By Naveen P Singh & Ranjith PC
Union Budget 2020 India: Against the backdrop of decelerating GDP in FY20, the Economic Survey 2019-20 has projected GDP growth of 6-6.5% for FY21. Emphasising the role of 'wealth creators' (as wealth effects have sustained influence in the economy), it lays a strong foundation for achieving developmental goals in the coming decade (2021-30). Budget FY21 has charted new vistas, moving away from sops to steer ahead on interventions with three broader themes, Aspirational India, Economic Development and Caring Society. This is a marked departure from the conventional approach of healing an economy with drawn-out fiscal doses to key sectors.
Focusing on the importance of agriculture, the budget prescribed a 16-point action plan to connect odd dots to mainstream holistic agricultural development. Further uptick in the projection of the share of agriculture in GVA, from 14.4% in the last Survey to 16.5% in the Survey this year is hinged on a vision of sustained resurgence of the farming sector in 2021-30. In an attempt to fuel farm growth, the allocation has been increased from Rs 1.3 lakh crore in FY20 to Rs 1.6 lakh crore in FY21, and is likely to spur the growth of rural India (along with Rs 1.23 lakh crore for rural development and panchayati raj). The government has tried to reposition the primary sector (agriculture and allied) as an engine of growth to bring prosperity and welfare to a large section of the population.
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The revival of the agriculture sector assumes primary importance as the nation's economy is now sailing in choppy water. It is understood that any sustained fiscal dose to and interventions in other sectors will find it difficult to pass the tests against protectionism and retreat from globalisation that has resulted from the global slowdown and trade war among the major economies. Therefore, the vision of the Survey and interventions of the budget are crucial elements for meeting the aspirations of farmers and the youth. Budget FY21 triggers key farm drivers to accelerate and sustain the overall growth.
First, an appeal was made in the budget to all states to adopt the model legislation laid down by the NITI Aayog, pertaining to land leasing, agri-products and livestock marketing, and contract farming. As these legal instruments are drawn from experience and expertise of various stakeholders, their adoption could bring drastic change in supply and value chains.
Second, the expansion of PM-KUSUM to cover 15 lakh plus farmers is a move away from conventional energy to supplement farmers' income. However, for larger benefits and creation of in-situ employments, the scheme must centre on an 'energy cadre' that balances between the genders in the programme to facilitate and maintain grid connections.
Third, faster connectivity with Kisan Rail and Krishi Udan (national and international routes) ushers in a new age in transport of farm commodities across the nation, and will especially benefit the North East. In addition, the proposed village storage scheme, to be run by women-SHGs, is a major shift to mainstream traditional institutions in the developmental process. Creation of warehouse and national cold supply chain would invigorate the supply chain in the country, and moderate the price of perishables (horticulture produce) that currently exceed foodgrains in terms of production.
Fourth, expansion of agriculture credit to `15 lakh crore is another major step to augment availability of capital expenditure and spur subdued rural demand. As the growth of the farm machinery industry has seen sustained rise over the last five years, it is essential to expand financial assistance for further penetration of farm mechanisation, from the current 40-45% level.
Fifth, the extension of the concept of Farmer Producer Organisation to the fisheries segment and announcement of the Sagar Mitra programme is key to unleashing the potential of Blue Economy, which, historically, seen particpation of resource-poor and marginalised fishermen at one end and the formal, industrialised sector at the other. Fisheries is a sub-sector that has seen consistence addition to Agriculture GVA. Last, but certainly not the least, the proposal of balanced fertiliser and pesticide use is essentially a leapfrog forward in achieving the twin goals of phasing out the wasteful existing fertiliser subsidy scheme and ensuring long-term soil fertility, especially in the Green Revolution areas. As highlighted in the Economic Survey 2018-19, there is decline in fertiliser use since 2011 without disrupting the food supply. The new system would enhance judicious use and farmer awareness.
Although Budget FY21 announced prudent steps and modest interventions in the primary sector to reverse the slowdown, very little attention has been given to the pressing issue of of climate change. There is also an absence of bold initiatives linking agriculture to achieving major Sustainable Development goals. Moreover, the thrust of farm innovation and sustainable development, agri R&D, has seen a meagre increase, of just 6.58% from last year's allocation (`7,846.17 crore in FY20 to `8,362.58 crore in FY21) in spite of high payoffs in the long-run. Also, farming in the coming decade (2021-2030) essentially needs a thrust on R&D to leverage machine learning, and internet of things to effectively deal with yield gaps, climate vagaries and supply chain constraints. Thus, less than desired funding in R&D can severely reduce the chances of delivering on meeting the aspirations of farmers.
Several parts of country have witnessed extreme climatic events over the past several years; it is indeed essential to include the climate element in policy offerings. For building climate-resilient farms and farmers, it is imperative to consider farm innovations and interventions made under ICAR-National Innovations for Climate Resilient Agriculture. There are also concerns pertaining to operationalisation and acceleration of many of these interventions as large part of agriculture remains a state subject. Lack of affirmative action and the institutional mechanism to bring all the states to a uniform reform platform (this can be seen from the low adoption of model central acts) is a serious impediment. Besides, many experts also believe that a large part of budget allocations to agriculture isn't utilised (e.g. PM-KISAN), and this legacy is continuing since the last several years. Therefore, the impetus given in this year budget should be read against the structural and functional issues that are affecting and distorting policies that hit the ground if the cob-webs over agri-growth are to be cleared meaningfully.
Singh is with ICAR-NIAEPR and Ranjith PC with ICAR, New Delhi. Views are personal