Riteshkumar Sahu
The budget allocation to agriculture and its allied field is very crucial for the country as agriculture sector engages almost 50 percent of the country's workforce and accounts for about 16 percent of India's gross domestic product (GDP).
Thus, the concerns of agriculture sector are high on the priority of the present Government to fight the ongoing agricultural crisis -- of farmer’s suicides, low remunerative prices of crops and uncertain claim settlements under crop insurance schemes.
To address all these critical issues, the government in the Interim Budget announced for 2019/20 just before the elections, had increased the budget allocated to the agricultural sector by a whopping 107 percent -- from Rs 67,800 crore in the 2018-19 revised budget estimates to Rs 1,40,764 crore.
However, this unprecedented rise in allocation is due to the implementation of Income Support Scheme (PSS) in the name of the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) under which, farmer families having cultivable land up to 2 hectares, will get direct income support of Rs 6,000 per year. This scheme will cost the government an annual expenditure of Rs 75,000 crore.
Apart from this, the government has taken a number of initiatives for the development of agriculture sector, remunerative returns for farmers’ produce and reducing the cost of production by initiating the schemes and budget allocation as shown in the below in the chart.
The budget allocation done earlier in the interim budget will continue which has aimed to boost economic status and empower farmers through providing them with income support to buy agricultural inputs, implementing crop insurance to protect farmers against crop loss, providing interest subsidies for short-term loans and effective execution of price support schemes to give fair price for farm produce.
Agriculture budget in the Modi 2.0 should aim to boost trade transparency, empower Farmer Producer Organizations (FPO) to hedge their exposure on Future Exchanges, MSP procurement from small and marginal farmers and rainwater harvesting needs immediate attention.
Thus, in the coming budget government need to allocate budget in the following to enhance farmer’s income:
> Government needs to alter policies regarding the functioning of APMC (Agricultural Produce Marketing Committee) and allocate more budget to make it more transparent by digitizing the physical trade happening at the market yard.
The physical market player having large trade volumes compulsorily linked through electronic- National Agriculture Market (e-NAM) for price transparencies.
> Budget need to allocate for registered FPOs wanted to hedge their positions on the futures commodities exchanges (NCDEX and MCX). Agri-exchanges facilitate physical deliveries of the Agri-commodities at the end of the expiry of contracts, complimenting agriculture trade and helps in price discoveries based on fundamentals like weather vulgarities, export-import demand, government policies, etc.
> Extra budget provisions needed to procure agri-commodities from the farmers who are major beneficiaries of the Income Support Scheme and help them realize MSP declared by the Government.
> Large budget requires for rainwater harvesting schemes, at a very large-scale, need to be implemented in the rural areas to recharge the groundwater levels in the area.
(The author is Research Analyst – Agri Commodities -Angel Broking at Angel Broking)
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