Boost to farm sector after two years of drought

The Budget that was presented by the finance minister is to be analysed in the backdrop of the Economic Survey that preceded the Budget and the expectations different stake holders had about the Budget. On the performance of the agricultural sector, the Survey stressed on the declining growth in agriculture, owing to two consecutive drought years and decline in production.

 The agricultural sector’s ongoing performance struggles and the contemporary agrarian distress are causes of concern in terms of food and income security as well as rural poverty alleviation. 

The main reason for slow growth and underperformance of this sector is the declining public investment. The successive Budget allocations for agricultural sector were very often marginal. 

The pre-budget survey recommended that the transformation in agriculture has to be steered by expansion of irrigation coverage via efficient micro-irrigation technologies, cultivation of less water intensive crops, and revamp of research and extension services. 

 An impartial analysis of 2016-17 Budget reveals that while most of the existing provisions have been continued, a number of new initiatives have been taken by the finance minister for bringing in more investment in the farm sector promoting growth in key areas and farmer’s welfare. In his Budget speech, he emphasized the vital need for ensuring income security to the farmers who are striving to provide food security to the nation. The govt intends to double the incomes of farmers by 2020.

The 2016-17 Budget could be termed an agricultural budget since agriculture topped Arun Jaitely’s 9-point strategy to transform India. As outlined in the Budget speech, the strategy for the farm sector centers around optimal utilization of water resources, soil conservation, rationalization of fertilizer usage and an appropriate approach for farm to market planning. While Rs 35,984 crore was allocated for agriculture in the next financial year the outlay under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) Programme is being enhanced to Rs 38,500 crore. The proposal to introduce universal coverage of cooking gas is mainly intended to benefit the poor in the rural areas. The 2015-16 target of agricultural credit of Rs 8.5 lakh crore is now enhanced to Rs 9 lakh crore for 2016-17.

The proposed Soil Health Card Scheme and the Common E-Market Platform etc are expected to transform the rural sector’s performance ecosystem. The expectation to expand irrigation coverage via efficient micro- irrigation technologies could be realized by the dedicated fund worth Rs 20,000 earmarked in the budget for irrigation set up under National Agricultural Bank for Rural Development (NABARD). The finance minister also announced a Nabard managed crop insurance scheme with a nominal premium and high compensation in the event of a crop failure. The government, under the budgetary provisions plans to bring 5 lakh acres under organic farming over a period of three years. 

Though much emphasis is given to revive growth rate in the farm sector, strategies for increasing the yield and reducing water use didn’t get the importance they deserve. Agriculture and allied services now contribute about 18.5 per cent of India’s GDP and employ about 58 per cent of the workforce. 

They account for 10.95 per cent of India’s exports and about 46 per cent of India’s geographical area is used for agricultural sector.  For the much needed breakthrough in our primary sector, the Budget should have pinpointed strategies for revamping research and extension services.

(The writer is a Bengaluru-based professor of economics, and consultant lawyer)