Agriculture is the backbone of the Indian economy. The sector, which provides employment to 48.9% of the total workforce and contributes around 18% to the GDP, received the priority as expected in the Union Budget. Agriculture and rural economy were the first topics the Finance Minister focused on in his speech as he presented the last full Budget of the NDA-government ahead of the general elections in 2019.
Amid several challenges such as rising crude oil prices, uncertainty surrounding revenue collections post the Goods and Services Tax, desire to revive the GDP growth and an endeavour to double farmers’ income, the government presented a moderately balanced Budget. The focused measures are expected to boost agricultural production and rural economy and help rural India realise the 2022 goal.
The impact of climate change on farmers’ income was one of the main concerns raised by the Economic Survey, which was released ahead of the Budget. Trying to address the challenge and in tune with the clarion call given by the Prime Minister to double farmers’ income by 2022, one can say that the Budget did not disappoint the farming sector. Other reasons like the BJP’s not-so-good performance in the recent Gujarat elections may also have prompted the government to focus on the sector. But that is beside the point.
In fact, a majority of the announcement was along expected lines. In a major departure from the past, Finance Minister Arun Jaitley began his Budget speech with the government’s plan for the farming community. He unveiled a series of measures in line with the government’s aim of doubling farmers’ income by 2022.
The Budget proposals included higher minimum support prices for crops, higher farm credit, setting up of a Rs 2,000-crore fund for developing agricultural markets, allocation of Rs 200 crore for cultivation and related industry, Rs 500 crore for ‘Operation Green’ and setting up of state-of-the-art facilities in 42 mega food parks.
Fixing the minimum support price of kharif crops at 1.5 times the production cost would help increase farm income. However, this promise requires clarity and budgetary provision. The government should be prepared for any trickling effect of negative externalities and have remedies to tackle any eventuality.
Providing sops to boost agri-business activities across the country and improve agricultural markets also assumes importance. Allocation has been doubled for enhancing food processing and specialised agro-processing networks from Rs 700 crore to Rs 1,400 crore.
The government has also decided to follow a cluster-based approach for stimulating agricultural production. Proposal to connect the 470 agriculture produce market committee promoted markets to e-nam (National Agriculture Market) and develop over 22,000 rural agricultural markets would bring these under the formal fold.
These are positive moves to remove middlemen and ensure the farmer receives the bulk of the prices paid by the consumer. At present, most of the sale is still done through commission agents. However, it is doubtful that the practice will be done away with anytime soon.
Budgetary allocation of Rs 10,000 crore for developing fisheries, animal husbandry can give the necessary boost to these sectors. Further, focus on developing horticulture cluster, organic farming and move to boost export through mega food parks can help in better linkage of farmers to the processors.
On the other hand, development of agri-business clusters will provide a viable solution to formalise agricultural markets at least in the long-run.
Hiking the agricultural credit target for the next fiscal by Rs 1 lakh crore to Rs 11 lakh crore will also help farming and allied activities. The Budget has allocated Rs 14.34 lakh crore for rural infrastructure since the government’s focus for next year is on creating maximum livelihood and job creation in rural areas. This amount will be funded through budgetary and non-budgetary allocation.
The government has also announced an increase in funds allocated for the National Rural Livelihood Mission to Rs 5,750 crore in 2018-19, from Rs 4,500 crore in 2017-18. The allocation of Rs 2,600 crore to ensure irrigation facilities in 96 irrigation-deprived districts will also help boost production and incomes.
Though a lot needs to be done for farmers’ welfare who subsidise the nation, the Budget managed to address quite a few challenges that agriculture and allied sectors face. Also, a lot would depend on the implementation of the schemes but the focus, which was long overdue, on the sector indicates better days for farmers.
(The author is Director at Centre for Good Governance, Hyderabad, and in-charge of Agriculture, Human Development and M&E groups. He can be contacted at [email protected])