To fuel rural growth, Govt. is going to spend more than Rs 1,000,000 crore in the coming year, which includes a 37 per cent jump or an additional $65 billion. Most of this is going to go into the government’s schemes like the National Rural Employment Guarantee Scheme and Bharat Nirman, which in effect puts more money in the hands of rural consumers.
Government is trying to create new markets in Rural India. We have to look at ways by which we can evolve new distribution strategies, offer value-added products and drive consumption in rural India.
Domestic demand and consumption has been the key driver for economic growth in India. Till now, most of the domestic consumption demand was based out of the big cities with the top eight cities accounting for almost 40 per cent of total demand. Household savings in India is among the highest in the world and statistics suggest the poor are forced to save a much higher share of their income than the rich.
With this budget and its huge spending on rural India, the Govt. has set ambitious targets of halving poverty by 2014, adding 12 million jobs a year and bringing 50 per cent women under self-help groups. If this holds true and if 70 per cent of India which resides in towns and villages have more money in their pockets and spend more on consuming value-added products, it has the potential to bring about a change in the economy.
So, whether it is on solar energy, lights, or the consumer goods, increased consumption in rural India will create new jobs required for providing these value-added products and services. After many years, the philosophy for driving growth is bottom-up rather than spending on ‘trickle-down effect.’ We are focusing on moving with the majority rather than the affluent minority. Thus, this budget is a clear shift in terms of its ambitious vision for driving economic growth.
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