Key Takeaways For Agricultural Sector

Finance Minister Arun Jaitley in his Union Budget 2016-17 speech laid maximum emphasis on the agricultural sector and farmers welfare with an aim to double the farmers' income by the year 2022.

He announced various allocations to the agri/farm and welfare with a total expenditure of Rs 35,984 for agriculture in 2016-17. Also, funding of Rs 20,000 crore for irrigation set up under the NABARD while allocation for MNERGA in FY 16-17 scheme is highest ever at Rs 38,500 crore.

He also announced five lakh acres will be brought under organic farming over a three year period and Rs 60,000 crore for water harvesting management. Agricultural credit is increased to Rs 9 lakh crore.

He also laid thrust on the rural sector’s healthcare, educational and job creation schemes. He announced a total of Rs 19,000 crore allocation for the Pradhan Mantri Gram Sadak Yojana along with Rs 60,000 crore for recharging of ground water reserves.

“FM announced that 5,500 villages will be electrified by February 2018 while Rs 86,500 crore will be spent on irrigation in the next 5 years,” said the FM. Allocation for Gram Panchayat and Nagar Palika stood at Rs 2.87 crore.

He added that nominal premium and highest ever compensation in case of crop loss under the Pradhan Mantri Fasal Bima Yojana. To nurture farm dairies and animal husbandry, 4 news schemes are announced respectively.

"The budget provides a good start by announcing structural reforms in the Irrigation and crop insurance sector thereby demonstrating the long term commitment of the government towards the Agricultural sector. The initiatives such as organic value chain development and initialization of nation wide e-trading platform also look at systematic development of the sector. Further, a similar focus is required on agricultural research for providing a quantum boost in agricultural productivity," said Ajay Kakra, Leader Food and Agriculture, PwC India.

The impact of the announcement will take time as the sector is going through one of the toughest in decades. Sectorial growth has come down as low as around 1.2 per cent from 3 per cent while productivity of Rabi and Kharif crops has declined nearly 30-40 per cent in the past one year.