Union Budget on Rural Development

The allocation for Dept. of Rural Development has increased from Rs. 62,201 crore
in 2009-10 (RE) to Rs. 66,138 crore in 2010-11 (BE).
�� The allocation on Mahatma Gandhi National Rural Employment Guarantee Scheme
(MGNREGS) has gone up by only 2.5 percent from Rs. 39,100 crore in 2009-10 (RE)
to Rs. 40,100 in 2010-11 (BE).
�� A major development for rural housing sector is a substantial increase in unit costs of
housing provided under Indira Awaas Yojana (IAY). The unit cost has been increased
by 30 percent to Rs. 45,000 for plain areas and Rs. 48,500 for hilly areas.
�� Quantum of allocation for IAY has, however, increased by only 13 percent from Rs.
8,800 crore to Rs. 10,000 crore.
�� Allocation for Pradhan Mantri Gram Sadak Yojana (PMGSY) has remained at the
2009-10 level at Rs. 12,000 crore.
�� The allocation for Backward Region Grant Fund (BRGF) has been increased by 26
percent, from Rs. 5,800 crore in 2009-10 (RE) to Rs. 7,300 crore.

The Union Budget 2010-11, having been presented at a crucial juncture with an economy creeping out of recession and rising commodity prices, has belied all expectation with its policy pronouncements on rural development. With heart-warming allusions to popular philosophies, the Finance Minister has tried to sidle past a dampener for rural development when rural India required larger investments in rural income generation, housing and infrastructure. The wide gaps in the attainment of physical targets set forth in the Eleventh Five Year Plan, which is nearing its completion, required larger investments in this sector.
The UPA in its first stint undertook a host of policy initiatives, landmark among which is the National Rural Employment Guarantee Act (NREGA) which promised at least 100 days of wage employment to a household seeking employment. Noteworthy also, was the UPA initiative on rural infrastructure development christened Bharat Nirman which encompasses rural housing, rural electricity connection, telephony, all-weather road connectivity, safe drinking water, sanitation and expansion of irrigation capacity. However, with the first full budget of the second run of UPA, the financial commitment on rural development seems less than forthcoming.
Trends in Allocations Starting from 2004, when the UPA first took office, the total allocation on rural development as a whole took a quantum jump. From 2004-05 to 2008-09 the average annual growth rate of expenditure on rural development was around 37 percent. Superlative growth was attained in 2008-09 with an overall growth rate of 79 percent over the allocation in 2007-08.
However, increase in allocation in this sector did not hold the trend for years 2009-10 and 2010-11. Outlays in Union Budget 2010-11 have reduced by 8 percent over the previous year. Overall the allocation for rural development sector stood at 1.1 percent of GDP for 2010-11 compared to 1.2 percent of GDP in 2009-10 (BE).