India faces a major shift in the functioning of the rural economy: Sitharaman on HT

Union Finance Minister Nirmala Sitharaman said there has been a significant change in rural areas. But the problem is that “we can’t measure it properly.” We don’t have any surveys to measure it either.”

FM Nirmala Sitharaman during the post-Budget press conference at the National Media Center in New Delhi, India, on Thursday, February 1, 2024. (Photo by Raj K Raj/ Hindustan Times) (Hindustan Times)

In an interview with Hindustan Times, Nirmala Sitharaman said there is a demand for services in rural areas that was not there before and stressed the need for better data for sharper policy making.

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“We need much more comprehensive and credible data that captures these types of changes. An improvement in the labor force surveys coming from the Ministry of Labor… but again this only affects work in the formal sector. We have not captured the informal sector,” said Nirmala Sitharaman.

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Is moderate growth in private consumption a cause for concern?

When asked about the impressive multidimensional poverty figures that did not translate into a significant increase in private consumption, Nirmala Sitharaman said that this reflected the fact that the economy was witnessing significant changes and challenges to existing paradigms.

“I'll take a very simple example; Farm workers move to urban areas during critical seasons [sowing or harvesting] They return to their villages. Now, since the coronavirus crisis, many of those who have been in urban areas and acquired skills – each at his or her level – say that rural areas provide them [similar] Ways to leverage and monetize their skills. Many of them haven't even returned yet [to urban centres]. If that happens, can we measure it? Can we take such changes into account? So I think we are in a very, very transitional phase,” the finance minister said.

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Nirmala Sitharaman also said that agriculture and its related activities are adapting significantly to changing methods and practices. The Common Service Centers (CSCs) that have been established are now seeing more postal and courier arrivals, even in post offices in rural areas. People are sending products and samples, she said.

“We are in a wonderful phase, on the cusp of a major transformation in the way agriculture, the rural economy, works,” Sitharaman added.

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Then why is MNREGA demand also increasing?

FM Sitharaman said the demand for MNREGA, a scheme that provides jobs with guaranteed wages in rural areas, is not increasing everywhere and the increase is also mainly due to seasonal activities.

“At the same time, we must also note that in some states it is still being targeted as one of the Centre’s resources. The CAG has pointed this out. We need to understand what is actually happening on the ground on MNREGA,” Sitharaman said.

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“We will never deny a cent. If it is required, yes, you will get it. But who explains the malpractice? Who explains to you that people who don't exist get the job cards?” she added.

Stressing on the need for clarity, the finance minister said when indicators like MNREGA demand are used to measure economic activity, one cannot simultaneously claim that rural demand is increasing in some cases and not in others.

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