Budget 2023: New schemes for agri sector notwithstanding, little evidence of doubling of farmers’ income

Union Budget 2023-24 has announced several new schemes for the agriculture sector, but maintains a deafening silence on the promise of doubling farmers’ income. In fact, the word farmer was used just once by Finance Minister Nirmala Sitharaman in her speech.

The goal of doubling farmers’ income has already missed the 2022 deadline set by Prime Minister Narendra Modi in his Independence Day speech in 2017. This is especially true for some states, where the household agricultural income has declined instead of rising, as per government data.

A parliamentary standing committee said in a report tabled in the Winter Session of Parliament that the monthly agricultural household income on an all-India basis rose from Rs 8,059 in 2015-16 to Rs 10,218 in 2018-19. But in states like Jharkhand, Madhya Pradesh, Nagaland and Odisha, the agricultural household income has declined instead of rising.

“...in four years (farmers’ income) in Jharkhand has come down from Rs 7,068 to Rs 4,895, for Madhya Pradesh it has come down from Rs 9,740 to Rs 8,339, for Nagaland it has come down from Rs 11,428 to Rs 9,877, for Odisha it has come down from Rs 5,274 to Rs 5,112,” the Standing Committee on Agriculture, Animal Husbandry and Food Processing noted in its 46th report. With the announcements made in the Budget, while the government appears to be supporting the agriculture sector through various new schemes and also continues to offer higher minimum support price (MSP) for key crops, there’s little concrete evidence of enabling higher farmer incomes.

The budgetary allocation for one of the prominent income support schemes ― PM Kisan ―  has been lowered from Rs 68,000 crore this fiscal to Rs 60,000 crore for FY24, when there were hopes of it being increased. At present, the scheme envisages payment of Rs 6,000 to farmers in three equal instalments each year. The allocation for the Department of Agriculture (under the Ministry of Agriculture and Farmers’ Welfare) has also been slashed by nearly 7 per cent or Rs 8,469 crore to Rs 115,531 crore from Rs 124,000 crore in the current fiscal.

One of the highlights of the Budget has been the increase in agri credit to the highest ever Rs 20 lakh crore for FY24, a five-fold increase in as many years, and up from Rs 18.5 lakh crore target for the current fiscal. The government typically increases the farm credit targets every year to support the agriculture sector, which remains one of the biggest employers in the economy. It claims to provide “hassle-free” credit at competitive interest rates, but it is left to the banks to dole out the money, with repayments often missing deadlines.

There is a Kisan Credit Card (KCC) Scheme, which provides credit at any time, and Modified Interest Subvention Scheme, which provides short-term agricultural loans up to Rs 3 lakh at subsidised interest rates. KCC have been issued to 3.89 crore eligible farmers with a limit of Rs 4,51,672 crore as on December 2022.

The Committee on Doubling Farmers' Income, set up under the Department of Rural Development, had identified several areas for doubling farmers’ income. These include: improvement in crop and livestock productivity, diversification towards higher value crops, better resource efficiency, enhanced cropping intensity, improvement in real prices received by farmers, and shift from farm to non-farm occupations as being significant sources of growth.

Several policy measures, such as MSP to secure the price at one-and-a-half times the all-India weighted average cost of production, schemes, and price measures to focus on high value-added crops, such as oilseeds, incentives for crop diversification through price policy measures, improvements in agricultural marketing, and by enhancing resource use efficiency, etc. have already been adopted by the government.

Also, while India has been witnessing record foodgrain production for successive years, climate change has begun to adversely affect agriculture. The Economic Survey released on January 31 points out that in 2022, an early heatwave adversely affected wheat production and a decline in the sown area for paddy cultivation (3.8 lakh hectares less in Kharif 2022-23 vs 2021-22) due to monsoon vagaries. While the Rabi paddy sowing has grown, increasing climate action poses perhaps the biggest risk to farmers’ incomes.

Meanwhile, one of the new schemes announced is an Agriculture Accelerator Fund to encourage agri start-ups by young entrepreneurs in rural areas. This fund will aim at bringing in innovative and affordable solutions for challenges faced by farmers. It will also bring in modern technologies to transform agricultural practices, and increase productivity and profitability.

Shashi Kant Singh, Executive Director - Agriculture and Natural Resources, EY, said that the Union Budget is incentivising a forward-looking vision for agriculture. “Focus on accelerator funds for agri start-ups, higher agri credit allocation, making India a global hub for millets, along with digital and functional rejuvenation of PACS (FULL FORM, PLEASE) will have a long-lasting impact on the sector. A national agri stack, built as a public good for effective decision-making, and farm advisory are commendable initiatives, which provide the much-needed thrust to the Indian agricultural sector,” he said.

FICCI President Shubrakant Panda said that promoting a cooperative-based economic development model for farmers “is a practical move. The plan to set up a decentralised storage capacity is encouraging for farmers as it is likely to lead to better price realisations”.

Among the other new announcements in the Budget is making India a global hub for millets by setting up a Centre of Excellence (CoE) at the Indian Institute of Millet Research, Hyderabad, for sharing best practices, research and technologies at the international level. Also, a new sub-scheme, PM Matsya Sampada Yojana, will be launched with targeted investment of Rs 6,000 crore to further enable activities of fishermen, fish vendors, and micro and small enterprises, improve value chain efficiencies and expand the market.

The FM has also said that a digital public infrastructure for agriculture will be built as an open source, open standard, and interoperable public good. This will enable inclusive, farmer-centric solutions through relevant information services for crop planning and health, improved access to farm inputs, credit, and insurance, help for crop estimation, market intelligence, and support for growth of agri-tech industry and start-ups.

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