Well before Finance Minister Nirmala Sitharaman rose to present the Interim Budget for 2024-25, there were indications as to what its focus would be. Doubts that this would be anything more than a vote-on-account had been settled when Prime Minister Narendra Modi publicly declared that “when polls are this close, the government presents an interim budget” — and went on to say with confidence of a victory in the polls, “we will bring a full budget when a new government is formed”.

Meanwhile, an ‘interim Economic Survey’, innocuously titled “The Indian Economy: A Review”, has presented a survey of post-Independence economic development, with a periodisation that divides those years into the pre- and post-Modi government eras. In language reflective of an electioneering pamphlet, peppered with the Prime Minister’s own assessments of his government’s record, the document concludes that the decade 2014-24 was one of “transformative growth”. Periods of significant or even high episodes of growth prior to that transformative decade are identified as wanting, on the grounds that such growth either left structural challenges unaddressed or was the result of an unsustainable credit boom that damaged the banking sector.

A eulogy

Given this background, it was to be expected that the Budget speech would be a vocal expression of this eulogy of the two governments of the last 10 years. For years, Part A of the Budget speech has been a tiresome recounting of policies already adopted, and to be adopted, many of which have little to do with the issues of resource mobilisation and allocation and the strategy they signal, which must be the actual concern. That has been true of this year’s Interim Budget as well, which focused on all the “welfare” schemes, in areas varying from housing to food, which have been largely attributed to the Prime Minister. It is another matter that the Prime Minister has in the past dismissed such schemes as representative of a “revdi” (sweet gifts) culture when implemented by non-Bharatiya Janata Party (BJP) State governments.

With the Interim Budget being identified as a mere vote-on-account, Part B of the speech was a declaration that while pursuing consolidation in the sense of achieving periodically revised fiscal deficit to GDP ratios, the government will be stepping up spending on infrastructure and welfare. In the circumstances, what can be assessed from the detailed Budget documents is the fiscal performance of the Centre in the current (rather than next) financial year, 2023-24. Even that exercise is fraught with difficulty because the practice of presenting Budgets on February 1 adopted in recent years has meant that “revised estimates” for the financial year incorporate projections relating to most of the last quarter of the financial year extending to March 31.

CGA data sheds more light

The only substantial figures at hand are the estimates of actual expenditure under different broad heads for the first three quarters of 2023-24 provided by the Controller General of Accounts (CGA), which can be compared with the estimates for the whole year provided in the Budget. This is, in certain areas, quite revealing. For example, if we take the estimates for the Department of Rural Development, under which the all-important Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme falls, as compared to budgeted expenditures of ₹1,57,545 crore for 2023-24, the revised estimates are placed at a much higher ₹1,71,069 crore. That points to a significant step up relative to that budgeted, despite claims that the NREGA scheme is being inadequately funded, wages are in arrears and job card holders are being excluded from work because wage payments are to be linked to Aadhaar.

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But a comparison of revised and budgeted expenditures conceals what is actually occurring. The actual expenditure on the MGNREGA scheme was ₹1,11,170 crore in the COVID-19 year 2020-21 and ₹98,468 crore in 2021-22. That came down to ₹90,806 crore in 2022-23 and the revised estimate projects spending on the programme in 2023-24 at an even lower ₹86,000 crore. The figures clearly do not match the government’s pro-poor rhetoric. Interestingly, the CGA reports that expenditure of the Department of Rural Development till December 2023 amounted to only ₹1,07,912 crore or 63% of the total projected in the revised estimates. So, more than a third of the estimated expenditure for the financial year is projected to occur in the last quarter of the year.

That deviation between revised expenditures over the financial year and the actual till December 2023 is even larger in the case of the Department of Agriculture and Farmers Welfare, under which the much-touted Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme of transfers falls. The budgeted expenditure for 2023-24 for that department was placed at ₹1,15,532 crore and the revised estimate is projected at ₹1,16,789 crore. The actual till December is placed at ₹70,797 crore by the CGA, or 61% of the revised estimate. Spending on the PM-KISAN scheme alone, which amounted to ₹66,825 crore in 2021-22, fell to ₹58,254 crore in 2022-23 and is projected at ₹60,000 crore in 2023-24.

There are two ways in which such deviations between actual spending till December and the revised estimates in the Budget can be interpreted. One could be that the Finance Minister has chosen to inflate revised estimates of spending to back her claim that the government has provided massive support to farmers and rural workers. The other could be that, despite tardy spending till December, the government plans to launch a pre-election spending blitz in areas where it believes it can swing votes in favour of the BJP. Being election season, the latter is a possibility. But trends of the kind noted with regard to spending on the MGNREGA scheme suggest that the government believes that rhetoric can be a substitute for actual allocations. Thus, despite claims that free rations for 80 crore people are a huge expansion of food support under the National Food Security Act, the total food subsidy has fallen from ₹5,41,330 crore in 2020-21 to ₹2,88,060 crore in 2021-22 and a projected ₹2,87,194 crore (RE) in 2023-24.

Estimates and projections

At the macroeconomic level, the Budget’s claim is that in 2023-24, the central government has managed to ensure that its receipts other than borrowing are almost equal to that budgeted. This is because it has met budgetary expectations with respect to tax revenues as well as expects to raise its non-tax revenue receipts by 25% relative to budget. The explanation for that hefty increase is that income from dividends and profits is slated to rise from ₹99,913 crore in 2022-23 to ₹1,54,407 crore in 2023-24 (RE). This is because, as compared with a budgeted ₹48,000 crore to be received as dividend/surplus from the Reserve Bank of India and nationalised financial institutions, the revised estimates suggest that the actual inflow will be more than twice that figure at ₹1,04,407 crore, largely because of transfers from the central bank. This has more than made up for a projected fall in miscellaneous capital receipts, consisting of receipts from disinvestment from a budgeted ₹61,000 crore to ₹30,000 crore. It is not clear whether even the figure of ₹30,000 crore can be realised, since the CGA estimates that ‘other non-debt capital receipts’, consisting of disinvestment proceeds, just crossed ₹10,000 crore by December.

Estimates and projections of this kind allow the Finance Minister to claim that even while ensuring total expenditure in line with the budgeted, she has managed to keep the fiscal deficit, at 5.8% of GDP, marginally below the budgeted level, hoping to please financial markets with her government’s prudence. Whether it would please voters to give the National Democratic Alliance a “resounding victory”, as she hopes, is yet to be seen.

C.P. Chandrasekhar is an economist and columnist based in New Delhi

Extreme weather events and variability in water availability are severely affecting agricultural production. Image for representational purpose only.
| Photo Credit: Ritu Raj Konwar

The theme for World Food Day (October 16) this year — ‘Water is Life, Water is Food’ — calls for urgent action in managing water wisely. Availability or a lack of water has become even more critical with increasing climate extremes. Countries face severe challenges such as drought, floods, unseasonal rains and prolonged dry spells. With less than seven years left to achieve the UN Sustainable Development Goals (SDGs), the Food and Agriculture Organization of the United Nations (FAO), the International Fund for Agricultural Development (IFAD) and the United Nations World Food Programme (WFP) — the UN’s food agencies — lay stress on the need to adopt innovative and collaborative approaches for improved management, conservation and availability of scarce water resources.

Water availability affects every aspect of human life, especially food and nutrition security. For instance, about 60% of India’s net sown area is rainfed, contributing to 40% of the total food production. However, rainfed agriculture depends directly on water availability, and rain and soil moisture variations can severely affect food and nutrition security. There is an urgent need to adapt to climate change by promoting technologies and practices that make rainfed production more resilient and sustainable. Sustainable water management is critical to address the impending food and nutrition security threats. In turn, irrigated agriculture accounts for 72% of global freshwater withdrawals, sometimes with lasting damaging effects on the sustainability of significant ecosystems, such as seasonal rivers and deep aquifers.

Water and crop production

Decades of poor water management, misuse and pollution, and the climate crisis have degraded freshwater supplies and ecosystems, adding to the vulnerability of small-scale producers to climate shocks and land degradation in some of the world’s most fragile ecosystems. About 40% of the planet’s total land area is degraded, leaving farmers with less productive land. Small-scale farmers, who make up more than 80% of farmers globally, are especially affected as they often lack access to finance, technology and irrigation to maintain a level of production that can sustain their livelihoods.

Extreme weather events and variability in water availability are severely affecting agricultural production, changing agro-ecological conditions and shifting growing seasons. Changes in rainfall and higher temperatures also affect crop productivity, reducing food availability.

The Government of India has assessed the impact of climate change in 2050 and 2080 using climate projections and crop simulation models. Without adaptation measures, rainfed rice yields in India are projected to reduce by 20% in 2050, and by 47% in 2080 scenarios, while irrigated rice yields are projected to decline by 3.5% in 2050 and 5% in 2080 scenarios. Wheat yields are projected to decrease by 19.3% in 2050 and 40% in 2080, while kharif maize yields could decline by 18% and 23%. In every scenario, climate change without adequate adaptation measures reduces crop yields and lowers the nutritional quality of produce. The FAO, in Andhra Pradesh, Karnataka, Himachal Pradesh, and Maharashtra, is piloting a crop forecasting framework and model incorporating climate (weather), soil characteristics and market information to aid rainfed farmers in making informed decisions contributing to food security.

Irrigation can also be an effective measure to make agriculture more resilient, and in most cases, enable farmers to transform their livelihoods by growing, consuming and selling high-value crops such as nutritious fruits and vegetables. In this context, the WFP supports soil and water conservation, the building or fixing of irrigation canals, dams, ponds, and dykes, as well as flood barriers through food assistance in exchange for labour. In 2021 alone, 8.7 million people across 49 countries benefited directly from such support. Similarly, IFAD supports Indian States in leveraging the Mahatma Gandhi National Rural Employment Guarantee Act scheme. Through safeguards during design and planning and encouraging participatory institutional development, IFAD ensures that micro-irrigation infrastructure is environmentally and socially sustainable and financially viable.

Climate change adaptation

The FAO also supports the sustainable transformation of agrifood systems and climate-smart agriculture practices to improve water-use efficiency. It supported the farmer water school programme in Uttar Pradesh, which helped smallholder farmers. At the same time, the Andhra Pradesh Farmer Managed Groundwater Systems project reached out to 638 habitations in seven drought-prone districts, that included a hydrological monitoring programme.

Similarly, IFAD has enshrined climate change adaptation in its core strategies. It set ambitious targets in terms of leveraging climate financing to mitigate climate change by addressing the adverse impacts of agriculture and helping farmers to adapt to the increasing volatility of weather conditions, by investing in the restoration and preservation of soil health, water resources and merging modern technologies with indigenous knowledge systems to build productive and resilient production systems and value chains. IFAD-supported projects in Maharashtra, Odisha, Uttarakhand, Nagaland and Mizoram incorporate climate-resilient seed varieties and crops, including millets, and train farmers in climate-sensitive agricultural practices and soil management to cope with increased water stress. The WFP is collaborating with the Government of Odisha to develop solutions for smallholder farmers, focusing on women. The goal is to enhance resilience through solar technologies, establish community-based climate advisory services to help manage climate impacts and promote a millet-value chain that reduces water usage and improves nutrition.

Steps needed

To achieve global food and nutrition security, political commitment is needed as much as concrete investment. The needed policies and investments must promote: Innovative and proven technologies that allow farmers to increase their productivity, adapt to climate change and become more resilient to shocks; environmentally and socially sustainable and financially viable irrigation and water management strategies; reduce their climate footprint of agricultural production, as well as bio-hazards and environmental pollution; bring sanitation and drinking water supplies closer to rural households; adopt efficient food and water recycling strategies and strengthen institutional arrangements and capacity for sustainable and equitable water regulations, management, access and ownership.

The UN’s food agencies work closely with the Government of India and State governments on innovations such as Solar 4 Resilience, Secure Fishing, and the revival of millets for renewable energy promotion, food security and nutrition.

Takayuki Hagiwara is Food and Agriculture Organization of the United Nations Representative in India. Ulac Demirag is Country Director and Representative, International Fund for Agricultural Development. Elisabeth Faure is Representative and Country Director, United Nations World Food Programme in India