The major announcements for the agriculture sector in the Budget 2017

Agricultural Credit

The agricultural sector has been suffering on account of several factors – poor monsoons, lack of farm insurance, rising input costs, low remuneration to farmers, lack of storage facilities and low investment in irrigation facilities. The agricultural credit budget allocation for the financial year (FY) 2016-17 was Rs 9 lakh crore. The allocation for FY 2017-18 is targeted at Rs 10 lakh crore. An increase of Rs 1 lakh crore or over 10 per cent.

Short-term loans of up to Rs 3 lakh are already available to farmers at 7 per cent interest. In December 2016, the government had announced a 60-day interest waiver to them. If the farmers avail the 3 per cent additional interest waiver by returning loans within the stipulated time, their actual interest comes down to only 4 per cent. So the increase in total allocation of Rs 1 lakh crore for credit to farmers is a significant boost. But, experience does not give evidence of significant increase in productivity and total production due to increase in farm credit.

However, the cash-starved agriculture sector which still depends on local money lenders and Non Banking Financial Company (NBFC) with a higher rate of interest will get some relief by the availability of additional funds. This is expected to address the much-publicised issue of farmers’ suicide by the supply of additional funds from institutional sources. Besides, the institutional credit availability is largely for short term crop loans. Whereas the farmer's long term credit needs, to invest in productive asset generation, is not given due importance.

Fasal Bima Yojana

The Pradhan Mantri Fasal Bima Yojana which was 30 per cent 2016-17, has been targeted to be 40 per cent in FY 2017-18 and set to increase to 50 per cent by FY 2018-19. In 2016, the budget allocation was Rs 5,500 crore and was raised to Rs 13,240 crore in the revenue expenditure to settle arrears. In FY 2017-18, Rs 9,000 crore has been allocated for the purpose. But, till recently, around 26% per centof the cropped area was covered under the programme. When the present target is not achieved the expected increase to 40 per cent looks ambitious. If the target is full filled, this will hugely benefit farmers who are vulnerable to erratic weather conditions and climate change hazards.

Primary Agricultural Credit Societies (PACS)

Various co-operative societies under National Bank For Agriculture & Rural Development (NABARD) have been in the forefront of releasing loans to farmers in rural areas. With Rs 1,900 crore allocated to computerising all 63,000 PACS, the increase in total credit distribution will be efficient and better monitored. The successful implementation of Direct Benefit Transfer (DBT) in different Government schemes, which has channelised subsidies directly to farmer's account by eliminating several bogus beneficiaries from the system, has left a lot of saving in state exchequer. Computerisation of PACS is no doubt a welcome step for further strengthening of these institutions for eliminating the malpractices in the system.

National Agricultural Market (e-NAM)

Farmers lose a lot of their produce in the post-harvest phase due to poor cleaning, packaging and storage facilities. The government plans to improve farmer’s returns by investing in modern technology for cleaning, packaging and storing of agricultural produce at each Agricultural Produce Market Committee (APMC). Towards this, Rs 75 lakh has been allocated to each e-NAM. Only increased production cannot benefit the farmers for increasing their income unless the produce is marketed at the right time for remunerative prices. Strengthening of APMCs is a step in the right direction.

Dairy and Infrastructure Development Fund to be established under NABARD

A corpus fund of Rs 2000 crores has been created under NABARD for milk and cattle rearing, which is an additional income for the farmer. Therefore, this move at establishing a fund dedicated to dairy development may also increase the contribution of milk and processed milk items to the overall agricultural output of the nation, providing supplementary income to the farming community.

1000 Mini Labs to be established in Krishi Vigyan Kendras (KVK)

The Lab-to-land programme and technology transfer to the farmer’s field will now be better facilitated. Farmers will have better access to relevant seeds, soil analysis and suitable plant varieties, all of which will optimise output in their respective areas.

Farm ponds to improve water availability for irrigation

Improving irrigation efficiency is critical for Indian Agriculture since we have 2.4 per cent world’s total geographical area, 18 per cent of world’s population, but only 4 per cent of world’s total fresh water reserves. The budget document shows that under the "Har Khet Ko Pani" initiative of Ministry of Water Resources, the allocation has been increased significantly to 1,450 crore.

Similar increase was also noticed for the Pradhan Mantri Krishi Sichayee Yojna (PMKSY) by 42.1 per cent, in 2017-18 amounting 7,375.92 crores as against the 2016-17 revenue expenditure of 5,187.01 crore. From the existing 5 lakh farm ponds, the government plans to implement an additional 10 lakh farm ponds this year and add another 5 lakh ponds in FY 17-18. This will contribute to increasing farm output and is in line with the government’s overall target to doubling farmer income in next four years. The fulfilling target of ponds in time bound manner with quality specifications is critical which will be implemented by state agencies. Proper monitoring at the state level can only achieve the result.

Contrary to the past, the union budget has not made any populist pro- farmer announcement to influence the rural voters as expected by a section of analysts. It has also not sought to compensate them for the ill effects of demonetisation and the recent sharp slump in agricultural prices with more subsidies or other fiscal doles. Instead, it chose the most appropriate path of strengthening the rural economy through well thought out measures to lift farm productivity, raise farmers’ income and generate more employment in rural areas. The new way of raising finance through NABARD, rather than allocating more funds through the budget is appreciated by Ashok Gulati, former chairman CACP. Revamping of Mahatma Gandhi National Rural Employment Act scheme (MGNREGA) and higher funding of National Rural Livelihood Mission and Skill Development programmes are also intended to create employment and shift some additional labour force from the overcrowded agricultural sector. This will create additional employment and income generation in rural areas. These measures will boost rural demand for future economic gains.

Coming to the flip side of the budget the highly subsidised credit are moving to the same set of farmers who are capable of repaying in time because interest subvention is linked to timely repayment. The budget has not laid adequate emphasis on the generation and transfer of new technology that is vital to raising production and reducing cost. The Finance Minister Arun Jaitley has reiterated the Government’s resolve to help farmers to double their income in another four years. But, how it is possible without giving a remunerative price for farm produce. The recommendations of the National Commission on Farmers (NCF) to provide the minimum price of C2 (i.e. total cost of production) plus 50 per cent is yet to be accepted by the Government. This has been suggested over the years by Prof. M.S. Swaminathan, founder M. S. Swaminathan Research Foundation (MSSRF). The budget allocation of meager Rs 6800 crores for agricultural research and education, this accounts far below 1 per cent of agricultural GDP. As pointed by Prof. M.S. Swaminathan the much-debated area worldwide i.e. climate change is not mentioned in the budget. Had such aspects also been addressed, the gain from the budget would have been much greater.

- The author is a retired Profesor and Head of the Department, Agricultural economics at Orissa University of Agriculture & Technology, Bhubaneswar

Hrudananda Atibudhi

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