Analyzing Union Interim Budget from agricultural point of view
Agriculture has been one of the most crucial sectors for national prosperity. The latest budget is rightly being hailed as farmer’s budget. The Interim budget 2019-2020 presented by interim Finance minister Piyush Goyal is a logical successor to previous four budgets presented by Arun Jaitely as far as the thrust on agriculture is concerned. Therefore, this budget must be seen in the context established by the last four NDA budgets. Last four years have seen an altogether different agricultural policy evolving gradually in an incremental manner targeting to increase the farmer’s income rather than the agricultural output.
The policy shift
Agriculture supports nearly 47% of country’s population in its various trades like fisheries, animal husbandry and obviously the crop-cultivation. Thus it provides employment, seasonal or perennial, direct or indirect, to a lion’s share of approximately half of the population. But, contributing only a mere 15% of the total GDP. This mismatch of employment to GDP ratio has been a big disturbing fact for the policy makers and economic experts since the independence. The Nehruvian socialist policies were largely focused on ‘pulling’ the people out of farming to be diverted to manufacturing sector. Agriculture was seen as a hopeless case. Post-Green revolution, once food self-sufficiency was achieved there was no need to focus singularly on increasing the production. But, unfortunately, all the policy reforms in this sector were primarily targeted at increasing the agricultural output.
A poor understanding of economics gave birth to the axiom that increased output would automatically result in increased income of the farmer. This understanding has been justifiably buried now. NDA identifies farmer’s income as its target. It became clear in 2014 itself when the ‘Agriculture Ministry’ was rechristened as ‘Agriculture and Farmer’s welfare ministry’ and ‘Food Processing ministry’ was separated from it to be taken care by another minister of Cabinet rank. Given the untapped potential of food-processing sector in producing employment, this move by PM Narendra Modi was a pleasant one. Amid the ‘political chattering’ of yet to be proven ‘agricultural unrest’, today, the government is appearing to be ticking the right boxes for achieving the goal of a 100% increase in the farmer’s income by year 2022.
The major thrust of this budget on agriculture appeared most explicitly in the launching of “Pradhanmantri Kisan Samman Nidhi”(PMKSN) , which got an allocation of rupees 75,000 crores to help farmers with small land holdings. This scheme provides 6,000 rupees to farmers having cultivable landholdings less than 2 hectares, which is more than 85% of the farmers. In a way, PMKSN covers for the basic input cost of agriculture. Bypassing the bureaucratic delays and corruption, this would be done by direct cash transfer in three installments of Rs. 2000 each. It would be better if the installments are transferred before the sowing seasons so that timely arrangement of seeds, fertilizers and labour is done. If this happens then it can prove out to be a very crucial step for saving the small farmers from falling into the debt trap.
PMKSN versus Karzmafi
PMKSN must be seen in contrast to the much romanticized ‘Karzmafi’ or the magic band of loan waivers. ‘Karzmafi’, howsoever good it is, as a political move but it is undoubtedly a bad move economy-wise, most of the times. It not only burdens the taxpayers and drain resources, it too eventually damages the agriculture in the long run by eliminating the chances of the use of the finances on development of agricultural infrastructure. While a loan waiver is a one time relief to those large and medium farmers who already have access to institutional loans, PMKSN is for farmers with smaller landholdings who have rarer chances of availing loans from banks. From the point of view of an average agriculturist, PMKSN will prove out to be far more effective in uplifting the life standard and the income of the farmers than waiving off their loan debts.
Building on the foundations of previous steps
The previous NDA budgets had laid out certain important policy measures which have brought positive structural changes in creating a background for a scheme like PMKSN. Firstly, the introduction of ‘neem-coated’ urea not just increased the effectiveness of the major fertilizer it also dented the black-marketers of urea who were earlier illegally diverting the government- sponsored urea for farmers to urea-based industries . Then, the focus on digging of water-bodies in the rural areas under MNREGA has marginally helped in improving the availability of irrigation water. Though, it still requires a more impactful push, but it has shown great results in the drought-stricken areas of Maharashtra and Madhya Pradesh. The Pradhanmantri Gram Sadak Yojna (PMGSY) has regularly received healthy allocations in previous budgets. The construction of the link roads connecting the villages to the nearest markets have increased the transportation facilities in the rural India. Need not to say that this has facilitated the farmer’s ability to sell his crops. More importantly, a direct exposure to sell market will help in development of commercial attitude in the farmers. The digital platform called ‘National Agricultural Market’ connecting major mandis of agricultural products have helped farmers in finding the highest price for their products.
The problem of mending loopholes in the minimum support pricing system is still needed to be corrected. There is a need to bring some more cereal crops and some cash crops in the minimum support pricing system. The MSP should be open to revision and flexibly increased in some specific regions depending on the success of crops in that region. The perennial problem of middleman taking away with all the profits has to be sought with a proper checking mechanism guarded by strict laws. Soil health cards generation have been a milestone in sustaining and checking the productivity and fertility of soil. Soil testing labs would require soil scientists thus would generate employment countrywide.
Interim budget 2019-20 is a landmark budget for the vision of Mahatma Gandhi who considered cow as ‘ mother’ and ‘sacred’. This budget has hugely taken care of Directive Principles of State Policy wordings about cows. In that venture ‘Rashtriya Kamdhenu Aayog’ and ‘Rashtriya Gokul Mission’ with a budget allocation of Rs.750 crores have been pioneered for protection and upgradation of indigenous breeds of cows. Also, the budget announced a 2% interest subvention to farmers pursuing animal husbandry and fisheries. Promotion of mixed farming suggests that the government intends to encourage the farmers to look for extra income through means other than conventional farm cultivation.
The way ahead
Mechanisms are being installed to make the farmer know about the health of his cultivable land and proper application of fertilizers. Government should focus more on informal education of farmers via extention workers and Krishi Vigyan Kendra scientists. Farmers should be trained to works on land improvement and in irrigation techniques e.g drip irrigation and use of sprinklers to minimize the water consumption for realizing the goal of ‘per drop, more crop’. More budget should be allocated in these ventures with the aim of creating mechanisms accessible to small farmers. Other conventional budgetary tools of directly helping farmers such as cash transfer benefits, interest rate subvention, Minimum Support Price regulations, waiving off loan debts are already in practice.
Now it is the high time to emphasize with dedication on some indirect intervention techniques like informal education of farmers, integrated nutrient management system, integrated pest management system. Value addition industries are also needed to be pampered and raised in order to process the farm products from agriculture sector. Government should look towards Food-Processing medium and small scale industries to help boosting our agriculture sector and sustaining it for longer period. The labour intensive nature of Food-processing industry can amply provide employment to rural youth and especially to women.
The interim budget 2109-2020 has provided various tools for curtailing farmer’s problems. It depends on their execution to see how much help they would do in addressing the problems of farmer suicides and support farmers to live with dignity and self respect throughout the year even during off season or bad production. ‘RASTRIYA KAMDHENU YOJANA’ and ‘RASTRIYA GOKUL MISSION’ will help cow regain her dignity who was called as ‘AGANYA’ which means sacred in Vedas. Thus, building on the foundations of previous budgets, this budget is the most farmer-friendly budget till date.
[Writer is a graduate of agricultural sciences from Sam Higginbottom University of Agriculture Technology and Sciences (Prayagraj, UP) estb. in 1906] [He can be reached at firstname.lastname@example.org]