Jaitley seeds the farm Modi ploughs

Reiterating its commitment to double farmers’ income by 2022, the Narendra Modi government continued to maintain its emphasis on the agriculture sector and announced a major hike in the Budget outlay. This is expected to boost credit flow to farmers, expand crop insurance and irrigation coverage besides augmenting dairy and agri-marketing infrastructure.

Finance Minister Arun Jaitley hiked the total outlay for agriculture, allied and rural sectors by almost a fourth to ₹1,87,223 crore for next financial year, while declaring the government’s intent to give a push for contract farming, which the corporates are keenly awaiting.

Jaitley, in a bid to ensure enough credit available to the farmers, hiked agriculture credit target to ₹10 lakh crore, while announcing digitisation of functional primary agriculture credit societies (PACS) and their integration with the core banking system of the District Central Co-operative Banks (DCCB).

PACS’ are a major source of credit disbursal to farmers and about 40 per cent of the small and marginal farmers depend on them to avail credit. Nabard will help computerise and integrate the PACSs with DCCBs at a cost of ₹1,900 crore over three years, with financial participation from the States.

Crop insurance

Allocation for the Pradhan Mantri Fasal Bima Yojana has also been hiked to ₹9,000 crore for 2017-18 to bring more farmers under the ambit of the scheme. Coverage under the crop insurance scheme will be increased to 40 per cent of the cropped area in 2017-18 and 50 per cent in 2018-19, up from 30 per cent in the current financial year. In 2016-17, the provision was increased to ₹13,240 crore from the earlier ₹5,500 crore to settle arrear claims. The sum insured under this scheme had more than doubled from ₹69,000 crore in kharif 2015 to ₹1,41,625 crore in kharif 2016.

The e-National Agricultural Market (e-NAM) will be expanded to cover 585 APMCs from the present 250. To boost post-harvest facilities, an assistance of upto ₹75 lakh will be provided to each e-NAM market for establishment of cleaning, grading and packaging facilities to enhance the value addition of the farmers’ produce.

“If the hike in agri-rural allocation largely goes towards productive infrastructure it would give a fillip to the rural economy and create jobs,” said Sanjay Kaul, MD and CEO, National Collateral Management Services Ltd. “There is, however, little to cheer for the private sector which was expecting initiatives to incentivise them to make fresh investments,” he added.

Agmarket reforms

Further, in a bid to further expedite agriculture market reforms, States will be urged to denotify perishables from APMCs. “This will give an opportunity to farmers to sell their produce and get better prices,” Jaitley said, adding that the government proposes to integrate farmers who grow fruits and vegetables with agro processing units for better price realisation and reduction of post-harvest losses. Jaitley said a model law on contract farming would therefore be prepared and circulated among the States for adoption.

Contract farming

“The announcement on corporate farming was welcome and the sector will look forward to more clarity on this during the coming days,” said BJ Maheshwari, whole-time director of Dwarikesh Sugar Industries Ltd.

M Senthilkumar, Chairman, The Southern India Mills’ Association, said the cluster approach for contract farming would benefit the predominantly cotton-based textile industry.

Jaitley further said that the issuance of soil health cards has gathered momentum and mini-labs would be set up in all the 648 Krishi Vigyan Kendras (KVKs) across the country to step up the issuance of such cards. About 5,000 farm ponds will be created in 2017-18 under MGNREGA. “These labs will help farmers to assess the actual nutritional requirements for their farmland and limit unnecessary expenditure on fertiliser,” said MK Dhanuka, Managing Director, Dhanuka Agritech.

While the industry has largely welcomed the Budget, farmer organisations were a bit disappointed.

“Farmers wanted a big path-breaking measure, which would lift them out of the debt trap. Not a single step in this direction. No measures to help small, marginal and tenant farmers who are trapped in private loans with little access to institutional finance,” Jai Kisan Andolan of Swaraj Abhiyan and other farmers’ organisations said in a statement.

“Farmers affected by two consecutive droughts, and other calamities like floods, were hoping for a big revival package. The government gave nothing but PMFBY, which has already failed to help them this year,” Swaraj Abhiyan said. Similarly, the solvent extraction industry, which was looking forward to a hike in duty differential between crude and refined oils, was disappointed with the Budget as Jaitley decided to maintain the status quo on the duty structure.

“This will discourage farmers from continuing to grow oilseeds and they may switch over to other crops. Our dependence on imports of vegetable oil will further increase,” said Atul Chaurvedi, President, Solvent Extractors Association of India.

Though there was no plantation-sector specific announcement in the Budget, the United Planters Association of India has welcomed the additional allocations made to Commodity Boards in the Revised Estimate for 2016-17.

“This would, to a certain extent, help in disbursing the amounts due to growers under various developmental schemes,” said Vinod Sivappa, President, Upasi.

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