Budget 2019: Modi govt likely to increase spending on rural development by 16%

New Delhi, Jan 31: Several reports and political experts have openly said that there is a widespread farmer distress and disenchantment among the rural population of the country over the performance of the BJP-led government at the Centre. Farmers and people living in rural areas feel that not enough has been done for them by the current regime which stormed to power in 2014.

Many surveys have predicted that the BJP may not be able to win as many seats as it did in 2014. Among many reasons being given for this, rural distress is also emerging as a key factor.

To address this, the Prime Minister Narendra Modi-led government, which would present an interim-Budget tomorrow, may increase spending on rural welfare.

In a bid to woo the rural votes ahead of the Lok Sabha elections due later this year, the government is likely to raise rural welfare spending by 16 percent for the fiscal year beginning April, a Reuters report said while quoting government sources.

In its interim budget on Friday, the government is set to earmark about Rs 1.3 trillion for the Ministry of Rural Development, up from Rs 1.12 trillion rupees in the current fiscal year, said Reuters reports while quoting sources with direct knowledge of budget discussions.

All eyes would on Parliament where the Modi government is set to present its final budget before the elections. The interim budget would be presented by Piyush Goyal, who has filled in for Arun Jaitley who is away abroad for treatment.

Although the government came out yesterday and said that it would be an interim budget, the indications are that it would not be a mere vote on account.

There is plenty of talk that the budget would deal with tax benefits and the farm crisis as well. The question is if these reforms are announced, can the government go ahead and implement the same before the elections.

There has been plenty of speculation on what the government may announce. There has been talk about an announcement regarding direct income transfers to farmers, the abolition of income taxes for those in the lowest tax bracket etc. However, in the long run, such announcements could be risky. An announcement on direct transfer could impact the producer-subsidy government support in the farm sector. Moreover, an announcement on income tax could also impact for both enhancements of productivity and collection of taxes.