The agriculture sector has been contributing to about 18-20% of the Indian GDP. Over 14 crore farmers, largely marginal and small, are involved in related activity. Notably, it has been estimated that the livelihood of over 50% of the population (largely rural poor) is inter-twined with the sector. Accordingly, the government has been providing a priority support to the sector as well as complementary sectors and sub-sectors.
Budget 2021-22 had allotted over 14% of outlay towards related ministries and programmes, particularly towards the Public Distribution System and Minimum Support Price, fertiliser subsidy as well as a range of programmes aimed at enhancing farmer incomes and strengthening and upgrading value chains.
Today, the country is the global leader in production of several agri and allied sector commodities and value-added products. Nevertheless, the sector has been characterised by several constraints that reflect the scope for interventions on various fronts. These include: exploiting scope for global market access given potential; crop diversification towards high-income generating crops including horticulture; enhanced adoption of GAP and farm mechanisation; use of digi-tech in agriculture; greater focus on climate resilient agriculture; encouraging aggregation of farmers into more viable producer organisations; reduce wastage and enhance value-addition through development of infrastructure in the phase of post-harvest, processing as well as logistics infrastructure; enabling enhanced access to necessary credit.
In this context, the budgetary announcements continue with the focus accorded in the previous budget and are much in sync with the needs of the sector:
Price support
• The procurement of wheat in Rabi 2021-22 and the estimated procurement of paddy in Kharif 2021-22 will benefit 163 lakh farmers. Basically, INR 2.37 lakh crore will be the direct benefit transfer value of MSP into the farmer accounts.
Climate resilient agriculture
• Chemical-free natural farming is to be promoted throughout the country, with a focus on farmers' land in 5-km wide corridors along the River Ganga, in the first stage.
• States will be encouraged to revise the syllabi of agricultural universities to meet the needs of natural, zero-budget and organic farming practices, modern-day agriculture and value addition.
• 5-7% biomass pellets will be co-fired in thermal power plants resulting in CO2 savings of 38 MMT annually. This is expected to also provide additional income to farmers and job opportunities to locals and help avoid stubble burning in agriculture fields.
Crop diversification with focus on value-addition and nutrition
• 2023 has been announced as the International Year of Millets. Support is to be provided towards post-harvest and value addition infrastructure, enhancing domestic consumption, and for branding millet products nationally and internationally.
• For farmers to adopt suitable varieties of fruits and vegetables, and to use appropriate production and harvesting techniques, the government will provide a comprehensive package with participation of state governments.
Pro-poor focus and balanced regional development
• Continued focus on initiatives for development of farmers and women. Focus will also be on market led production for farmers and economic empowerment through livelihood promotion of women and FPOs.
• Thrust on development of the North-East, border villages as well as aspirational districts.
Competitive import substitution
• To reduce the dependence on import of oilseeds, a comprehensive scheme to enhance domestic production of oilseeds is to be implemented.
Farm extension and digi-tech services
• Facilitate delivery of digital and hi-tech services to farmers with involvement of public sector research and extension institutions along with private players. A related scheme in PPP mode is to be launched.
• Use of ‘Kisan Drones' is to be promoted for crop assessment and spraying of insecticides and nutrients.
• Digitisation of farm records is to be accelerated.
• A fund with blended capital, will be facilitated through NABARD. This is to finance start-ups for agriculture & rural enterprise, relevant for the farm value chain. The activities for the start-ups will also support FPOs, facilitate machinery for farmers on rental basis at farm level, and also technology including IT-based support.
Fiscal incentives
Presently, cooperative societies are required to pay a minimum alternate tax at the rate of 18.5%. However, companies pay only at the rate of 15%. To provide a level playing field, the rate for cooperative societies is to also be reduced to 15%.
Surcharge on co-operative societies will also be reduced from the present 12% to 7% for those with total income of more than INR 1 crore and up to INR 10 crore. This would help in enhancing the income of cooperative societies and its members who are mostly from rural and farming communities.
Many of the other budgetary pronouncements also complement those related to agriculture such as Gati Shakti related infrastructure. The related investments including in multi-model logistics parks and cargo terminals will facilitate the move towards a single domestic market for agro commodities, as well as global market connectivity. The government's focus on the agriculture and allied activity value-chain is most comprehensive and reiterates its focus on evolving global competitiveness for evacuation of marketable surplus, even while addressing the needs of those at the bottom of the pyramid.
(Disclaimer: These are the personal opinions of the author.)
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