Industry captains and others have hailed the Union Budget 2011-12 presented by the Finance Minister, Mr Pranab Mukherjee, on February 28, describing it as ‘growth-oriented', ‘a fine balancing act' and so on as it is supportive of the industry and the services sectors.

The Finance Minister doubtless has the unenviable task of maintaining fiscal rectitude without disturbing the growth drivers that continue to deliver to make India one of the world's fastest growing significant economies.

Food prices

If there is one big thing the Budget ought to have considered with more seriousness, it is unabated food inflation and measures to contain it.

In his speech, the FM conceded that high food inflation remained a matter of concern. High food prices hurt the poor the hardest and further dilute their already frugal nutrition intake.

The country is inexorably moving towards nutrition insecurity as pervasive malnutrition /under-nutrition takes its toll, especially in rural India.

Farm output

Closely linked to high food prices is farm output and distribution. Has the Budget paid enough attention to agricultural production and productivity issues with a long term perspective?

Does the Budget provide for leveraging agriculture to improve people's nutrition and health? Sadly, the answer is in the negative.

One must hasten to add, the Budget does contain a number of positive provisions for agriculture and allied activities. Mr Mukherjee devoted as many as 20 paragraphs in his speech to make several proposals for the farm sector.

Individually, each one of them is important and deserves a mention.

Despite that, taken together, these proposals are most unlikely to bring about any significant improvement in production and productivity in the near future or make any dent on inflation.

Allocation for farm

In addition to hiking credit flow to farmers by a whopping Rs 1,00,000 crore to a new high of Rs 4,75,000 crore for 2011-12, the Budget has an allocation of Rs 7,860 crore for easing bottlenecks in horticulture, milk, poultry etc.

Also, there is allocation of Rs 400 crore for green revolution in the eastern region, and Rs 300 crore each for promoting 60,000 pulses villages; for palm development in five years; for vegetable supply chain; for animal protein; for fodder; and for millet (nutri-cereals) development.

These initiatives, one hopes, signal an informed shift in official thinking.

There are welcome provisions relating to strengthening the supply chain.

Infrastructure

Post-harvest infrastructure including cold chains has been accorded ‘infrastructure' status, with access to viability gap funding. Customs duty on cold storage equipments has been reduced. Obviously, the intent is good.

The known challenges of Indian agriculture are truly daunting; but the Budget has offered nothing special to address the structural problems.

Humungous amount of investments are required to address the structural issues of input delivery, irrigation, agronomic practices, rural infrastructure and so on. In his speech, the FM did recognise the importance of improving the supply response of agriculture to rising demand, but offered no solution. His anger – ‘big difference between wholesale and retail prices is not acceptable' - is justified; but he did not come up with appropriate practical recommendations.

The least the FM could have done was to urgently convene a high-level meeting of all State chief ministers to discuss and remedy the existing flaws in the horticulture supply chain, improve market linkages and prevail upon the States to respond to the challenges with appropriate policies and programmes.

Currently, the principal challenge the country is faced with is two-fold - unabated food inflation and pervasive malnutrition. The prospect of a marked improvement any time soon is rather limited. The policymakers have to act.

Investment in agriculture

In addition to nationally common but regionally differentiated policies for strengthening market linkages and improving the supply chain, we need a substantial step up in public investment in agriculture. Unless this is done, there will be limited motivation for private investment to flow in. A significant amount of investment will flow from the private sector if the investment climate is conducive. The case for incentivised entry of private investment for establishing backward linkages has never been stronger than at present.

nutrition and health

Importantly, leveraging strengths in agriculture to deliver nutrition and health to several hundred millions of poor Indians ought to become our national mission. The importance of farm sector lies in the fact that it not only produces nutritious food, but also generates incomes for growers and employment in the downstream processing sector. Unfortunately, the Budget has overlooked this critical aspect of the Indian economy. It is not too late even now to revisit the country's priorities.

Last but not the least, the country needs growth with equity. Government policies must not only encourage growth but also ensure equity in the flow of growth benefits. With more than half the country's workforce toiling on farm, growth-oriented agriculture alone can ensure equitable distribution of income and wealth for sustained overall growth in years to come.

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