Agriculture in the 2016-17 Union Budget

Comments by Prof M S Swaminathan

Doubling the Income of Farmers in Five Years

Giving an income orientation to farming is probably the most significant announcement made by the Finance Minister. He has said that the aim of government will be to double the income of farmers in five years. The economic survey however points out that the contribution of agriculture and allied sectors has been declining. It is in this context that the emphasis on income becomes urgent. The National Commission on Farmers (NCF) had recommended that hereafter we should measure agriculture progress by the growth in the real income of farmers and not just by gross production of wheat, rice and other commodities. For achieving income enhancement, we need in my view, at least five major steps. These are, first, higher productivity of small farms leading to larger marketable surplus – second, knowledge, skill, credit and land ownership empowerment of women farmers, who carry out over 60% of farm work, third, substitution of low value crops with high value ones like fruits, vegetables and flowers as well as animal products; four, promotion of biomass utilisation so that every part of the plant is utilised for preparing value added products through initiatives like Rice BioPark and finally, the procurement price should be based on the NCF proposal namely, C2 plus 50 per cent.

The total outlay of agriculture and farmers’ welfare is Rs. 35,985 crore. The schemes already announced like those relating to irrigation, including groundwater utilization, efficient fertilizer use, improved soil healthcare, better post-harvest technology and a more comprehensive agricultural insurance policy are being backed up by enhancing financial provision. A long term irrigation fund will be created in NABARD. Emphasis has been placed on greater investment in the food processing industry. Also, 100 percent FDI will be allowed for marketing food products made in India. 2016 is the International Year of Pulses and we will be importing nearly 10 million tonnes of pulses to bridge the gap between demand and supply. It is therefore appropriate that the Finance Minister has provided Rs. 500 crore for a special pulses mission. The MGNREGA will also be reoriented to meet the needs of agriculture like soil conservation, watershed management and groundwater harvesting. In a significant move, 0.5 percent Krishi Kalyan Cess on all taxable services will be utilised for farmers’ welfare, for increasing their social protection and for providing them with minimum needs for a better quality of life. This is appropriate since the Finance Minister even at the very outset emphasised that agriculture and farmers’ welfare will be the first among the 9 pillars of the Budget. The budget places emphasis on organic farming. Paramparagat Krishi Vikas Yojana for bringing 5 lakh acres under organic farming as well as the proposal for Organic Value Chain development in the NE region are welcome measures in this decade of sustainable development. The introduction of technology and e-platforms for regulating agricultural markets are forward looking steps. Taking into account the high risk nature of farming, the credit allocation for this sector has been increased to Rs. 9 lakh crore.

In order for the MSP benefit to reach farmers, it is proposed to decentralise procurement, promote online procurement through FCI and effective arrangements for the procurement of pulses at an attractive MSP. Also, four new dairy programmes namely, animal health card, advanced breeding technology, E-market portal and the establishment of a National Centre for Indigenous Breeds with an allocation of Rs. 850 crore are timely, since we have nearly a billion farm animals.

An allocation of Rs. 80 lakhs per Gram Panchayat will now be available to transform villages for filling infrastructure gaps. As recommended by the NCF atleast Rs. 20 lakhs out of this amount should be reserved for meeting the gender specific needs of women. Facilities will be created for an additional storage of Rs. 97 lakhs metric tonnes of food grains. Rural infrastructure will be improved by the allocation of Rs. 19,000 crore for the Pradhan Mantri Gram Sadak Yojana. The adverse impact of natural calamities will be minimised through increased agricultural credit and improved insurance. Rs. 5,500 crore has been provided for an enlarged crop insurance scheme.

On the whole, the budget has tried to be as pro-farmer as possible subject to the limitation of resources. Seeds have been sown for agricultural transformation and for attracting and retaining youth in farming. The dawn of a new era in farming is in sight.

M S Swaminathan

29 February 2016