Cash transfers cannot and should not replace the public provision of essential goods and services, but rather supplement them. Cash transfers are the latest fad of the international development industry, as the preferred strategy for poverty reduction. And now Indian policymakers are busy catching up. The idea was mooted in the Government's Economic Survey for 2010-11, and the Finance Minister made an explicit announcement in his budget speech for replacing some...

During a recent trip to a rural part of western India to report on rising food prices, I met two kinds of farmers — those with access to irrigation and those without. The differences between the two were stark. Those with drip irrigation or sprinklers invariably were reaping rich harvests and profits. But the vast majority of India’s farmers fall in the second camp: they water their crops by flooding their...

Pranab Mukherjee, India’s finance minister, put the rural economy at the heart of a national budget on Monday, saying ridding the farm sector of crippling supply bottlenecks would be his “focus” in the coming fiscal year.A market-neutral budget supporting agriculture, welfare schemes and the extension of banking services to more people was designed to dispel any sense that the Congress party-led government was in drift after a series of high...

Rattled by soaring food prices and falling farm productivity, the FM has announced a slew of measures to boost the farm sector and vowed to deepen the process of attracting more private investment in agriculture and agro-processing. He announced an increase in bank lending for farm sector as well as interest subsidy to farmers who pay short-term crop loans on time. "I propose to enhance additional subvention to 3% in 2011-12....

Budget 2011-12 marks a sharp retreat of the government from the social and economic sectors. It has cut back expenditures in sectors that matter to common people, especially the poor. On the other hand, it has given huge concessions to the corporate sector in the form of tax cuts and exemptions. Let us take the overall fiscal stance of the budget. The underlying strategy is to reduce its fiscal deficit to...