,377 crores to support the rural mass during lockdown with Mahatma Gandhi Employment Guarantee Act (MGNREGA) and the National Social Assistance Program (NSAP) to manage the ongoing COVID-19 scenario. But it would be interesting to know why the allocation has been reduced in 2021-22, as the migrated working classes are still dependent on the flagship scheme MGNREGA in rural areas.

Fig. 1 Rural Development Allocation (INR Crores)

[Authors’ compilation, GoI Budget reports]

2. Trends in allocation and key features of MGNREGA, PMAY-G, and PMGSY

In 2021-22, INR 73,000 crores have been allocated to MGNREGA crores and an estimate has been drawn as 87,853 (future revised actual) using pattern analysis of last past eight years. Fig. 2 shows the budget expenditure compared to actual expenditure on MGNREGA (INR crore). This year MGNREGA has experienced a reduced allocation from 1,11,500 crores last year to 73,000 crores. MGNREGA is a demand-driven scheme, as depicted by the Union budget, last year there was a 51% increase in demand for work under this scheme. Then the question arises of why there is a 34% reduction in budget allocation of MGNREGA. MGNREGA ensures 100 days of employment in Rural India. It can be observed that the number of employment days is getting reduced from 2016-17 to 2020-21. This may be due to more opportunities in the high-wage working sector, or there is a lacuna to provide jobs when demanded. In West Bengal, even in January 2021, the demand for work under the scheme was high as 23,07,469 households (Fig. 3). The unemployment allowance or the delayed compensation is paid by the state govt. funds. From state (W.B.) MIS reports, it is clear that INR 12,89,104 has been transferred to the rural workers for 2020-21; however, INR 7,63,376 is due. This reduction in the budget allocation is going to likely impact the rural work population and their livelihood, as the payments might be delayed budget deficit (based on the previous trend).

Fig. 2 Budgeted vs actual expenditure on MGNREGA (INR crores)

[Authors’ compilation, MGNREGA MIS Reports, GoI]

Fig. 3 Household demand for work under MGNREGA in West Bengal

[Authors’ compilation, MGNREGA MIS Reports, GoI]

In 2021-22, it has been allocated INR 19,500 crores to Pradhan Mantri Awas Yojana Gramin (PMAY-G). Till October 2020, the completion rate for 2020-21 was at 3% due to COVID-19 (Fig. 4). INR 1,20,000-1,30,000 is provided to rural households compared to INR 2,50,00 irrespective of plains and hilly areas. Rural Ministry has been informed to take control of this disparity of allocation per house as several logistical issues in rural areas are prevalent that may not be there in urban areas. In PMAY-G, the work completion is dependent on the MGNREGA employment as govt. converges these two schemes to complement each other for the cost-effective implementation at the ground level. In this scenario, lower budget allocation in MGNREGA will likely be affecting the PMAY-G scheme as MGNREGA led labor availability will be lower and contractual workers will be recruited that will considerably increase the cost of construction as the notified wage rate in West Bengal under MGNREGA is INR 204, whereas, the external rate is around INR 350-500 per day.

Fig. 4 Budget vs actual expenditure on PMAY-G (INR crores)

[Authors’ compilation, Union Budget Reports, GoI]

Fig. 5 gives a graphical representation of the budget vs actual expenditure on Pradhan Mantri Gram Sadak Yojana (PMGSY) (INR crore). In 2021-22, it has been allocated INR 15,000 crores to PMGSY and an estimate has been drawn that shows 108 percent expenditure for 2021-22 (future revised actual). The government has already considered the slow pace of work due to the delay in the approval of the project reports. Now, as the contractors are approved, the additional delay in payments will likely affect the construction speed for an uncertain period. Not only that, the contractors are provided with additional money for maintenance for 5 years. Delay in payments due to insufficient funds will also hamper the transport infrastructure. As evident, the funds allocated were underutilized in the previous years. Hence, there is a growing concern this year as well. However, the budget allocation in this segment is also lower this year. Perhaps due to the expenses for combating COVID-19, the allocation has been decreased.

Fig. 5 Budget vs actual expenditure on PMGSY (INR crores)

[Authors’ compilation, Union Budget Reports, GoI]

2. A brief on Agriculture Infrastructure Fund (AIF)

INR 1 lakh crore Agri Infrastructure Fund (AIF) has been allocated for farmers. This is a funding program for post-harvest management Infrastructural development and farmer-consumer market development. The scheme has an approval period of 2020-29 (10 years). The allocation also emphasizes market linkages and e-NAM (national electronic market platform) with a budget of 410 crores i.e., 17% higher than last year. Although APMC markets cover agricultural areas around 496 sq. km, the small and marginal farmers that share the major part of the Indian farming system find it difficult to access the APMC markets. Govt. thus planned to empower the “Graamin haats” through NABARD by allocation a whopping amount of 1000 crores. Some key features of the newly implemented AIF have been presented in an intuitive graphical framework in Fig. 6. With the funding, many agricultural initiatives will be revitalized, generating value for farmers throughout the country.

Fig. 6 key features of Agri Infrastructure Fund (AIF)

[Prepared by authors]

3. DILRMP and SWAMITVA initiatives

Digital India Land Records Modernization Programme (DILRMP) is a part of the Digital India initiative, a Central Sector Scheme. This year INR 150 crores have been allocated. This is crucial for rural infrastructure and credit improvement as the banks & other institutional funding systems ask for digital records and updated mutation data for loan facilities. Survey of Villages Abadi and Mapping with Improvised Technology in Village Areas (SWAMITVA) is the recent scheme that GoI has emphasized. This scheme has made a jump from 79.65 to 200 crores this budget year (Fig. 7). It provides the demarcation of rural “chashi jomi” by Drones Survey Technology. This will also rectify the disputes of “daag number” for landowners. This will facilitate creating ‘RoR’ for rural people to take loaning benefits. However, this may create confusion in “dakhaldari” lands where the holder of the tenure enjoys the right of occupancy.

Fig. 7 SWAMITVA (INR crores)

[Authors’ compilation, DILRMP MIS, 2021; Union Budget Reports, GoI]

4. Trends in allocation and expenditure in Health

In the last 8 years, the allocation to health has been increased from INR 35,163 crore in 2014-15 to INR 73,932 crore in 2021-22 (Fig. 8). The fund allocated over the years were overutilized. Further, 2020-21 was a challenging period, and an additional amount of INR 15,817 crore was given in 2020-21. Three flagship programs were introduced this year, described as follows:

Urban Swacch Bharat Mission 2.0: The objectives of the program are countrywide fecal sludge management, prohibiting single-use plastic, segregating waste at source, and minimizing air pollution.

PM AtmaNirbhar Swasth Bharat Yojana: The program’s objectives are to promote primary, secondary, and tertiary rurban healthcare developing existing centrally funded medical institutions that include new disease management and identification programs.

COVID-19 vaccine: INR 35,000 crore has been allocated for vaccination to tackle the pandemic.

Allocation in major health schemes is presented in Fig. 9. National Health Mission has been observed to have a major share of the total allocation, followed by autonomous bodies. However, last year government made extra allocations to the other sector as COVID-19 health packages. National Rural Health Mission (NRHM) has been allocated INR 30,100 crore. The fund is dispersed in a 60:40 ratio from central and state. However, financial support to states for NHRM has witnessed gradual decrement. Recent NRHM data shows that (1) Nagaland has been cited as the least approved Community Health Centres (CHCs), (2) Punjab’s expenditure falls by 22%, (3) Bihar has the poorest bed to population ratio, (4) West Bengal has the most expenditure on CHCs, (5) Uttar Pradesh has the most GoI support but less expenditure on CHCs compared to West Bengal, and (6) Gujrat spent less than 5% of their approved infrastructure. Although the number of CHCs in West Bengal is high the CHCs are not having sufficient staff, due to which these centers are active at their full capacity

Fig. 8 Budget vs actual expenditure on Health sector (INR crores)

[Authors’ compilation, Union Budget Reports, GoI]

Fig. 9 Allocation in major schemes in Health (INR crores)

[Authors’ compilation, Union Budget Reports, GoI]

5. A way forward

Altogether, the budget 2021-22 witnessed mixed reactions from the nation, with COVID-19 creating havoc at the door. The GoI has been found keen enough to make necessary adjustments in the budget for possible strengthening of the health sector that primarily focuses on COVID-19 vaccination. However, more provisions are needed as allocation has been reduced this year even when the migrated working classes are still dependent on the flagship scheme MGNREGA in rural areas. MGNREGA is a demand-driven plan; according to the Union budget, demand for employment under this scheme increased by 51% last year. The demand for employment under the program in West Bengal was as high as 23,07,469 in January 2021. The workforce would most likely be badly affected by the significant budget cuts, as payments will be postponed owing to a lack of finances. Low MGNREGA funding is likely to have an impact on the PMAY-G scheme, as MGNREGA-led labor accessibility will be reduced and contractual workers will be hired, raising construction costs significantly. The advised remuneration in West Bengal under MGNREGA is INR 204, while the daily outside wage rate is about INR 350-500. In addition, the further delay in funding will presumably bring challenges in construction works for an indeterminate length of time for projects approved under PMGSY and subsequently in the transportation infrastructure. DILRMP is critical for rural credit enhancement programs since banks and other institutional financing systems require digital records and current mutation data, in order to provide effective financial services. The government-sponsored “Graamin haats” have the ability to enhance the agricultural industry. The newly introduced NABARD-supported scheme, AIF is an advanced funding program, which has the potential to make future improvements in the farmer-consumer market systems. Furthermore, the rural health sector has also seen a boost with crucial budget allocation in NRHM programs. However, in the context of West Bengal, it is important to mention that NRHM has been implemented well enough in the state compared to others as reported in the recent reports. These improvements need special attention to monitor the proper functioning of the CHCs after formation in the state.

By Mr. Anirban Nandy & Dr. P. K. Singh; ARF group Members