Budget 2024: What agriculture needs

The share of Gross Value Added (GVA) of agriculture and allied sectors in the economy was 20.3 percent and 19 percent.

The presentation of the interim budget on February 1, 2024, on the eve of Lok Sabha elections (in April-May 2024) should normally be a muted affair. But the precedent of the interim budget of 2019 has set a new benchmark when a much needed, but entirely new scheme of direct income support, PM Kisan Samman Nidhi, was not only announced but it was also made applicable from December 2018. The first PM-Kisan installment was disbursed to a large number of land holders before the 2019 elections. Should we expect a similar announcement this year?

During the pandemic years of 2020-21 and 2021-22, the share of Gross Value Added (GVA) of agriculture and allied sectors in the  economy was 20.3 percent and 19 percent, respectively. As the other sectors of economy bounced back, the share of agriculture came down to 18.3 percent in 2022-23. This is not bad news as the more productive sectors have staged a comeback. The income levels in these sectors are higher for their employees. Most agricultural land holdings are very small and those depending on agriculture earn only a subsistence income. Many small landholders depend on wages from other sectors of the economy for subsistence.

This being the situation of agriculture, the interim budget needs to provide a direction to the full budget which will be presented after the formation of a new Government.

Themes For Interim Budget

I think the interim budget should take into account three major themes.

First, it should be able to provide a roadmap for better paying employment opportunities so that some agricultural workers can move out and earn better income. This will require bold and imaginative thinking which is not based on any dogma.

Textiles, garments, leather, food processing, warehousing, cold chain infrastructure, hotels and tourism etc. can absorb some surplus workers who are today subsisting on very low incomes from agriculture. Some of these sectors contribute handsomely to India’s goods exports. There is a need to provide high quality infrastructure so that these industries are globally competitive.

The second priority within the agriculture sector should be to prevent the degradation of soil and water resources of India’s original green revolution regions in north-west – Punjab, Haryana, Western Uttar Pradesh, Uttarakhand. The ecological threat in these areas is well known not only to the Government but also to the farmers themselves.

But the policy support, administrative commitment and required funding has not been forthcoming to achieve any significant diversification from water guzzling crops. It would be naïve to expect Punjab and Haryana to find financial resources on their own to compensate farmers, at least for a couple of years, to reduce area under non-basmati paddy.

Haryana has been providing an incentive for diversification from paddy - Rs 2,400 per acre for maize and Rs 3,600 per acre for pulses. But due to the precarious financial situation of Punjab and different political parties ruling at the Centre, serious efforts have not even started preparing a credible roadmap for funding diversification. A central package is necessary for saving India’s most agriculturally aware state from an ecological disaster.

The third priority of the budget should be to support horticulture, livestock and fishery sectors as the dietary preferences are changing towards more nutritious and protein-rich food. An urgent need to check widespread malnutrition among the poor population can be achieved by increasing their consumption of proteins. About seventy percent of India’s population is non-vegetarian and meat is a cheap source of protein for them.

The policies and budget allocations should reflect the opportunities in the rural economy to increase productivity of these items. The marketing infrastructure for them needs large investment by the Government and private sector.

In the last ten years, the Government has taken a number of appreciable decisions to support the agriculture and allied sectors. Repeal of three farm laws was seen as a setback to the reforms of agricultural marketing. The momentum for reforms needs to be regained in tune with the ground realities in various states.

Siraj Hussain is a former Union Agriculture Secretary. Views are personal, and do not represent the stand of this publication.