Bringing cheer to agriculture
The budget is presented after demonetisation with considerable expectations of bonanza for poor and middle income groups. Pre-budget discussions in professional and political circles were how agriculture and rural poor will share the benefit of demonisation. On all accounts, it appears that the finance minister has fulfilled the expectations. His budget speech started with a premise on containing inflation, reducing corruption, improving governance and optimising natural resource management. The challenges visualised are of global protectionism and commodity prices. In line with expectations, the overarching aim of the budget is to distribute the fruits of economic growth with farmers, poor and marginalised population living below poverty line.
Finance minister tried to bring cheers to agriculture sector by allocating sufficient resources for making agriculture more productive, profitable, sustainable and resilience. The budget shows a clear road map to protect farmers against various kinds of risks and increase agricultural incomes through irrigation development, improved soil health, access to markets, credit, and agricultural insurance. It is welcoming that the provisions for agriculture this year are in continuation of the previous budget. Only difference is that last year agriculture was severely affected by monsoon failure with depressed agriculture growth, which completely changed to an impressive agriculture growth of 4.1 per cent in 2016-17. It is laudable that all efforts are being made to continue doubling farmers’ income by 2022.
It is paradox that in a rising economy and emerging global power, Indian agriculture is still confronted with the vagaries of monsoon. Agricultural growth is always driven by monsoon as more than 60 per cent cropped area is rainfed. In the budget, both production and marketing aspects of agricultural commodities have received due attention. The budget provisions are expected to boost agriculture sector, and make agriculture less risky and more resilient. Establishing long-term irrigation fund and expanding coverage of agriculture insurance are welcome steps. Expanding irrigated area though prime minister irrigation scheme will significantly increase productivity, promote diversification in favor of more remunerative commodities and reduce risk of climate variability, especially uncertain rainfall. Promoting micro-irrigation will improve irrigation use efficiency and increase agricultural production. It is also welcoming that allocation to MGNERGA has been increased and linked with asset building, especially construction of farm ponds for irrigation. It will have multiple benefits of increasing employment generation in rural areas, raising crop yields and reducing risk due to uncertain rainfall. Agricultural insurance will increase risk bearing ability of farmers to adopt new technologies and borrow for buying inputs (like fertiliser, pesticide, farm machines), which will contribute in raising agricultural production during normal year. In the event of bad years and crop failures, farmers may claim for a large part of the cost incurred for production. Dairy sector also acts as a risk cushion and important source of income. To boost dairy sector, a corpus of Rs 2000 crores with NABARD has been established. It will help in creating dairy infrastructure that will increase production of milk and milk products. India is global leader in milk production, boosting processing and value addition will increase incomes of marginal and small farmers.

Provision of soil health cards is reemphasised by establishing mini soil testing labs in all the Krishi Vikash Kendras, which are considered to be knowledge and innovation hubs for farmers. Soil testing is critical for balance use of nutrients to improve soil health and increase crop productivity. However, it must be insured that farmers follow the recommended doses of nutrients to improve soil health. Soil testing must be supported by on-farm demonstrations on soil test based nutrient management. Saving water through micro-irrigation and improving soil health are way forward for improving sustainability of natural resources in agriculture. A dedicated micro-irrigation fund with NABARD will improve water management. Similarly, a big boost has been given to agricultural credit; the target kept is Rs 10 lakh crores. It was mentioned that credit flow will be more towards neglected and lagging areas by covering large number of farmers, especially marginal and small farmers, in organised banking system. Waving a fraction of interest on agricultural credit will surely give some relief to farmers.
On market reforms, efforts are continuing to make transparency in price discovery, link farmers with remunerative markets, and integrate domestic markets. Provision has been made to expand e-National Agricultural Market (e-NAM), and implement in 585 markets. e-NAM. This initiative will benefit farmers and help them to decide selling destinations to get remunerative prices. To strengthen and effective functioning of e-NAM, additional resources have been allocated. Similarly, incentives will be given to states for denotifying perishable commodities from the APMC Act. This will help farmers to sell their produce at remunerative prices. Government is also developing a model law for contract farming, which will ensure assured procurement and remunerative prices. Institutionalising contract farming will revolutionise agri-marketing system as is witnessed in many Southeast Asian countries. However, success will depend on how the front-end, especially organised retail, agro-processing and agri-export, will unfold. It would have been better if incentives to front-end was also incentivised.

Food processing is a sun rise sector. There are losses to the tune of 20-40 per cent in the entire supply chain of various agri-food commodities. These losses are much higher during peak supply of perishable commodities. Also, the demand for processed food is increasing with growing incomes and changing taste and preferences of consumers. Foreign direct investment is further liberalised and provisions of business are eased. Global experiences suggest that foreign direct investment bring global best practices and technologies in food processing and retailing. Strengthening processing sector will reduce losses of perishable commodities and add value to increase income of farmers if linked with the industry and also generate employment for rural youth.
Programs such as ‘Start Up’, ‘Make in India’, and ‘Stand-Up India’ are also relevant for agriculture sector to benefit youth and women entrepreneurs. Strengthening MUDRA Bank will benefit MSMEs. Similarly, Digital India program will benefit agriculture sector in accessing knowledge and making financial transactions. It would have been good if additional incentives would have been given to start-up entrepreneurs who are engaged in making applications and implementing them for agriculture sector. Hon’ble prime minister in his address at Indian National Science Congree-2017 emphasised how ‘disruptive technologies’ are changing the landscape of various kinds of services and transactions. These are easing lives of common people but these are yet to be popular in agriculture sector. Promoting ‘disruptive technologies’ in agriculture, especially for financial transactions, inputs and service delivery, marketing and subsidy transfer, will reduce transaction costs and improve efficiency in agriculture sector.
Besides, there are other programs, such as rural roads, national highways, port, education and skill development, health care, and electrification will directly benefit farmers and rural population.
Overall, the budget is pro-farmer and agriculture. It is an attempt to strengthen agriculture and step forward to double farmers’ incomes by 2020.