Union Budget 2025 | Economic Survey pitches for policy shift to cut cereal output, boost pulses, edible oils

New Delhi: The pre-budget document for the 2024-25 fiscal has suggested policy reforms to discourage overproduction of cereals while boosting output of pulses and edible oils, which the country currently imports to meet domestic shortages.

The Economic Survey 2024-25, tabled in Parliament on Friday, stressed that India's agriculture sector has "significant untapped growth potential" despite various growth initiatives.

Farmers must be allowed to receive unimpeded price signals from the market, with separate mechanisms to protect vulnerable households, it added.

The document outlined three key policy shifts needed - establishing market mechanisms for price risk hedging, preventing excessive fertiliser use, and discouraging production of water and power-intensive crops that are already in surplus.

"These policy shifts will help lift agricultural productivity in the economy by boosting land and labour productivity in the sector," the survey said.

Stating that India faces a persistent deficit in the production of pulses and oilseeds, the document said the slower growth rate of oilseeds at 1.9 per cent raises concerns, especially considering India’s heavy reliance on imports to satisfy domestic edible oil demands.

To address this, the document suggested focused research to develop climate-resilient crop varieties, enhancing yield and reducing crop damage. Efforts to expand the area under pulses in rice-fallow regions are likely to help.

It also called for the promotion of extension activities and training for farmers on the best practices, the use of high-yield and disease-resistant seed varieties, and targeted interventions to improve agricultural practices in the major growing regions for pulses and oilseeds.

It stressed the judicious use of fertilisers considering soil degradation, particularly the decline in organic carbon content, poses a significant challenge to Indian agriculture.

The agriculture sector growth averaged 5 per cent annually during FY17-FY23, showing resilience despite challenges.

In Q2 FY25, the sector grew 3.5 per cent, recovering from growth rates of 0.4-2.0 per cent in the previous four quarters.

The sector contributes approximately 16 per cent to GDP and supports about 46.1 per cent of the population, as per FY24 provisional estimates at current prices.

The document emphasized the growing importance of allied sectors like animal husbandry, dairying and fisheries for income diversification.

"Climate variability can present significant challenges; however, farmers with diverse income streams are better positioned to navigate these uncertainties," it said.

Allied activities like animal husbandry, fisheries or agroforestry, can enable the farmers to mitigate the risks effectively.

The document emphasised the growing importance of allied sectors like animal husbandry, dairying and fisheries for income diversification.

However, it flagged challenges like climate change and water scarcity that require targeted interventions.

Digital technology adoption and improved market infrastructure through platforms like e-NAM were highlighted as critical focus areas.

Government schemes have shown a positive impact, with over 11 crore farmers benefiting from PM-KISAN and 23.61 lakh farmers enrolling under the PMKMY pension scheme as of October 31, 2024.

The report also stressed the need for private sector investment to support small farmers and modernise food grain storage systems, particularly in remote and hilly areas.

Union Budget 2025 | Nirmala Sitharaman, who continues to be Finance Minister, will present her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', reports suggest there might be a tax relief for those making up to Rs 15 lakh per year. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.