Budget 2024-25 focuses on stepping up farm and rural incomes

Mukherjea expects more tangible steps like PLI, FAME etc., which will allow India to step up and fill the void in the global market created by the economic challenges being faced China.

The Interim Budget 2024-25 continued with its focus on the farm sector with an allocation of  Rs 1,27,469 crore for the Ministry of Agriculture, which makes for about 2 percent of the Union Budget.

The budget was conservative in its expenditure allocations for key schemes but outlined its intent to implement measures to increase the productivity of high-yield crops - an issue that has plagued Indian agriculture.

Allocation for the PM Kisan Samman scheme remained unchanged at Rs 60,000 crore for the fiscal year 2025, for Pradhan Mantri Krishi Sinchai, the allocation has been raised marginally to Rs 11,391 crore from the revised estimate of Rs 8,781 crore for FY 24.

Finance Minister Nirmala Sitharaman referred to the farmers as ‘Annadata’ under the PM-Kisan Samman Yojana. In her budget speech on February 1, she noted that under the PM-Kisan Samman Yojana, direct financial assistance is provided to 11.8 crore workers. She also expressed the government's intent to raise the productivity of high-yield variety crops.

According to an analysis by PRS legislative research, fund utilisation by the ministry has been above 70 percent in the last decade. Allocation to the ministry increased by 141 percent in 2019-20 on account of PM Kisan.

Nearly 48 percent of the allocation to the ministry in 2023-24 was towards PM Kisan. The scheme became operational on December 1, 2018. It provides income support of Rs 6,000 per year in three equal instalments to all land-holding farmer families. According to the guidelines, state governments and UT administrations identify the farmer families. In 2021-22, Rs 66,825 crore was spent on PM-Kisan and according to the revised estimates, Rs 60,000 crore is estimated to have been spent on the scheme, lower than the budget estimates, in year at Rs 68,000 crore.

Challenges for the year ahead

Indian farm sector clocked a growth rate of 4.4 percent in the past six years (2017-18 to 2022-23) but the first advance estimates for  FY 24 indicate a seven-year low growth of 1.8 percent, aggravated by poor monsoon (El-Nino effect) in 2023. Analysts predict that production of major Kharif crops could witness a decline in 2024, allied activities such as livestock, fishing and aquaculture are also likely to decline. Rabi sowing has been muted as on December 1, while sowing of key Rabi crops such as wheat, pulses, oilseeds and coarse cereals had declined to 434.66 lakh hectares, around 67 percent of the normal area.

Promise of doubling farmer incomes

Prime Minister Narendra Modi had promised to double farmer incomes by 2022 and a committee was formed to suggest a blueprint. The committee recommended that the cost of production be reduced, ensuring remunerative prices for agricultural produce. A slew of schemes have since been designed to buffer farmer incomes. The schemes include PM Kisan and PM Fasal Bima Yojana. As of available data, the average monthly income of agricultural households was Rs 2,115 in 2002-03 and in 2018-2019, it reached Rs 10,218. This is according to the MOSPI Committee on Doubling Farmers Income 2017.

The government has taken steps to improve remunerative prices for farmers, including procuring certain crops at minimum support prices. The MSP for wheat in 2023-24 was fixed at Rs 2,125 per quintal, more than double the cost of production, while for paddy, the MSP for 2022-23 was fixed at Rs 2,040 per quintal with the cost of cultivation pegged at Rs 1,360. The ministry had adopted the recommendation of the committee and the MSP for all Kharif and Rabi crops was increased.