Budget 21-22: Well-Balanced Approach

Agricultural sector, being the mainstay of the rural econ­omy has been a priority area for the government. Moreover, the recent impasse on the implementation of farm bills has enhanced the strategic importance of the Budget 2021 for the agriculture sector. While the overall allocation for the Department of Agriculture, Cooperation and Farmers Wel­fare has been slashed in the Budget 2021, the announcements in this year’s budget seem to be well-balanced in terms of addressing the short term issues such as the commitment of the gov­ernment to continuing with minimum support prices (MSPs) and, at the same, strengthening the foundation for addressing the structural challenges in the long run. 

Enhancing Scope for Value Addition and Productivity 

• Introduction of Agriculture Infrastructure Development Cess on petrol, diesel, gold and other imports is expected to improve facilities for production, storage and processing of farm produce. 

• Coverage of Operation Green has been extended to 22 perishable crops which was earlier restricted to 3 crops (tomatoes, onions and po­tatoes). This would enable India to emerge as a major food processing hub with opportunity for players to set up their sourcing and / or processing facili­ties in India and for existing players to augment capacities for value addition. 

Boost to Innovation and R&D 

• Increase in the budgetary allocation for R&D for improving efficiency and sustainability is expected to facilitate new product development such as an alter­nate source of plant-based proteins and large-scale cultivation which could help significantly address the changing dietary patterns of consumers. The increased allocation can help reduce dependence on imports of major commodities such as vegetable oils, pulses and foster in­digenous production. 

• Launch of Mission Poshan 2.0 seems to be an intensified strategy to improve nutritional outcomes by addressing issues of health, wellness and immu­nity of children and pregnant women across 112 aspirational districts. 

Credit and Infrastructure Support 

• Increase in agriculture credit target and rural infrastructure development fund is expected to trigger a virtuous cycle of consumption-investment-em­ployment which would have a ripple effect on al­lied sectors such as farm inputs, equipment manu­facturers, etc. 

• Focus on the fishing sector through the an­nouncement of setting up five major f ishing harbors along the coastal belt is expected to gener­ate economic activities in the respective regions. 

The Budget seems to be well-bal­anced in delineating areas which need focus in the short run and those where foundational pillars need to be strengthened for addressing the chal­lenges of productivity, value addition, innovation and investments.