Union Budget 2022 | Farm sector hails generous MSP, fertiliser sops, vows of doubling income

Women farmers work in a paddy field. (Representative image: Reuters)

Record payment to farmers by buying wheat and rice at higher MSP this fiscal, substantially enhanced fertiliser subsidy and cash support under PM-KISAN – these are some of the steps Finance Minister Nirmala Sitharaman counted out today, when she was asked if the government’s promise of doubling farmers’ income by 2022 has been fulfilled.

In her Budget speech, the FM said that the procurement of wheat in Rabi 2021-22 and an estimated procurement of paddy in Kharif 2021-22 will cover 1,208 lakh metric tonnes of grains from 163 lakh farmers. This amounts to Rs 2.37 lakh crore direct payment of MSP value to the farmers’ accounts.

The allocation for PM-KISAN cash support scheme has been increased to Rs 68,000 crore in FY23 from Rs 65,000 crore this fiscal. Under the Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan Yojana), small and marginal farmers are given up to Rs 6,000 per year in three installments as minimum income support.

Procurement of wheat in Rabi season 2021-22 and the estimated procurement of paddy in Kharif season 2021-22 will cover 1208 lakh metric tonnes of wheat & paddy from 163 lakh farmers and Rs 2.37 lakh crores will be the direct payment of MSP value to their accounts. A fund raised under the co-investment model will be facilitated through NABARD to finance startups for agriculture and rural enterprise relevant for farm produce value chain.

A significant increase has been seen in fertiliser subsidy during the current fiscal year, with BE of Rs 79,530 crore nearly doubling to Rs 140,122 crore at the RE stage. The FM said this enhancement was done to protect the farmers from international price fluctuations and for FY23, the fertiliser subsidy allocation has been raised by nearly a third to Rs 105,222 crore.

While Sitharaman said that all these steps will increase the farmers’ income “substantially”, there is no clarity about the desired income level which would have proved that the incomes did actually double.

The promise of doubling farmers’ income was made in 2016. Thereafter, a committee set up to find out how to go about this objective spoke about increased focus on non-farming activities to increase income of farming households. In 2019, an empowered body was set up to monitor and review the progress of the recommendations of this panel.

The committee had identified sources of income growth like improvement in crop and livestock productivity, diversification towards high-value crop and a shift from farm to non-farm occupations.

As per the last available data, the average income of farming households rose to Rs 10,218 per month in the agricultural year (July-June) 2018-19, an almost 60 percent increase over 2012-13. But the fine print of the government’s findings (contained in the latest Situation Assessment Survey) indicates mounting income stress for farmers during these six years.

For one, the farmers are now earning more from wages than from crop cultivation, indicating that cultivation is becoming less lucrative. Then, nearly every second farming household remained indebted in 2018-19 (much like 2012-13) but the indebtedness or amount owed has increased significantly.

Also, an overwhelming majority of farmers continue to hold minuscule land, with only 0.2 percent of rural households owning more than 10 hectares in AY 2018-19.

The economic survey has pointed out that while the land holdings of farmers have become more fragmented in 2018-19 than what it was six years earlier, the increasing share of non-cultivation activities in their overall income shows that the focus should be on sectors such as dairy, fishing and animal husbandry. Essentially, the farmers need to look outside the core activity of farming to increase their earnings.

Chemical-free natural farming will be promoted throughout the country with a focus on farmers’ land in the five km wide corridors.

Farming distress, however, continues to be visible in suicides and also in the recent protests by farmer unions, which led to the repeal of the farm laws. In a reply to another question, Sitharaman pointed to the Opposition-ruled Maharashtra and continued suicides by cotton farmers in the state. She said that while the Centre is always targeted for farmers’ plight, questions need to be raised to state governments too about measures they have taken to help them.

In her Budget speech, the finance minister not spoke of generous MSP pay-outs and other support schemes for farmers. She also outlined initiatives to enable technology interventions in agriculture.

“The overall thrust of the Union Budget seems to be towards building a more robust and resilient agriculture sector. This is sought to be achieved through modern technological interventions and incentivising investments. A new focus is on digital and other cutting-edge technologies, such as drones, delivered through the agency of new-age agritech start-ups and other private partners,” Pravesh Sharma, Director at Samunnati Agro, said.