Agriculture: Rained Manna
The farmer has often been the focus of a Budget on the eve of an election year (mostly through largesse), like a massive loan waiver or sops. So, even though “agrarian distress” was the topic of most televised discussions on Finance Minister Arun Jaitley’s last full Budget – including the BW Businessworld round-table, few perhaps, had an inkling of just what he had up his sleeves. Of the total funds allocated for the ministry for the next fiscal, Rs 1,313.08 crore will be for the Pradhan Mantri Kisan Sampada Yojana (PMKSY), up from Rs 633.84 crore allocated for the scheme in the current financial year.
Along with the customary enhanced allocations on rural infrastructure and the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGREGA), Union Budget 2018-19 took a leap towards the recommendations of the Swaminathan Commission report, guaranteeing a minimum support price (MSP) that would bring meaningful returns to the farmer. The implementation of the Swaminathan Commission report, incidentally, had been the most audible demand from the farmlands. The MSP formula of the commission of ‘cost of cultivation plus a return that is 1.5 times higher’, will be the standard MSP for the Kharif season.
The real rabbits up the Finance Minister’s sleeve, were measures that would give a shape to the NDA government’s much professed promise of doubling the farmer’s income and he did that not with a larger dose of doles, but through measures taken to bring industry to the farmlands and to integrate the farmer with the market. The Union Budget has made a provision of Rs 2,000 crore for the agri-market, to be able to cover 22,000 agricultural markets and APMC (agricultural produce market committees) by 2022. Should the scheme see the light of day, it will be able to create a completely interconnected market, linking small and marginal farmers, who make up 85 per cent of the farming community. To encourage each district to focus on cultivation of specific crops, schemes will be re-oriented to promote “cluster-based development” of agri-commodities.
Incidentally, the Organisation for Economic Cooperation and Development (OECD), in its Economic Survey for India in 2017, had said, “Reducing the wide dispersion in living conditions across states and between urban and rural areas call for higher agricultural productivity, improved urban infrastructure, and liberalised product and labour markets.”
The real elixir for the farmer was not in allocations for agriculture, but in provisions that will lead to the much-debated nexus between the farmer or producer, and industry. To ensure better returns to farmers, the Union Budget has doubled the allocation for the Union Food Processing Ministry to Rs 1,400 crore for the 2018-19 financial year from Rs 715 crore allocated for the current fiscal.
An incentive comes in a roundabout way for the food processing industry in the way of enhanced customs duties on fruit and vegetable juices. To protect the domestic industry, the government has hiked customs duties on orange juices from 30 per cent to 35 per cent, on other fruit juices and vegetable juices from 30 per cent to 50 per cent, on cranberry juice from 10 per cent to 50 per cent and on miscellaneous food preparations (other than soya protein) from 30 per cent to 50 per cent. To help the cashew processing industry, it has proposed a cut in customs duty on raw cashew from five per cent to 2.5 per cent.
Was the focus on agriculture simply the stereotyped political reaching out to the largest vote bank – where the bulk of India resides? Agriculture, after all, continues to provide employment to 62.7 per cent of India’s population. Way back in 1993-94 it accounted for rural employment for 77.6 per cent of the population. All the while, agriculture’s share in the gross value added (GVA) has fallen rapidly from 18.5 per cent in 2011-12 to 15.2 per cent in 2016-17.
The 2017-18 Budget had addressed major challenges too, when it aimed to bring a crore households out of poverty and to make 50,000 Gram Panchayats (village-level governing units) poverty free by 2019. It had also targeted having five lakh farm ponds dug under MGNREGA. The allocation for MGNREGA had been as high as Rs 48,000 crore. But for the farm sector, Budget FY19 will always be different.
K. Ravichandran, Group Head, Corporate Ratings of ICRA says, “These rural focussed measures will somewhat alleviate the stress of the farmers. These measures will help rural focused companies in the following sectors, namely agricultural inputs (seeds, fertilisers, agrochemicals), automobiles (tractors and two-wheelers), FMCG and NBFCs, including micro-finance entities.” This will create a better job opportunity as well.
Sheryl Vaidhyan, the Head of DuPont South Asia calls this Budget, “A Budget that promises to boost India’s manufacturing and infrastructure development. The measures announced by the government today will lead to a better quality of life for all citizens of India.”
