Govt announces multiple schemes for Bharat; allocation inadequate to match inflationary pressure
The budget outlines initiatives for rural prosperity, including skill development and broadband access, but experts said key allocations for MGNREGS and housing schemes aren't enough to tackle rural poverty.
The FY26 budget announced a long thread of schemes for rural India, including a comprehensive multi-sectoral rural prosperity and resilience programme, grameen credit score and broadband connectivity for all government secondary schools and primary health centres.
But experts say allocations should have been higher, especially towards schemes like Mahatma Gandhi National Rural Employment Guarantee scheme (MGNREGS) and rural housing scheme, to take inflation into account.
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The multi-sectoral rural prosperity and resilience programme will be launched in partnership with states to address underemployment in agriculture through skilling, investment, technology, and invigorating the rural economy.
The goal is also to generate opportunities in rural areas, especially for women, youth, farmers and landless families, so that migration is an option rather than a necessity, finance minister Nirmala Sitharaman said on Saturday in Parliament.
Grameen credit score
Public sector banks will develop a Grameen credit score framework to serve the credit needs of self-help group (SHG) members and others in rural areas, she added.
“Women empowerment is important to eradicate poverty in rural areas. It’s being done through a planning commission. 1.15 crore (11.5 million) of 3 crore (30 million) have already become Lakhpati didis. To take it forward, ₹19,005 crore of budgetary allocation has been made. To empower women, we are taking another foot forward. Through the newly announced rural prosperity and resilience programme in budget, we are aiming at poverty-free village for poverty-free India. We will extend it up to the block level from district level,” union rural development minister Shivraj Singh Chauhan told reporters after the budget announcements.
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“Another specialty is Grameen credit score. When credit scores are announced for women associated with self-help groups, they can opt for bigger amounts of loans from banks.”
Sitharaman also said India Post with 150,000 rural post offices, complemented by the India Post Payment Bank and a vast network of 240,000 Dak Sevaks, will be repositioned as a large “public logistics organization”.
Broadband connectivity will be provided to all government secondary schools and primary health centres in rural areas under the Bharatnet project, Sitharaman said in her budget speech.
Chauhan, when asked about the period of implementation of the prosperity and resilience program, said, “We are targeting to get all necessary clearance from the Cabinet by 31 March so that we can work on these actively from the beginning of FY26.”
New water deadline
Sitharaman also mentioned a new deadline for providing all household in rural India with a functional tap connection. Jal Jeevan Mission (JJM), which was supposed to provide water on the tap to every household at the rate of 55 litres per capita per day by FY24, has been extended until 2028 with an enhanced total outlay for 100% coverage, she said.
Since 2019, about 154 million households representing 80% of India’s rural population have been provided access to potable tap water connections, but progress has been slow in Kerala, West Bengal, Jharkhand and Rajasthan.
Himanshu, associate professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi says that the allocation is not sufficient for rural development, given a rise in inflation.
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“Wages in rural areas are very low. The incomes are not increasing. Neither is there any programme for how to raise incomes in rural areas, both in wages and in agriculture. Your budget is lower than what was actually spent in 2023-24. You can't be saying something and then doing something which is completely opposite. Inflation has increased by roughly more than 10% in the last two years. Your budget is lower than what it was there two years ago. So, how do you expect it to increase is the whole problem,” Himanshu said.
“Increasing more money in the rural economy would have required you to spend more on MGNREGS, spend more on rural housing and spend more on various other schemes. Which is basically where people will be able to get more money out of it. So, primarily it's not even an increase I would say in real terms. Inflation has been roughly on average 5-6%. But if you want things to make a difference, then it must be at least a 10% increase,” he added.
Taking initial estimates into account, the increase in the rural development ministry’s allocation is 5.7% on year and 0.8% for Jal Shakti ministry in FY26.
The allocation for the rural development ministry in FY26 has been ₹1.87 trillion (BE) against revised estimates (RE) of ₹1.73 trillion and ₹1.77 trillion (BE) a year ago. This includes ₹86,000 crore for MGNREGS, ₹12,000 crore for the Pradhan Mantri Gram Sadak scheme and ₹54,832 crore for the Pradhan Mantri Awaas Yojana-Gramin (PMAY-G) scheme.
In the case of the Jal Shakti ministry, it received nearly ₹1 trillion for FY26. While the department of drinking water and sanitation has been given ₹74,226 crore (BE), including ₹67,000 crore for its flagship scheme JJM, the water resources, river development and Ganga rejuvenation department has been allocated ₹25,275 crore.
Challenges ahead
“A new scheme to be launched for 5 lakh SC and ST women entrepreneurs involves challenges like limited access to collateral, financial literacy, lack of industry or sectoral knowledge of upcoming sectors and the discrimination they face remain valid. A comprehensive package of decentralised services and hubs, tailored financial products and services such as collateral-free, microfinance, access to networks, mentoring business skills & technology, markets and so on, all integrated with the various women collectives or institutions could be key to the success of this initiative,” said Neeraja Nitin Kudrimoti, associate director at Transform Rural India, lead of Community Action Labs.
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“Since these are also disproportionately affected by climate change and need to be engaged in adaptation and mitigation space on a large scale, linking them to green businesses and skills is crucial at this stage. A check on the loan uptake against women being used as conduits for raising family capital needs to be ensured,” Kudrimoti added.
On Rural Credit Scores, experts say it will have a larger role in making finances available to access care at critical times as in rural areas borrowing to meet healthcare needs is very unique. However, the real challenge lies in ensuring that these resources effectively reach the most vulnerable populations, particularly in rural areas. Budgetary provisions must translate into actionable, community-driven solutions to bridge the gaps. Collaborative efforts between people, government, civil society, and local leaders will be key to achieving meaningful progress.
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Business NewsBudgetNewsGovt announces multiple schemes for Bharat; allocation inadequate to match inflationary pressure
First Published:2 Feb 2025, 02:02 PM IST
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