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Budget 2023 must set trajectory for farm growth in next decade: Experts

The Modi government promised to double farmer incomes when it was voted to power in 2014 and although various measures have been introduced, analysts said agricultural growth has been uneven. The budget needs to set a roadmap for enhanced productivity and better remuneration, they said.

January 20, 2023 / 11:44 AM IST
Raising farmer income is more important than providing crop insurance, according to some economists. (Representative image)

Raising farmer income is more important than providing crop insurance, according to some economists. (Representative image)

Making minimum support price for crops a legal instrument and expanding it to include pulses, edible oils and other commodities are among the measures that farmers and analysts expect to be addressed in the upcoming budget to help farmers achieve the goal of doubling their income.

The agriculture sector was India’s saviour during the pandemic, growing 3 percent in FY21 when all other sectors contracted. In the first half of FY23, output by agriculture, forestry and fishing increased 10.8 percent, surpassing pre-pandemic levels.

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The government has over the years increasingly focused on agriculture. In FY16, the budget allocation for the ministry of agriculture and farmer welfare was Rs 24,460.51 crore, which was increased to Rs 1,38,550 crore in FY23.

Various schemes were introduced to benefit agriculture and farmers.

An income support scheme, the Pradhan Mantri KIsan SAmman Nidhi (PM-KISAN) was launched in FY19, under which farmers got Rs 6,000 a year in three equal instalments. About Rs 2 lakh crore has been released so far to about 113 million farmer families, according to government data.

Under the Pradhan Mantri Fasal Bima Yojana, a crop insurance scheme started in 2016, about 117.3 million farmer applicants have received claims and over 380 million farmer applications have been enrolled. According to the government, for every Rs 100 premium paid by farmers, Rs 493 has been received as claims.

Access to institutional credit for the agriculture sector has improved. Data shows an increase to Rs 18.5 lakh crore in FY23 from Rs 8.5 lakh crore in FY16.

The government has increased the minimum support price for all mandated kharif, rabi and other commercial crops. The MSP for paddy increased to Rs 2,040 per quintal in FY23 from Rs 1,310 per quintal in FY14. The MSP for wheat increased to Rs 2,125 per quintal from Rs 1,400 per quintal in FY14.

The way forward

Experts said the data may not capture the complete picture on the ground. According to Himanshu, an agri-economist at Jawaharlal Nehru University in New Delhi, farmer incomes haven’t kept pace and have been on a decline.

“Rural wages are down. Insurance is not important. What we need is an increase in farmer incomes,” he said.

PM-KISAN, the income support scheme, is not sustainable, agri-economists said.

Devinder Sharma, a food policy analyst and researcher, said the government has followed market-driven strategies.

“The finance minister needs to see what kind of agriculture we want. Rubber plantations have collapsed and this is a trend that I see across the country,” Sharma said.

According to a report of an inter-ministerial committee headed by Ashok Dalwai set up to prepare a blueprint for doubling farmers’ income by 2022, the average annual income of a farmer at the national level was taken as Rs 96,703 in the base year FY16, with the targeted level of Rs 1,92,694 at FY16 constant prices or Rs 2,71,378 at current prices.

“The prescribed time frame for doubling the farmers’ income, being seven years, requires that accelerated growth rates are targeted since business as usual would not make it possible. Hence, target a farm income growth rate of 10.4 percent per for the nation,” the panel said in the report.

Seven major areas of growth were identified to increase farmer incomes: improvement in crop productivity; improvement in livestock productivity; saving in cost of production; increase in cropping intensity; diversification towards high-value crops; improvement in real prices received by farmers, and a shift from farm to non-farm occupations.

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Infrastructure and R&D

The budget ought to further incentivise diversification and ensure that an increased MSP is delivered to farmers for crops other than wheat and paddy.

Shashi Kant Singh, executive director - agri and natural resources at PwC India, said the budget should incentivise and focus on building agriculture infrastructure and R&D capacities.

“There is also a realisation that you cannot just grow on crops – fisheries and animal husbandry need greater play in the budget,” he said.

“The way the 1991 budget set the growth trajectory for Indian industry, we need a budget like that for Indian agriculture,” said Sharma.

The last full-year budget before the general elections in 2024 could just be the right one to do that for agriculture.

Agriculture as a sector has the highest number of employees in India, with 152 million people working in the sector in FY21.

Shweta Punj
first published: Jan 20, 2023 11:41 am