Budget 2018 Agriculture sector highlights
Agri Politics Cultivate articles

Agriculture in Budget 2018 – ‘Wows’ and ‘Hiccups’

Narendra Modi Government’s last full budget has focussed a lot on long term development agenda rather than fanfare or populist announcements in Agricultural sector. It can rightly be called as a continuation of four year reform agenda of incumbent Government that focuses to double farmers’ income by 2022 when India celebrates its 75th year of independence. Let us now look into the ‘hiccups‘ and ‘wows‘ for Agriculture in Budget 2018.

For decades, country’s agriculture policy and programme had remained production centric…. Our emphasis is on generating higher incomes for farmers. We consider agriculture as an enterprise…’ started Finance Minister Arun Jaitley as an opening remark on ‘Agriculture and Rural Economy’ episode. The important announcement in Budget 2018 that kept his words is decision of Government to keep MSP (Minimum Support Price) for the all unannounced crops of kharif at least at one and half times of their production cost. The ‘Wow‘ moment continues ‘NITI Aayog in consultation with Central and State Governments, will put in place a fool-proof mechanism so that farmers will get adequate price for their produce.’ said Finance Minister. Further He put the onus upon Government to purchase either at MSP or work in a manner to provide MSP for the farmers through some other mechanism. 

Budget 2018 Agriculture sector highlights

Better Prices to Double Income

Besides MSP, Budget also focussed on various strategies for Price realisation. First among them is to create an institutional mechanism, with participation of all concerned Ministries, to develop appropriate policies and practices for price and demand forecast, export – import measures, use of futures and options market and so on. Second, strengthening of e-NAM (virtual market) and to expand coverage of e-NAM to APMCs (local regulated Mandi). Third, setting up of Agri-Market Infrastructure Fund with a corpus of Rs 2000 crore for developing and upgrading agricultural marketing infrastructure.

GrAMs for small and Marginal Farmers

The main drawback for e-NAM is the accessibility and little quantity. To address that, budget lays down a plan to convert rural haats to Gramin Agriculture Markets (GrAMs) with necessary physical infrastructure. ‘These GrAMs, electronically linked to e-NAM and exempted from regulations of APMCs, will provide farmers facility to make direct sale to consumers and bulk purchasers.’ said Jaitley. He also put forth that all weather rural road scheme PM Gram Sadak Yojna (Phase III) will link these haats to habitations

Cluster approach

Depending too much on Agricultural crops alone doesn’t helps doubling Farm income. Hope Jaitley and his team understood that and budget widens the scope of Agriculture. It calls for developing cluster based model in a scientific manner for identified agriculture produces in each district, growing horticulture crops in clusters bring advantages of scales of operations in partnership with Food Processing and Commerce Ministry, Encouraging Organic farming by Farmer Producer Organizations (FPOs) and Village Producers’ Organizations (VPOs) in large clusters of 1000 hectares each and Encouragement of Women Self Help Groups (SHGs) to take up organic agriculture in clusters under National Rural Livelihood Programme are noteworthy. Hope this promotion of cluster based approach will indirectly benefits agri based industries and corporates as bulk purchases comes handy.

Food processing sector – The gainer

World Food Expo, Food parks, friendly FDI policy has helped Food processing sector all these days. The sector is ‘Growing at an average rate of 8 per cent per annum’ claims Jaitley. Hoping to sustain, that allocation of Ministry of Food Processing is being doubled from Rs 715 crore in 2017-18 to Rs 1400 crore. “Thank you, @arunjaitley Ji, for Doubling the Budget Allocation for Ministry Of Food Processing. This will immensely benefit farmers in availing various food processing related schemes and increasing their income. Will also generate millions of new jobs” Ms. Badal, Food Processing Minister tweeted.

Wow‘ moment continues for Ms. Badal, with brand new ‘Operation Greens‘. The Amul model led Operation Flood that made India a leading diary producer would be replicated in ‘Operation Greens’. ‘Operation Greens shall promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management. ‘I propose to allocate a sum of Rs 500 crore for this purpose’ said Finance Minister. If you wonder that extra ‘s’ in ‘Greens’ denote some ‘loose leaf’ vegetables then this is ‘wow‘ moment for your English teacher.

Allied Agri gets focus

Budget outlines setting up a Fisheries and Aquaculture Infrastructure Development Fund (FAIDF) for fisheries sector and an Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirement of animal husbandry sector that expands the scope of Dairy Processing Infrastructure Development Fund (DPIDF) announced in Last Budget session. Besides that it extends the facility of Kisan Credit Cards to fisheries and animal husbandry farmers to help them meet their working capital needs. In the area of Agroforestry, the budget announces funds for a Re-structured National Bamboo Mission with an outlay of Rs 1290 crore to promote bamboo sector. Recently bamboo grown outside forest areas had been removed from the definition of trees. 

Further, it touched upon worries of lessee farmer to access credit. It envisages NITI Aayog with state Governments to evolve a suitable mechanism to enable access of lessee cultivators to credit without compromising the rights of the land owners. Jaitley also pointed out that ‘lessee cultivators are not able to avail crop loans. Consequently, a significant proportion of arable land remains fallow and tenant cultivators are forced to secure credit from usurious money lenders.

So, budget this year a holistic one with special attention to the ancillary sector including infrastructure which will help the overall consumer and farm sector.  It clearly revolves around Government commitment to double farmers income.

Agriculture in Budget 2018
Credits: PIB

Now ‘hiccups’

Economic Survey 2017-18 has mentioned Climate change a threat to doubling farmers income in full chapter. But budget didn’t consider that, be it in infrastructure lacuna for speedy compensation or increase in Agri R&D spending. Again success of Rural haats (GrAMs) rest with State Government as Agriculture Marketing falls under state list. Also no hint to bring agricultural marketing to concurrent list as recommended by Ashok Dalwai committee (in draft report of doubling farmers income). 

There is no clarity over MSP hike. The M.S. Swaminathan committee report had recommended a MSP of 50 percent profits above the cost of production classified as ‘C2’ or Comprehensive cost of production which includes imputed rent and interest on owned land and capital. By announcing hike of one and half times of the production cost it doesn’t mean the same formula recommended by M.S. Swaminathan headed National Commission on Farmers.

As we are leading in malnutrition ranks, Processing industries must be reoriented towards domestic consumption which is more needed, rather than ‘export oriented’ promotion. On employment generation the budget needs to be applauded but Nutritional security must also be considered. So, low scale value addition and ‘non export’ processing industries must also be subsidized, supported or atleast guarded from domestic taxation (GST). Regarding ‘Operation Greens’ we have to wait and watch whether incidents of dumping of potatoes and tomatoes in streets continues due to poor price. After all it’s cheers for Farmers and would it be a ‘Wow‘ moment for BJP in next Lok shaba elections in rural pocket ? Promises must turn into reality. Again a Hiccup.

Also Look into: What Does Union Budget ’18 Speak For Environment? (Click here)