India Govt floods agriculture with resources, the only sector it hopes will save economy; cuts spend elsewhere

With coronavirus bringing the economy to a virtual halt and with almost all sectors reporting a dip in operations, the government trained its focus on the farm sector and rural development and increased its spending for priority sectors to generate larger benefits for the economy.

Incidentally, while India reported dismal GDP numbers for Q1FY21, agriculture emerged as the only bright spot, as was earlier predicted by RBI, with it being the only area with reported growth. India’s GDP fell 23.9% amid the ongoing coronavirus pandemic  and it is the lowest that the country has hit in the last four decades.

Expenditure for non-priority sectors has been restricted for the first four months of the current financial year i.e. April to July. “Even as the total government spending during April-July has increased 11% despite a steep fall in revenue, priority areas have seen a significant jump,” Expenditure Secretary TV Somanathan said. Rural development spending, for example, increased 145.4% to Rs 1,02,096.5 crore in April-July 2020, from Rs 41,589.2 crore in April-July 2019.

Government’s overall figure reflects a sharp increase in priority areas coupled with a conscious re-prioritisation of those areas which are of not much benefit to the economy. “The focus of government expenditure has been in the priority areas such as Rural Development, Agriculture Cooperation and Farmers Welfare, Health, Transfer to States, GST Compensation, Health Research, Labour and Employment,” TV Somanathan replied to the queries.

The center’s total expenditure in April-July soared by about Rs 1.07 lakh crore or about 11.3% as compared to last year’s numbers, according to latest official data. The same came close on heels with suggestions from economists, industrialists and the Reserve Bank of India that the government must increase spending to revive the economy.