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Agriculture sector and Expectations from Budget 2023-24

Budgets are becoming more and more irrelevant now-a-days talking more of future reforms and doing less for removing current bottlenecks in the growth path. — Anil Javalekar


Budgets are becoming more and more irrelevant now-a-days- talking more of future reforms and doing less for removing current bottlenecks in the growth path. Earlier, budgets were waited for days to come expecting tax and tariff reliefs and announcements of popular welfare and direct benefit schemes. All this has now gone, and budgets have stopped talking of such things. Still, budgets are being presented every year and budget experts, particularly politically sponsored experts, are analyzing the positives and or negatives of future strategies mentioned in budget.  

The agriculture scenario has changed over the years

Agriculture played a vital role in India's economy though account for only 20 % or less of country's Gross Value Added (GVA), engaged 55% of the workforce and has supported Indian industrial sector growth. The policy support, production strategies, public investment in infrastructure, research and extension for crop, livestock and fisheries have significantly helped Agriculture sector to grow satisfactorily. The agriculture and allied sector GVA at factor cost at current prices (base 2011-12) increased from Rs 5220 crore in 1950-51 to Rs 3980067 crore in 2021-22. The production of foodgrains also increased from 508 lakh tonnes in 1950-51 to 3157 lakh tonnes in 2021-22 with yield increase of 1900 kg per hector during the period. It is true that Indian agriculture has progressed and diversified after independence but still faces problems of many kind and expect government to do more. The budget is one government instrument that helps meet the expectations.

Agriculture development Strategies adopted so far

  1. After independence, Indian planners considered industrialization as the prime objective and gave agriculture sector a secondary position, treating it either supplier or consumer of the industrial sector. There was no specific agriculture policy as such. The deficit of food grains was met by imports and combating floods, famines and droughts was a priority concern. The strategies adopted were mainly to increase the production of food grains that too with intensive farming. Efforts were made to increase production and productivity of fertile lands with irrigational facilities for important crops like wheat and rice. High-yielding varieties of multiple crops were main thrust areas with supportive strategies like strengthening rural infrastructure with major and minor irrigation, energization of pump sets, supply of inputs for plant nutrition and protection, promotion of machinery for farm operations, reorganization of agriculture credit, providing better marketing facilities and creation of adequate storage for farm produce. Most important initiative was in the form of abolishing of zamindari and land reforms.
  2. Thereafter, Indian green revolution strategies were adopted and that made India not only self sufficient in food grains but even surplus. The Green Revolution technologies played a major role in increasing food supplies, in lowering and stabilizing food prices, in increasing farm incomes and in generating additional income and employment in the non-farm economy. Indian planners however, failed to spread the green revolution to whole India and it remained limited to certain areas and certain crops. Most Indian states and most agricultural land thus remained out of this green revolution. The prosperity benefits have mostly gone to Punjab, Haryana and western UP as evidenced from the procurement of surplus food grain in the form of buffer stock from these three states. The green revolution in the irrigated tracts of the country has largely bypassed the arid and semi-arid regions, which constitute the bulk of the dry land areas.
  3. The first ever National Agriculture Policy was announced on 28th July 2000 though remained mostly on paper and no serious action initiated till the formation of National commission on farmers (2004). The National Commission on Farmers (2006) and National farmers Policy (2007) can be termed as important milestone in the history of Indian agriculture as it shifted the focus from agriculture production to farmer’s income. It also helped understand the importance of dry land and rain-fed farming as its improvement was considered important for spreading the green revolution. The 11th Five Year Plan also emphasized that ‘the agricultural strategy must focus on 85% of farmers who are small and marginal, increasingly female, and who find it difficult to access inputs, credit and extension or to market their output. While some of these farmers may ultimately exit from farming, the overwhelming majority will continue to remain in the sector and the objective of inclusiveness requires that their needs are attended to’. The National Policy for Farmers (2007) was to improve the economic viability of farming through substantially improving the net income of farmers.
  4. Government of India took several initiatives through National Horticulture Mission, National Bamboo Mission, National Fisheries Development Board and the National Rainfed Area Authority. The reforms in agricultural marketing and efforts to revitalize cooperative credit structure are some other initiatives. The National Food Security Mission and the Rashtriya Krishi Vikas Yojana (Additional Central Assistance Scheme) have been approved to substantially enhance investment in agriculture and increase production and productivity. All these initiatives are in consonance with the intent, direction and measures suggested in the National Policy for Farmers.
  5. In India, Agriculture being a State subject, the State Government is primarily responsible for the growth and development of agriculture sector and developing perspective plans for their respective States and ensuring effective implementation of the programmes/schemes. However, Government of India supplements the efforts of the State Governments through various Schemes / Programmes.  Some of the  schemes introduced recently  were Income support to farmers through PM KISAN, modified Pradhan Mantri Fasal BimaYojana (PMFBY), Providing Soil Health Cards to farmers, Promotion of organic farming in the country, Neem Coating of Urea,Agri Infrastructure Fund, Promotion of FPOs Scheme, National Bee and Honey Mission (NBHM), Setting up of E-NAM extension Platform, Improvement in farm produce logistics, Introduction of Kisan Rail, Creation of a Start-up Eco system in agriculture and allied sector etc. These initiatives were expected to increase investment in the agriculture sector as also the income of farmers apart from improving the productivity and production of agricultural produce.

Challenges and budget expectations

  1. Helping agriculture and farmers survive climate change will be an important challenge and budget need to frame policies and allocate adequate funds so to minimize the damage to agriculture economy. Huge resources need to be mobilized for the research required to meet the climate challenges, the technologies to be developed, compensate the losses of farmers while adopting new farm practices and technologies and to educate farmers and create awareness among public of the consequences of climate changes. It is to be seen how the coming budget thinks of this sector with this reference.
  2.  Helping farmers to gain from the prospering agriculture sector will be another challenge and this budget is expected to firm up its strategies towards minimizing the loss of farmers’ income due to markets cycles and its functional or operational deficiencies. The withdrawal of three laws that were to expand agriculture markets has created confusion among the trade operators and farmers and that needs to be explained. Market reforms are necessary particularly to minimize the manipulation of prices by middlemen or by monopolized market operators and to help make available all the facilities required by farmers at reasonable cost as also give better choices to farmers.
  3. It is to be understood that the price support to and procurement of certain crops in certain areas is not helpful. The need is to revamp the MSP system for region-wise major crops with procurement support like jawar and pulses in Maharashtra, wheat in Punjab/Haryana/MP, Rice in coastal regions etc so to cover major crops and majority of farmers of all areas in the country.
  4. Crop insurance is also not helping farmers. It is desirable that the government pay insurance premium for all crops and for all farmers for all types of damages and losses and not involve farmers and treat their declaration for crops and land sufficient. The scheme should be simple and all farmers should get reasonable compensation for loss without asking.
  5.  Making small land holdings viable is another challenge and till it happens, small farmers need direct financial support. The PM kisan benefits are meagre and need to be increased with certain linkage to the cultivable land holdings and its potential incomes.  Uniformly giving Rs 6000 per annum may not be helpful in the long term.  

Most of the time, Indian budgets are revenue deficit and development funds are made available through borrowings or from created money. The expectations from every sector are always more than the available budgetary resources and the government has to manage the allocations with development priorities. Still, climate change is a serious issue and its impact is also visible. Therefore, this budget will hopefully prioritize the strategies and help the agriculture sector grow fast and help farmers to survive the climate crisis.

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