Table of Contents
THE CONTEXT: Recently, the Finance Minister of India presented an interim budget in the Parliament and experts are highlighting concern regarding budget allocation in farm sector.
ANNOUNCEMENT FOR AGRICULTURE IN INTERIM BUDGET
- Agriculture and food processing: Promotion of private and public investment in post-harvest activities including aggregation, modern storage, efficient supply chains, primary and secondary processing and marketing and branding.
- Nano DAP: Application of Nano DAP on various crops will be expanded in all agro-climatic zones.
- Atmanirbhar Oil Seeds Abhiyan: A strategy to achieve ‘atmanirbharta’ for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower will be formulated.
- PM KISAN: Direct financial assistance to 11.8 crore farmers under PM-KISAN.
- PM Fasal Bima Yojana: Crop Insurance to 4 crore farmers under PM Fasal Bima Yojana.
- e- NAM: Integration 1,361 mandis under e- NAM, supporting trading volume of 23 lakh crore.
- Fishermen: A new department “Matsya Sampada” to be set up to address the needs of fishermen. Implementation of Pradhan Mantri Matsya Sampada Yojana (PMMSY) will be stepped up. Five integrated aquaparks will be setup. The Ministry of Fisheries, Animal Husbandry and Dairying witnessed a 27 per cent increase.
- Dairy Sector: A comprehensive programme for supporting dairy farmers will be formulated. The programme will be built on the success of existing schemes such Rashtriya Gokul Mission, National Livestock Mission, and Infrastructure Development Funds for dairy processing and animal husbandry.
ISSUES
- Allocation for agriculture: Allocation for agriculture has not gone up and subsidies have not been rationalised. While schemes like the Pradhan Mantri Fasal Bima Yojana saw an increase in allocation, the allocation under the PM Kisan Samman Nidhi remained the same at ₹60,000 crore. The PM Kisan Man Dhan Yojana, however, saw a decrease in allocation.
- Inadequate for research: For agricultural research, the allocation is ₹9,941.09 crore. The Department of Agricultural Research and Education (DARE) received Rs 99.4 billion (BE) for FY25, a marginal 0.7 per cent increase over Rs 98.8 billion (RE) in FY24. Farmers’ organisations, however, termed the allocations as inadequate.
- Food and Fertiliser subsidies: Budgetary support in the agriculture-food sector has primarily revolved around welfare measures and subsidies. It is compelling to note that the budget allocations for food and fertiliser subsidies, individually, account for a much higher budget than that compared to the Ministries of Agriculture and Farmers Welfare and Fisheries, Animal Husbandry and Dairying.
- Preferring consumer over farmer: In FY25, the budgeted food subsidy fell to Rs 2.05 trillion (BE), compared to Rs 2.12 trillion (RE) in FY24 which is a 3.3 per cent drop. However, this still underscores a significant bias towards consumers, as the subsidy caters to them rather than the farmers. Free ration to 800 million people through the PM-Garib Kalyan Yojana is, of course, an accomplishment. But the necessity of extending this support to such a vast number of people is a matter of concern.
- Did not address MSP: The Budget, however, was silent on issues such as a guaranteed minimum support price based on the S. Swaminathan Committee’s formula, which is a long-standing demand of farmers.
THE WAY FORWARD:
- Investment: There is a need for more public investment in agriculture and subsidies to form producing and marketing cooperatives and collectives.
- Rationalise food subsidies: There is an urgent need to rationalise the food subsidy, on the lines of former PM Atal Bihari Vajpayee where he had streamlined the Targeted Public Distribution System (TPDS). Rationalisation along such lines can save at least Rs 50,000 crore.
- R&D Expenditure: The finance needs to be allocated for agri R&D and more irrigation, especially micro-irrigation. This could help the country to produce “more with less” and ensure food security in the face of climate change.
- Rationalisation in fertiliser: There is a need for rationalisation, especially in minimising the diversion of fertilisers to non-agricultural sectors. It is widely acknowledged in expert circles that around 20-25 per cent of urea is diverted. A potential solution is to shift from subsidising the price of urea to directly empowering farmers through direct cash transfers.
THE CONCLUSION:
India’s agricultural sector is facing several challenges, which are limiting its growth and development and the recent interim budget with lesser allocation raising more concerns.
There is a need to provide adequate budgetary support for agriculture sector to manage food inflation. Adapting to climate change and maintaining macroeconomic fundamentals are vital for sustained growth of agriculture.
UPSC PREVIOUS YEAR QUESTIONS
Q.1 Comment on the important changes introduced in respect of the Long term Capital Gains Tax (LCGT) and Dividend Distribution Tax (DDT) in the Union Budget for 2018-2019. (2018)
Q.2 One of the intended objectives of Union Budget 2017-18 is to ‘transform, energize and clean India’. Analyse the measures proposed in the Budget 2017-18 to achieve the objective. (2017)
MAINS PRACTICE QUESTION
Q.1 Discuss the role of budgetary allocations in enhancing economic resilience of the farm sector considering the challenges posed by high inflation, increasing food subsidies and climate change.
Spread the Word