What Interim Budget 2024 holds in store for the agriculture sector?

Experts expect an increase in institutional credit to the agriculture sector in the interim Budget, as was seen in last year’s Budget. However, it is not clear how marginal farmers will benefit from it. Hence some announcements specifically benefiting the marginal are also expected.

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Some analysts are of the view that the money transferred under the government’s flagship direct benefit transfer scheme — Pradhan Mantri Kisan Samman Nidhi — will increase by 50 percent to Rs 9000 per year.
The agriculture sector in the Union Budget 2023-24 saw a total allocation of Rs 1.25 lakh crore or a 2.78 percent share. This share was 3.36 percent in the 2022-23 Union Budget and 3.78 percent in the year before that. This shows a declining trend in percentage allocation to the agriculture sector.
When it comes to promoting natural farming some budget allocation on research and development is desired by the industry.

Says Satyajit Hange, Co-Founding Farmer, Two Brother Organic Farms, “Organic farmers anticipate that the budget will prioritise sustainable agriculture, offer incentives for organic certification, allocate funds for organic research, and support market access for organic products, while addressing environmental and biodiversity concerns.”

With an aim to produce chemical and fertiliser-free food grains and other crops, the promotion of natural farming started in the Union budget 2022-23. It is widely believed that organic farming and natural farming help to reduce environmental pollution and improve soil health.

According to the Economics Survey 2023-24, during 2021-22 around 59.1 lakh hector areas were cultivated under organic farming. A substantial push from the government side is required in terms of awareness and incentives if the gross area cultivated under organic farming is to be increased, experts believe.

Neetika Suryawanshi, CFO, Pakka Ltd (a regenerative agri-abased solutions providing company), comments “Government support, encompassing infrastructure development, tax incentives, and funding for research & development, is crucial. Substantial investments in R&D are imperative to enhance technical skills, meet stringent quality standards, and broaden capabilities across diverse sectors.”

The industry expects the government to allocate some funds on R&D and spread awareness of natural farming.

According to the recent report by Jefferies on ITC, agri revenues declined 2 percent year-on-year (YoY) due to restrictions on agri exports. this was the case with other firms as well dealing in agri-commodities. Agriculture sector stocks on average delivered 33.49 percent returns since February 1, 2022.

At least three stocks from the agriculture sector have managed to more than double. Tarai Foods, Agri-Tech (India) Ltd and Indo US Biotech Ltd are among the little-known agriculture sector stocks that gained up to 189 percent since the previous budget.

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