Agri sector hopes for a pivotal push from Union Budget 21-22

For agriculture, which was the only sector to witness growth during the Covid-19 pandemic, expectations are high from the Union Budget 2021-22. The sector is likely to see higher allocations especially in the areas of agriculture credit, PM Kisan and irrigation among others.

Industry players are looking forward to incentives such as lower taxes for agri-tech and specific interventions for crop R&D and post-harvest infrastructure.

The Budget should focus on augmenting supply-demand mismatches in areas such as pulses, animal protein and dairy, as the outlays were disproportionately tuned towards erstwhile green revolution crops such as rice and wheat, said Anand Ramanathan, Partner, Deloitte India.

“It is time to take a decadal view and focus on one or two areas such as oilseeds and pulses, where we are still import dependent and also on horticulture crops,” said Ramanathan. Besides, it should also focus on promotion and upgradation of technology in agriculture, incentivise ag-tech to develop and build more solutions to address the challenges in the sector.

Also, there is a need to look at partnering with States to promote specific crop clusters and subsequent downstream processing. “An infrastructure status to the warehousing sector would help in enhancing the shelf life of the farm produce,” Ramanathan said.

Sops for food processing

“Agriculture and its allied activities require a pivotal push in the upcoming Budget. The food processing industry has played an important role in better price realisation for farmers and in reducing the cost of intermediaries. Accordingly, the Budget must provide special incentives to food processing such as interest subvention, lower taxes, access to technology and other measures,” said Ajay S Shriram, Chairman and Senior Managing Director, DCM Shriram Ltd.

He added, “Moreover, the direct benefit transfer mechanism can be fine-tuned and gradually utilized to support farmers in place of other subsidies. Let farmers decide how to use the money judiciously. Backed by the benefit of DBT, farmers will be well placed to buy better seeds, use new-age fertilizers and optimize water usage.”

“Agricultural R&D requires directional support to help achieve breakthrough in technology and better planting material. Two areas that need immediate attention are linkage of agricultural research with industry requirements and avoiding ideological resistance to modern technologies such as GM crops. The government must also come out with a policy for agri-tech that encourages the growth of Indian start-ups along with the adoption of the latest techniques. Further, it is important to regularly communicate and connect with the farmers to ensure they get the maximum benefits from the policies,” Shriram said.

Focus on Micro Irrigation

Randhir Chauhan, Managing Director, Netafim India, said that to popularise micro-irrigation, the government should put in place a mechanism to ensure smooth flow of funds, in order to achieve the target of bringing in additional 10 million hectares under micro irrigation in five years. Also, there is a need to streamline the process of disbursal of micro-irrigation subsidies.

Further, the micro irrigation industry needs to be provided infrastructure status, a move that would help accelerate its growth and bring down the cost of equipment for the farming community.

Level playing field for agri NBFCs

The agriculture sector requires substantial capital commitment, as procurement of equipment remains a major spend for most farmers. However, most of the agricultural credit extended to farmers is of a working capital nature. To ease the access of credit and support financial inclusion, agri-NBFCs have a major role offering access to finance for farming equipment and machinery. However, these NBFCs have traditionally been excluded from the purview of government subsidy schemes.

“The Budget should ensure that agri NBFCs are included in the major government subsidy schemes and programmes, a benefit hitherto available only to the banks. Such a move will enable agri NBFCs to emerge as a significant contributor in financing the agri value chain,” said Prabhat Chaturvedi, CEO, Netafim Agriculture Financing Agency (NAFA).

“Agritech has been instrumental in helping India manage disruptions caused by the management of Covid-19. The early stage enterprises aimed at post-harvest value addition must be incentivised and encouraged, as the development of innovative fresh produce supply chains, and a vibrant food processing sector, are key to better price realisation for farmers,” said Jinesh Shah, Managing Partner of Omnivore.

Amith Agarwal, co-founder and CEO, Agribazaar, said agriculture should be treated as a priority sector, universally, not just by banks, but by the entire financial eco-system especially service providers like rating agencies.

The government should further incentivise small- and medium-scale players with tax exemption schemes to invest in rural cold-chain and agri-logistics infrastructure.

Incentivising agri-tech players with tax exemptions and rebates will make it more viable for these companies to create impact at scale. This move will also enable agri-tech organisations to grow their projects faster by helping more significant investments in their research and development efforts, said Agarwal.