Agri Business

Farm budget: Satisfactory

Rajalakshmi Nirmal | Updated on February 01, 2019 Published on February 01, 2019

What’s changed?

There was disappointment for rural-India which was expecting ₹2.8 lakh crore bonanza from the FM eyeing a scheme similar to the Rythu Bandhu of Telangana. The Pradhan Mantri Kisan Samman Nidhi will pay a sum of ₹6,000 a year for small farmers holding land up to 2 hectares. The cost for the government for the full year 2019-20 will be ₹75,000 crore. This is unlike the Rythu Bandhu scheme which is giving benefit to all farmers irrespective of the size of the holding. Also, the sum that Telangana government is paying through the Rythu Bandhu scheme is sharply higher and is per acre of holding; the benefit comes to ₹10,000/hectare for a season and ₹20,000/year for a farmer. The sum of ₹10,000 was not arbitrarily fixed. It was decided after working out the cost of production for a farmer taking into account the cost of – seeds, fertilisers, pesticides and labour. This benefit was intended to take care of the initial investment needs of farmers and save them from borrowing at high interest rates from the middlemen/commission agent in villages. But the scheme - Pradhan Mantri Kisan Samman Nidhi looks more of an income support scheme for farmers, rather than a one that will take care of the entire pre-production costs for a farmer.

That said, there have been many other good moves in the budget which is positive from the standpoint of farmers. First, the total subsidies to a farmer that includes MSP, fertiliser cost and interest subvention on crop loans that worked to ₹1.79 lakh crore in 2017-18 and increased to ₹2.56 lakh crore in 2018-19, has increased further in the estimate for 2019-20 to ₹2.7 lakh crore. This is because of the substantial jump in the provision for MSP procurement – from ₹1 lakh crore in 2017-18 to ₹1.8 lakh crore for 2019-20. Further, the allocation for the Market Intervention and Price Support Scheme (where the centre purchases oilseeds and pulses at MSP) has increased to ₹3,000 crore for 2019-20, from ₹200 crore in 2017-18. So, farmers can expect more central procurement in the coming year. The good news is also that there has been increase in the budget for Pradhan Mantri Krishi Sinchayee Yojana. From ₹8,251.43 crore, it has increased to ₹9,515.93 crore. This allocation may help complete some of the long pending projects in irrigation across states and help farmers in the arid areas. So far (since 2016-17) only 31 of the 99 major projects under AIBP (Accelerated Irrigation Benefits Programme) have been completed.

The background

In the last five years, agri GDP growth has averaged at 3 per cent, down from the previous five years’ 4.28 per cent, hitting the roots of rural economy. The record high food production in 2016-17 and 2017-18 didn’t help as food prices crashed. Various measures taken by NDA towards farmers’ welfare including – establishment of electronic National Agriculture Market (eNAM), increase in the minimum support prices of crops and implementation of the crop insurance scheme – Fasal Bima Yojana, haven’t helped change the dire situation in rural-India. However, one thing to take note of is that spending on infrastructure in rural-India -- as indicated by the number of houses constructed under central schemes including the Pradhan Mantri Awaas Yojana-Gramin, the construction of roads in rural areas, or power connectivity in villages -- has been higher than the previous five years.

Fact box:

Fact box:

MSP procurement may rise

Irrigation projects get higher funding support

PM-KISAN benefit is too little

Published on February 01, 2019
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