Lack of reform upsets farm sector

The beleaguered farm sector was looking for much more from Union Budget 2019-20 to alleviate distress and boost agri-incomes. This, even as the agrarian distress, witnessed over the past few years, threatens to spill over as the South West Monsoon, the lifeline for the country’s agriculture sector, has had a delayed onset and made poor progress, impacting early kharif planting.

“We will invest widely in agricultural infrastructure,” said Finance Minister Nirmala Sitharaman, presenting her maiden Union Budget. “We will support private entrepreneurship in driving value-addition to farmers’ produce from the field and for those from allied activities, like bamboo and timber from the hedges and for generating renewable energy,” she said.

Sitharaman has hiked the allocations to the Agriculture Ministry by about 92 per cent to ₹1.30 lakh crore for 2019-20 from the revised estimates of ₹67,800 crore in 2018-19. However, of this, ₹75,000 crore has been earmarked for the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan), a direct income support scheme, against ₹20,000 crore in 2018-19 (RE).

The Modi Government, immediately after returning to power, expanded the PM-Kisan scheme to cover all farmers across the country, under which ₹6,000 is being directly given to farmers. The fertiliser subsidy has been increased by 14 per cent to ₹79,996 crore from the previous year’s ₹70,085 crore. Of this, the urea subsidy comprised of ₹53,629 crore ( ₹44,995 cr in RE 2018-19) and nutrient-based subsidies, ₹26,367 crore ( ₹25090 cr).

Appreciating the farmers’ efforts in achieving self sufficiency in pulses, Sitharaman hoped for a repeat of such a success in the production of oilseeds and thereby reducing the edible oil import bill.

To ensure better prices for farmers, the Centre will work with States to allow farmers benefits from the electronic National Agricultural Market (e-NAM). “The Agriculture Produce Marketing Cooperatives (APMC) Act should not hamper farmers from getting a fair price for their produce. Ease of doing business and ease of living both should apply to farmers too,” she said.

Sitharaman also stressed upon the need to replicate Zero Budget Farming across the country, following which scrips of agri-input makers such as UPL and RCF ended in negative terrain.

Struggling to grow

India’s farm sector grew at a slower pace of 2.9 per cent in 2018-19 as lower prices impacted farm incomes despite higher output. Further, a drought across several states last year also aggravated the agrarian distress.

Farmer sector stakeholders are largely disappointed with the budgetary announcements. “The Budget has nothing concrete for farmers and is merely empty rhetoric. It does not address the issue of remunerative prices for farmers’ produce or suggest any steps to free them from indebtedness. Rather, the Government adds to the burden of the peasantry by proposing a ₹2 cess on diesel which will increase the cost of production significantly,” said the All India Kisan Sabha (AIKS) in a statement.

“The Government is moving in the direction of greater deregulation. This has led to increasing agricultural costs as opposed to savings in cost of production. A major cause of the crisis in agriculture is the huge increase in prices of inputs that has taken place as a result. With a huge rise in the cost of seeds, fertilisers, diesel and electricity as a result of decontrolling of prices of these inputs and imposition of GST, government needed to restore price regulation and bring prices of input costs under control,” AIKS said while calling upon all its units to rise up in protest against the betrayal of the peasantry and be vigilant and resist any attempts to promote corporate interests.

‘No vision’

“The Budget lacked policy direction on several key issues that dogged agriculture,” said Aribandi Prasada Rao, VP, Telangana Rythu Sangham, said. “The Economic Survey has identified the issues that are plaguing the sector very well. It acknowledged the domination of small farmers. The BJP’s manifesto too has promised several interesting schemes for farmers. But the Budget has not reflected them,” he said. Ram Kaundinya, Director General of the Federation of Seed Industry of India (FSII) said that the seed industry had expected more from budget 2019 on inclusion of new technologies to address agricultural distress.

“The agri-business (sector) was expecting specific reforms to encourage and promote private sector investments along the agriculture value chain. These expectations have been belied,” said Sanjay Kaul, MD and CEO, National Collateral Management Ltd. “There appears to be lack of vision of how the government would achieve the laudable objective of doubling famers’ income and improving the livelihood of farm households in the next three years,” Kaul said.

However, D Narain, MD & CEO, Bayer Crop Science said, “The proposed measures around farming will give an impetus to the agriculture industry by plugging gaps in capital subsidies and structural support. “Plans to invest further in agri-infrastructure are a step in the right direction to make Indian agriculture more competitive globally.”

The edible oil industry said the Budget had failed in encouraging oilseed cultivation, while expressing fears that maintaining the status quo on import duty would actually force farmers to shift to other crops.

“The Finance Minister in her speech ‘Vision for the Decade’ focused on self sufficiency in oilseeds. However, this did not reflect in the Budget Notification except for the withdrawal of exemption from custom duty (7.5 per cent) on palm stearin and fatty acid which has practically no impact on the struggling Palm Oil Refiners,” said Atul Chaturvedi, President, SEA.

“The industry anticipated an increase in the import duty on edible oils from Malaysia. But we understand because of the trade agreement with Malaysia, that could not have been possible. But the Finance Minister could have looked at quantitative restrictions on edible oil imports. This made the budget announcements just as a routine exercise,” said Sameer Shah, President, SOMA.

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