Decoding Budget for Bharat: Experts on what Budget-2021 has for rural India

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The Rural Marketing Association of India has taken the initiative to put together thoughts and views by a panel of leaders who are experts in the rural domain.  At this juncture, when everything is heading towards a new normal, RMAI’s ‘Decoding Budget for Bharat’ takes a look at what is ‘New’ in this Union Budget for Rural India.

Message from Biswabaran Chakrabarti President – RMAI

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Biswabaran Chakrabarti

Dear All,

Greetings from Rural Marketing Association of India.

We are about to come out of the worst pandemic that the globe has ever seen together. We
will be completing a year soon since it all started.

At this juncture, when everything is heading towards a new normal, we, the rural marketing fraternity, are keen to see what is the ‘New’ in this Union Budget for Rural India. At RMAI we have taken a humble initiative to put together thoughts and views by a panel of leaders, who are experts in the rural domain.

Our team has aptly named it – Decoding Budget for Bharat!

We have our senior members, our advisory council and close associates of RMAI who have come forward to pen down their thoughts. My heartfelt gratitude to them.

Kind regards, Biswabaran Chakrabarti President
Rural Marketing Association of India (RMAI)

Puneet Avasthi, Senior Executive Director, Kantar

A difficult balancing act between tight fiscal space and economic revival

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Puneet Avasthi

Post-Covid urban unemployment has increased and Private Sector confidence has been dented (evidence: declining PFCE). The budget focuses stimulating jobs through Healthcare and Infrastructure investments. This should lead to an improved job environment for Urban Indians across Socio-economic classes, as also help create jobs for rural India (in primary healthcare facilities and the construction sector), thus helping Rural India to diversify their sources of income.

The budget focuses stimulating jobs through Healthcare and Infrastructure investments. This should lead to an improved job environment for Urban Indians across Socio-economic classes, as also help create jobs for rural India (in primary healthcare facilities and the construction sector), thus helping Rural India to diversify their sources of income.

Rural Markets in coastal communities, Fruits and Vegetables producing states and Cotton producer states are likely to be more buoyant

Imported Electronics to be expensive, again the effort is to leverage India’s market potential to nudge marketers to Value Add more in India

With the scrappage policy and continued high price on fuel, government is sending a signal to consumers to buy EV’s

On the revenue side, Direct Taxation has largely been left untouched, with the expectation that growing GST as non-compliance comes down and privatization initiatives will help finance government Middle Class Indians should start seeing benefits of increased government expenditure leading to job and income creation.

S Sivakumar, Group Head – Agri & IT Businesses, ITC Limited

Decoding the Union Budget 2021 for Agriculture Sector

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S Sivakumar

To decode the government spends and policy in agriculture this year, one has to go back ten months, because the announcements in Budget alone do not give the complete picture.

The pandemic struck just as rabi crops were being harvested in March 2020. Timely and proactive exemptions to the sector from the Covid-induced lockdown ensured uninterrupted harvesting of rabi crops and planting of kharif crops a couple of months later. Agriculture and allied sectors, clocking a growth rate of 3.4% at constant prices, were the only bright spot in 2020-21 amid the steep decline in the performance of other sectors.

Further, dedicated funds for post-harvest agriculture infrastructure to the tune of ₹165,000 Crores as part of the AtmaNirbhar Bharat package, and the regulatory reforms related to agricultural marketing can be considered as many “mini budgets” through 2020. These steps were aimed at improving competitiveness of agricultural production and adding value to the primary produce. Policy initiatives such as the Guidelines for the formation and promotion of FPOs were designed to collectivise and empower farmers to plough back a larger share of the consumer price to the farmer.

The reforms related to agricultural marketing met with stiff opposition from some sections of the farmers. One of the major contentions of the agitating farmers was the apprehension that Government would dilute the MSP mechanism that assures a profit based on the cost of production. The Finance Minister sought to dispel this fear by sharing the procurement data in her Budget Speech. That the value of 2020-21 procurement at ₹2,87,966 Crores was nearly four times that of 2010-11 at ₹77,488 Crores should provide comfort regarding government’s intent. That the amounts were distributed across more commodities as well as more farmers is also a reassuring data point.

She also dealt with the other concern of the agitating farmers that the APMC system would be dismantled once more private channels open up under the new agricultural marketing Acts. The Agriculture Infrastructure Fund is now made available to APMCs for augmenting their infrastructure facilities.

The enhanced allocation to the Rural Infrastructure Development Fund will contribute towards improving efficiency of the supply chain logistics. The expanded list of perishables under Operation Green will help more value addition and reduce wastage. Increased corpus for Micro Irrigation Fund will expand the area under micro irrigation and improve water use efficiency. Proposed new investments in the fishing harbors, fish landing centers, and seaweed farming will help diversify the sources of income for farmers.

Harish Bijoor, Brand Guru and Founder, Harish Bijoor Consults Inc

We create infrastructure, you create consumption

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Harish Bijoor

I do believe Budget 2021 as presented by FM Nirmala Sitharaman, is a positive one for industry, however I am not too sure how it will pan out on demand and demand creation.

The budget is good for industry as it is manufacturing positive, worker-positive and investment positive. I quite like the 6 legs it stands on. This seems a budget that aspires to reach every part of the economy as far as the infra-structure, investment, well-being of people, innovation and R&D and importantly an accent on minimum governance and maximum government.

Industry looks happy as of now. However, this is a manufacturing and productivity centric budget. The pandemic created two issues. It cut and curtailed manufacturing and hurt several sectors of the products and services industry. While bigger businesses were relatively less hurt, the medium, small and micro industries were hurt badly. Hurt badly even to the point of no-recovery.

The budget addresses this issue squarely. The pandemic also created the second issue of sluggish demand. The economy regressed into a functional and essential products and services mode. Out here, every rupee saved by a home is considered an earning. Consumers down-graded from premium brands, and even consumed less quantum of the tooth- paste and shaving cream.

Lipstick and cosmetic consumption of course went out of the window it had flown in through. Even house-maids and cooks lost their jobs and livelihoods, as middle-class Indian homes got to be “aatma-nirbhar”. The second key issue is the fact that consumption and the mind-set to consumption is down. The budget does not address this second issue as much. And that is a concern.

To an extent the budget does believe that industry will now take charge, use all the positivity around, the budget sops included, and produce robustly. In the bargain more jobs will be created, and the positive cascade of more money in the hands of labour, will result in more buys. We will need to wait and see how this pans out.

The budget is therefore good for industry and just about neutral to demand and demand creation.

As for rural markets, many changes have occurred. The WFH regime has helped de-magnetize urban agglomerations. Many workers in the IT and ITES segments, as all across the virtual sector of work, have moved to a WFA mode. And this Work from Anywhere regime has made them get back home in their villages and towns even. This has created valuable pathways for demand in the small towns and villages of our country. Urban habit to consumption will cascade into the rural hinterland faster. This is a contagion in itself that will spread into the consumption habit of Indians in the small towns and villages. Expect consumption booms for a while in our villages and small towns.

 Dr. Anup Kalra, Director- Corporate Affairs, Ayurvet

Agriculture and Livestock Budget Analysis

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Dr. Anup Kalra

Agriculture and livestock are one of the most important sectors and offers a great opportunity to for the country. Owing to this, stakeholders follow the government budget very closely. These sectors provide largest livelihood opportunity to the available workforce of our country. It also plays an important role in providing food security and inputs to 100’s of allied industries. Thus, their role in economic and environment sustainability is of great significance. Therefore, these sectors should not look at these sectors from food security point of view.

To solve the work force crisis in agriculture sector, allocation of funds for COVID-19 vaccine is going to be a great support. This would mean healthy people, healthy nation.

Special impetus given on creating FPOs, infrastructure of APMCs, linking additional 1000 mandis on e- NAM, balanced use of fertilizers shall provide advantage to our farmers in improving soil health, better production and in for getting connected with the customers for value creation. Most importantly, the budget allocated for infrastructure development of rail, road and waterways link would aid the farmers to transport their produce at various locations.

Further bringing beneficiaries of the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) under the Kisan Credit Card (KCC) scheme will further empower our farmers through NABARD. The support to micro irrigation will motivate farmers to use water more efficiently. Linking this with Jaivik kheti and Natural farming would help in production of quality and safe food. In addition, farmers would be provided solar pumps and they would be able to use barren land for setting up of solar parks. This would be one-step further towards sustainability.

To further strengthen support to farming community, government has also brought livestock and fisheries sectors into limelight. Announcement of developing five major fishing hub including Chennai, Kochi and Paradip and establishment of multipurpose seaweed park in Tamil Nadu will motivate farmers for exploring new avenues of livelihood apart from agriculture. With this, it expects to achieve Rs. 1 lakh crore fisheries’ exports by 2024-25. Almost, 200-lakh MT fish production by 2022-23.

The scheme also focusses on developing 3477 Sagar Mitras and 500 Fish Farmer Producer Organizations to involve youth in fisheries extension. This budget also supports doubling of milk processing capacity to 108 million MT from 53.5 million MT by 2025. Most importantly, the Artificial insemination services is to be increased to 70% from the present 30%. This would improve milk production, processing leading to more employment and employability. This surely would aid in doubling farmer’s income.

Promoting ‘One Product, One District’ in budget speech of Finance Minister will motivate our farmers, local manufacturers and retailers and support them in developing their capability to produce and process more and help India become AtmaNirbhar. However, now the focus has to be on Production to Profits. The farmer’s needs to be more skill oriented be in position for effective use the technology towards higher production. In addition, the government needs to support the farmers to get right price for their produce, failing which the farmers may not find this attractive enough and would move away from it.

Overall, with the united efforts of our farmers, youths, workers, entrepreneurs and government, India is poised to be the leader in agriculture and livestock sector, which will not only produce for the country by also, feed the world.

Anurag Vohra, Senior Vice President and India Business Head, Kirloskar Brothers Limited

Strengthening the vision of Atmanirbhar Bharat for growth in both rural and urban landscape

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Anurag Vohra

Budget 2021 has come at a very crucial juncture when we are just recovering from the Covid-19 pandemic. The damage due to Covid-19 is significant and it is estimated that it will take a significant time for our economy to recover from the debacle. Hence, during this budget day, there were huge expectations and questions on how the government will take the steps necessary to revive the economy. So, in a way, it was a make or break budget, this time.

I am very happy that the budget took into consideration this grave situation and steps taken in the budget will be very helpful in bringing back the economy on track. The government has opened its coffer and proposed to spend significant expenditure across all sectors. It, for some time, has not been too much bothered about the increase in fiscal deficit, as the creation of demand from all sectors has taken priority.

Kirloskar Brothers Limited, India’s first and largest pump engineering company, provides fluid management solutions for virtually every industry. So, the promising budget will definitely benefit us as our products go in all sectors. However, the increased focus on rural economy and infrastructure sector, where higher expenditure has been proposed, will benefit us the most. Besides, being a truly Indian company, we are bound to benefit from the government’s continued rise in impetus on the Atmanirbhar Bharat mission and Vocal for Local programme.

The rise in budget allocation towards the Rural Infrastructure Development Fund from 30,000 crores to 40,000 crores and proposed enhancement in the agricultural credit target to 6.5 lakh crores in order to ensure that the farmers receive adequate liquidity, is anticipated to drive demand for our products in agricultural sector. Similarly, the announcement to augment the existing Micro Irrigation Fund, created with a corpus of 5,000 crores under the NABARD, by another 5,000 crores, is expected to augur well for us.

The proposed launch of the Jal Jeevan Mission, which aims at facilitating universal water supply in all 4,378 urban local bodies, ensuring tap connections in around 2.86 crores households and enabling liquid waste management in 500 AMRUT cities, is expected to boost demand for our products.

Extension in deduction of interest on loan taken to purchase an affordable house by one more year, i.e. till 31st March 2022, and the proposed tax holiday related to the same, as part of the Government’s vision to ensure ‘Housing for All’, will help in increase of our domestic pumps.

The various Production Linked Incentive (PLI) scheme and increased fiscal allocation for the National Infrastructure Pipeline (NIP) scheme by the government could play an integral role in driving an all-round demand. Solar is another area where additional capital infusion of 1,000 crores will help scale our business in solar pumping solution.

Sanjay Kaul, Founder and CEO, Impact Communications

Budget Impact on Rural Media

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Sanjay Kaul

Over the years Successive Govts. has been focusing on development of Rural sector. As a result, Rural market has been hero for most of the companies and economy even in the COVID times.

This Budget is largely growth oriented and progressive for Rural. With a massive allocation for infrastructure, especially Rs1.70 lakhs for construction of roads and highways will help generate employment in Rural. An additional allocation of INR 1.23 lakh crore for Rural Development and Panchayat Raj system will help employment at grass root level.

Government has spelled out 16 action points to lift and double farmers’ income by 2022. Rs.2.88 lakh crores have been dedicated to farm and Rural sector.

Budget allocation to health sector will translate into a better health infrastructure in Rural too. Doubling milk production by 2025 will give great flip to the dairy sector.

Raising fish production by 2lakh tonnes will encourage diversification opportunities for Rural youth. Government will help install 20 lakh stand-alone pumps for small farmers & additional 15 lakh farmers with solar water pumps.

All this will translate into higher rural incomes, consumption and additional growth for the companies operating in Rural or for those intending to foray there. Rural agencies will see a spur in spending by companies. Rural practitioners need to tweak their offerings with digital integration as Covid has compulsively altered and enhanced digital awareness & consumption. Going forward it’s a progressive budget for Rural marketing industry, the only caveat is how effectively these schemes are implemented on ground.

Veerendra Jamdade, CEO, Vritti Solutions Ltd

Budget 2021-22 will boost rural economy

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Veerendra Jamdade

Rural India has been relatively less affected by the pandemic, with tier II & III markets offering hopes of economy boost and demand generation, and also promising better opportunities for the advertising industry. The Union Budget 2021-22 focusing on infrastructure, health and packages for agriculture has further boosted the growth prospects from these markets.

The budget has all the ingredients to lift the rural economy, benefit the farmer, raise healthcare infrastructure and increase government expenditure on rural and urban infrastructure. All of this indicate that the focus of the budget has been on rural. This is essential as agriculture still drives the Indian economy. There is also thrust on highways development, railways and airport development, which I feel is the key to opening of the economy. The allotment of INR 20,000 crore for bank recapitalization is the need of the hour to revive the underperforming banking sector.

Rural infrastructure focus is the key for kick-starting the economy post pandemic. Initiatives such as free LPG and Ujjwala, 86% coverage under one-nation, one-ration card, the doubling of MSME allocation, the application of minimum wages to all categories of workers, inclusion of women in all categories of workforce, allowance of one person companies, enhanced AgriCredit target, increasing rural infra development fund, application of new Agri Infra cess, development of fishing harbours, doubling of micro irrigation corpus, and availing of infra fund to APMCs, will take rural economy to new heights.

The proposal to revise definition for small companies by increasing their threshold for capitalization is welcome and will certainly help in the ease of doing business.

Pradeep Lokhande, Founder, Rural Relations

Budget 2021: Infrastructure Development should benefit not just industries but also rural youth

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Pradeep Lokhande

For most of the people in our country, public health centres and sub-centres are extremely important, and we do have basic infrastructure in our country. But question is how we can make it at par and accessible to all.

We expect that Government should invest maximum in Health and Agriculture infrastructure of the country, because now the importance of health has reached to every household of the country, all thanks to the pandemic.

The budget presented by our Hon’ble Finance Minister for the year 2021-2022 is very good in terms of empowering SMEs which is very important and good step taken as it was very necessary to ensure their survival from this pandemic, otherwise many people would either be bankrupted or left unemployed.

Allocation of a major portion of budget to health, majorly done towards vaccination, is also need of the hour. Our people, our frontline soldiers who have worked day and night and saved the country from pandemic should get the vaccine first.

It is important to look at how infrastructure benefits to not just industries but also to crores of rural youth of this country. When the infrastructure development will start happening across rural India, it is not just agriculture but youth which will get advantage of that, from entrepreneurship as well as employment point of view, which is need of the hour as well.

Why it is required, because now the exposure to rural population, specially youth, is so much due to the internet penetration and other advancements that more than 85% people know and aware about what is happening around the world and not just limited to their village or district.

Now it is Government’s responsibility to provide access to rural people of the same resources and infrastructure they are giving to the urban or semi-urban population.

Government should also work on strengthening the 2,50,000 secondary schools of rural India and take steps towards making rural youth educated who is exposed to the world through interne, and should give importance to vocational education. Secondary school students are future of India and it will also benefit in solving the migration problem.

From the human-being point of view, I believe, Government should work on five major sectors, i.e. Education, Health, Power, Roads & potable drinking Water.

Out of the above, Power has reached to most of the villages; Potable water is also available. It is Education, Health & Roads which Government should focus to develop upon.

Your thoughts, please