Indian Agriculture:Latest Concerns
The agriculture growth is expected at 4.1% following normal monsoon in 2016. This comes after dismal 1.2% increase in 2015-16, and a contraction of 0.2% in the year before.
The Union budget gave a push to market reforms in agriculture, increased funding for crop insurance and set a higher target for farm credit. The move is to tackle distress in rural India.
NABARD, the apex rural bank, has been charged with implementing schemes to improve access to irrigation and develop the dairy sector.
However, the government’s goal of doubling farm incomes in five years has still not been clarified regarding how it is expected to be done at a time when farm incomes have plunged due to lower crop prices due to demonetisation.
Agriculture in Budget
The ‘Transform, Energise and Clean India’ TEC agenda of budget may seem like a new term but is, in fact, a continuation of various earlier initiatives of the Government.
As per the Finance Minister, the budget for 2017-18 is on 10 important sectors, including farmers, infrastructure, digital economy and tax administration to transform, energise and clean India.
Total allocation of Rs. 1.87 lakh crore for rural, agri and allied sectors is a welcome increase of 24% over the previous year.
Along with it, the focus on development of rural infrastructure in the form of roads and a higher allocation for housing will energise the rural economy.
NABARD sponsored research shows that rural roads can be virtually compared with the nerve system of a nation which enable building a healthy and equitable society.
Though the overarching theme of doubling the incomes of farmers in five years involves lot of policy decisions and many pre-requirements, the budget has best tried to address some of them at a time.
The three major aspirations of the Indian farmer are
Improving irrigation efficiency is critical for agriculture since India only has 2.4% of the world’s total geographical area, an 18% of the world’s population, but only 4% of the world’s total fresh water resources
To increase focus on irrigation, NABARD has been provided with an additional Rs. 20,000 crore under the Long Term Irrigation Fund (LTIF).
Alongside, a separate allocation of Rs. 5,000 crore has been made to push the micro irrigation agenda to achieve the goal, ‘per drop more crop’.
The Pradhan Mantri Fasal Bima Yojana has been provided an enhanced allocation of Rs. 9000 crore.
The scheme will target to cover 40% of the crop area next year and 50% year after.
As per the current scheme, the government had allotted Rs 5,500 crore under crop insurance for both Rabi and Kharif products.
Under the Fasal Bima Yojana, farmer’s contribution towards premium has been decreased to as low as 2% to be paid by farmers for kharif crops, and 1.5% for rabi crops making it possible to include the small and medium farmers to avail crop insurance.
GIC and foreign reinsurers receive significant share of premium from crop insurance in India. Pre-agreed formulas are applied to determine sum insured and the related loss in each season.
Continued income during lean season
For a non-farming period or lean season, the animal husbandry sector has been given encouragement.
NABARD has also opined that development of dairy is critical to bringing sustainability to agriculture.
There are numerous examples where farmers have shown their ability to manage inclement weather and market vagaries by investing in dairy as an alternate mode of income.
The dairy cooperative network includes 254 cooperative milk processing units, 177 milk unions covering 346 districts and over 1,55,634 village-level societies.
Till March 2013, about 15.1 million farmers have been brought under the ambit of village level dairy corporative societies. Yet, about 80% of this milk is being collected and distributed by unorganised sector in the form of ‘doodhiyas’, local sweet shops.
In Budget 2017-18, Livestock got a boost with the proposal for a Dairy Processing Infrastructure Fund of Rs. 2000 crore which would grow to Rs. 8000 crore in three years.
This allocation will allow NABARD to finance modernisation of milk processing units, encourage new bulk-milk cooling units, improve milk production and increasing modernisation of breeding facilities.
Focus on soil
The Budget highlights the importance of soil health which is critical to farm production and productivity.
Agriculture in many parts of India has been affected and soil has been impaired due to wrong usage of fertiliser.
The proposal to create minilabs for soil testing continues the existing drive on Soil Health Cards.
The central government will urge state governments to delist perishables such as vegetables and fruits from Agriculture Produce Marketing Committees (APMCs) via amending Essential Commodities Act and allow farmers to sell such items directly to consumers to get a better price.
Each e-NAM will be provided with Rs. 75 lakhs for cleaning and packaging of farmer produce.
Also, additional 335 e-NAMs will be added to the 250 created in 2016-17.
In an innovative move, the Budget seeks to integrate e-NAMs with commodity exchanges and enact a model law on contract farming.
This model law will help the farmers get better value for their produce.
Off farm sector boost
The growth of rural sector also depends upon the off-farm sector development which includes all economic activities such as household and non-household manufacturing, handicrafts, processing, repairs, construction, transport, trade, communication, community and personal services in rural areas.
To boost this sector of rural economy, important proposals for skill building, developing over 600 district Prime Minister’s Kaushal Kendras, India International Skill Kendras and SANKALP (Skill Acquisition and Knowledge Awareness for Livelihood promotion Programme) are being promoted.
The budget has set a target for disbursing Rs. 10 lakh crore ground level farm credit, up from Rs. 9 lakh crore in 2016-17.
The challenge lies in the fact that more equitable spread of this agri credit is required as 40% of agricultural households still do not have access to banks. Hence, the credit flow is targeted to the underserved area.
The banking sector has been demarcated its role for inducing more financial inclusion.
To support it, there has been increase in Financial Inclusion Fund which will allow for more thrust on higher financial literacy and support the digitisation initiatives.
Additionally, Rs. 1900 crore for three years are provided to Primary Agricultural Cooperative Societies, the lowest tier of India’s rural cooperative credit structure, to bring digital banking to rural doorstep.
Computerisation of PACS will bring in more transparency in their working.
Farmers are always hopeful lookind towards sky for good rain and looking towards government for giving them fair share according to their contribution in Indian economy.But often their hopes are belied. A start is needed to make the farmer feel that he is not ignored.