Agriculture budget in times of shrinking farmland

The agriculture budget planned by Chief Minister B S Yeddyurappa is designed to exhibit the government’s concern for the farm sector. But the budget comes at a time when land for agriculture is shrinking following sanctioning of vast acres in rural areas to industries.

The phrase –– agriculture budget –– no doubt sounds impressive. Enquiries with officials revealed that there was no indication of a special allocation for the sector as such. Going by the statements already made by ministers in the Yeddyurappa cabinet, the agriculture budget will only be a bunch of allocations pertaining to agriculture and its allied areas.

In other words programmes and new schemes of agriculture, horticulture, sericulture, animal husbandry, sugar, fisheries and agriculture marketing departments will form the agriculture budget.

Besides, the departments of energy, cooperation and rural development and panchayat raj also figure in the special document partially.

Over the years, contribution of agriculture and allied sectors to the gross state domestic product has been declining. In 1980-81 it was 43 per cent and has come down to 26 pc in 2001-02. Since 2007-08, the sector’s contribution has remained at 16.98 pc. This trend calls for more more focus by the State government on the this sector.

A separate budget for agriculture has been a long pending demand of farmers in the state. Leaders of Rajya Raitha Sangha for decades have demanded separate allocation of funds for this sector and maintained that it should be in the form of Railway budget presented by the Centre every year.

The government might have been sending farmers on foreign junkets. But that doesn’t mean that farming community is pleased with whatever the government is doing.

Farmers have been questioning the manner in which the government is acquiring land for industrial projects and have agitated in many districts. The government often has said it is not forcibly acquiring land. At the same time, there is no explanation of its efforts in making farmers hold onto their land.

The government has also announced an Agriculture Investment Summit in June this year, on the lines of Global Investors’ Meet held last year. The proposed agriculture budget is expected to offer an introduction to the meet.

By and large, the new initiatives in the budget are already made known to the public. The Chief Minister himself has said he will announce agriculture loans at one per cent interest.

Yeddyurappa, soon after he came to power in 2008, reduced interest rate on farm loans through cooperative banks from four to three per cent. Such practice began in 2004, when the then government announced farm loans at six per cent interest. Later in 2006, the interest rate was reduced to four per cent.

Since 2008 as much as Rs 10,773.35 crore has been disbursed as farm loan at three per cent interest rate. The government reimburses an average of 7.5 per cent of differential interest to the cooperative societies upon the loan recovered. In the last three years the government has reimbursed Rs 332.05 crore.

If the interest rate is further reduced, naturally it will increase burden on the state exchequer.

The government will have to reimburse differential interest at the rate of 9.5 pc. Because the reduced interest rate may see more beneficiaries, prompting the government reimburse more than what it did in the previous years.

The Department of Planning had allocated Rs 127 crore under this scheme for the year 2010-11.

Going by the previous budgets, it is obvious that the Organic Mission will continue to get crores of rupees. Yeddyurappa may bring in more districts under the Bhoo Chetana scheme, which aims at increasing fertility of soil. The government is also contemplating a scheme to adopt agriculture land belonging to people of SC/STs, who own less than a hectare of land.


The Chief Minister may formally announce the scheme in the budget and may name it after former Prime Minister Atal Behari Vajapayee.

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