New Delhi: There has been an 8% increase for the Rural development in Union Budget 2025-26 from the previous yearโs revised estimates.
The Ministry of Rural Development which oversees two key departmentsโthe Department of Rural Development and the Department of Land Resources has been allocated Rs 1,90,406 crore
The Department of Rural Development has been allocated Rs 1,87,755 crore, marking an 8% rise, while the Department of Land Resources has been allotted Rs 2,651 crore, a 35% hike compared to last yearโs revised estimates.
Major rural schemes under the department have also received substantial funding:
- Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS): Accounts for 46% of the departmentโs total budget allocation.
- Pradhan Mantri Awaas Yojana-Gramin (PMAY-G): Receives 29% of the budget.
- National Rural Livelihoods Mission (NRLM) & Pradhan Mantri Gram Sadak Yojana (PMGSY): Each receives 10% of the departmentโs allocation.
- National Social Assistance Programme: Accounts for 5% of the total budget.
In recent years, allocations to these schemes have fluctuated based on demand. For instance, during the COVID-19 pandemic, MGNREGS spending increased significantly due to higher demand for rural employment.ย
However, in 2024-25, fund utilization under PMAY-G was lower than expected, resulting in a slight reduction in revised estimates.
With 65% of Indiaโs population residing in rural areas and 47% depending on agriculture, the sector remains crucial to the countryโs economic landscape.ย
While agriculture is expected to grow at 3.8% in 2024-25โan improvement from the previous yearโs 1.4%โit continues to lag behind the broader economy, which has been expanding at an average annual rate of 7% since 2001-02.
Inflation remains a challenge, with rural retail inflation averaging 5.4% in 2024โhigher than the 4.4% recorded in urban areas. The Economic Survey (2023-24) attributes rising food prices to extreme weather conditions, erratic rainfall, and lower reservoir levels, which have affected agricultural output.ย
However, a well-distributed monsoon is expected to boost agricultural productivity and revive rural demand.
The rural employment landscape has seen a significant shift, particularly in female labor force participation. The Female Labour Force Participation Rate (FLFPR) for women aged 15 and above has increased from 25% in 2017-18 to 48% in 2023-24.
This surge has largely been driven by self-employment, with unemployment rates for women dropping from 4% to 2% and for men from 6% to 3% over the same period.
Despite improvements in financial inclusion, rural indebtedness remains a concern. The All India Rural Financial Inclusion Survey (2024) found that the proportion of rural households with outstanding debt has risen since 2016. The average debt for agricultural households stood at Rs 91,231, while non-agricultural households carried an average debt of Rs 89,074. Additionally, 25% of rural households still rely on informal credit sources such as moneylenders and landlords.
