Union Budget 2022 and agriculture: Not much to cheer

Rural areas, agriculture and allied activities received warm words underscored by lofty statements of vision and intent from the finance minister. However, the FM has been parsimonious in allocations, although governments rarely have total budgetary allocations for the sector. An aspect of budget speeches and allocations is that once the event fades from public memory, few look into the details of the amounts disbursed and spent. More worryingly, this year's promising headlines do not inspire enthusiasm since the statements of intent regarding high profile investments, like river-linking, are bound to run into a wall of bureaucracy and inter-state rights. Thus, interlinking rivers and other programmes are unlikely to witness large-scale spending in the next financial year.

Cut backs

A marked feature of Budget 2022 is the lack of enthusiasm towards allocations for agriculture and allied activities. The outlay of major schemes has witnessed a sharp cut back. The MGNREGS (rural employment guarantee scheme) is down from the actual of about Rs 1.1 lakh crore to the proposed Rs 73,000 crore. The National Health Mission, National Livelihoods Mission and others have seen minor changes, with several witnessing a cut. The total allocated to the Department of Agriculture and Farmers Welfare has increased from Rs 1.18 lakh crore to Rs 1.24 lakh crores. Of this, the lion's share of Rs 68,000 crores will be for PM-KISAN. Worryingly, there is no allocation for capital expenditure for even activities in agriculture, including agricultural research. The allocation for fertiliser subsidy has decreased from Rs 1.49 lakh crore in the current financial year to Rs 1.05 lakh crore - probably indicative of the lower outgo due to an increase in prices.

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A possible reason for lower allocations could be to do with revised estimates in 2021-22 had increased expenditure on areas that have a direct bearing on rural livelihoods and incomes - MNREGS, crops husbandry and warehousing - to Rs 1.4 lakh crore.

Risky bet

The government's approach seems akin to placing a risky bet on overall economic recovery increasing employment in rural areas. This is indicated by increased funding to rural roads, drinking water and other infrastructure projects like optical fibre connectivity and programmes for Scheduled Castes and Tribes. However, the problem with this approach is that the budgetary allocations are rarely utilised or even disbursed. The case of Jal Jeevan mission is illustrative. Last year, Rs 50,011 crore were allotted, but the actual spending was Rs 45,011 crore. The fate of many other departments has been worse.

The significant problem is that the Budget harps too much on an unknown distant future by creating a rosy picture while doing too little too late for the present. The claim that the Budget is for the next 25 years and the focus on technology solutions is an easy way to postpone taking hard decisions related to increasing public investments in agriculture. The government seems to be creating the perception that technology and electronic, inter-connected markets may be the panacea for India's entrenched problems, including market and capital access, low productivity, stagnant yields, and information asymmetry in a globalised world. Historically, such a focus has not ended well for the stakeholders since technology and markets have their own dynamics, including their possible exclusionary nature.

Missed bus

The result of the Budget is that it is likely to postpone the much-needed investments that would have laid the groundwork for a rural recovery. Promises for change in the distant future have to meet the immediate needs of the present: the promise of river linking in the future has to face the imminent danger of groundwater stress, the promise of electronic markets providing succour in future may cut little ice with farmers who face extreme volatility for crops at hand and those staring at lack of low-cost capital for their next season while the moneylender is at the door.

(S Ananth is an independent researcher and advocate based in Andhra Pradesh)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH

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