Budget 2020: Exclusive trains and planes to ferry produce

Finance Minister Nirmala Sitharaman may have devoted a sizeable part of her Budget speech to the agriculture and rural sector. However, barring a couple of big announcements — such as launching dedicated planes and trains for ferrying perishable products from remote locations, and engaging NABARD to map all the existing warehouses in country — the Budget left much desired for the sector.

While the agriculture and allied sectors received a nominal increase of 8.1 per cent to ₹1.6-lakh crore (which is negligible if inflation is accounted for), the allocation for the rural sector saw barely any increase, at ₹1.23-lakh crore.

Many of the agriculture-related schemes witnessed heavy slashing of funds, though some others received a boost in allocation. The funds earmarked for fertiliser and food subsidies were slashed significantly (see table), while the PM Kisan Samman Nidhi (PM-Kisan), PM Krishi Sinchay Yojana (PMKSY) and PM Fasal Bima Yojana (PMFBY) saw an increase in allocation for 2020-21, though their spending was less than allocated in 2019-20.

While presenting the Budget, the FM listed out a 16-point action plan — many of which have already been rolled out — that the government is undertaking for the agriculture and allied sectors.

Krishi Udaan, Kisan Rail

Sitharaman said the Ministry of Civil Aviation will launch Krishi Udaan , a project to use dedicated aircraft on national and international routes to help improve the value realisation of agri produce from the North-Eastern States and tribal districts across the country. Similarly, the Indian Railways, together with the private sector, will come up with Kisan Rail , which will be a seamless national cold supply chain for perishables, including milk, meat and fish.

Krishi Udaan and Kisan Rail are special arrangements being made to reach agricultural produce soon after harvest. Similarly, the States will be encouraged to implement model laws formulated by the Centre, said Agriculture Minister Narendra Singh Tomar, in a statement.

The two new schemes will play a key role in the proposed 16-point action plan to boost agriculture. If formulated and implemented well, these schemes will be the ‘different set of solutions’ that the agriculture sector has been longing for, said Ajay Sawhney, Partner at Cyril Amarchand Mangaldas.

District-level storage

In another major announcement, NABARD has been directed to map and geo-tag all the existing warehouses, cold storages and reefer van facilities, with a combined capacity of 152 million tonnes, in an effort to streamline storage. To meet the requirement for warehouses at the block and taluk levels, the private sector will be engaged, with the government providing viability gap funding.

“The decision to boost district-level storage infrastructure with private partnerships is a welcome step. Through these announcements, the government has addressed some of our long pending demands,” said Sandeep Sabharwal, CEO of the Sohan Lal Commodity Management Group.

“The 16-point action plan for the agriculture sector represents a comprehensive package of interventions. This is a refreshing change from the previous Budget, which had limited new schemes for agriculture,” said Sanjay Kaul, Chairman of National Collateral Management Services Ltd (NCML). However, the agri industry is disappointed as no reforms have been announced in the Essential Commodities Act, he added. Also, the schemes to spur private investment and capital formation in the agri space were insufficient, he further said.

Agri credit target

The government has also fixed ₹15-lakh crore as the new agricultural credit target for 2020-21, which will disbursed through NABARD. “The decision to integrate negotiating warehousing receipts with e-NAM will help in broadbasing the agri warehousing receipt financing, and benefit agri NBFC companies,” Sabharwal said.

However, Kiran Vissa, an activist with Rythu Swarajya Vedika in Hyderabad, said the agricultural credit target cannot be a Budget headline. “It’s not government allocation, it’s raised routinely each year. It’s a target for banks and it goes mostly to non-farmers. The government only pays interest subsidy on this credit, which ranges from ₹18,000 to ₹21,000 crore a year,” he said.

Fisheries sector

Another focus of the government would be the fisheries sector, whose output it wants to increase to 200 lakh tonnes by 2022-23 from 126 lakh tonnes in 2017-18. The government wants to increase marine exports to ₹1-lakh crore by 2024-25, from ₹45,000 crore in 2017-18.

Towards this end, the Budget announced the setting up of 500 farmer producer organisations and employing around 3,500 new fishery extension professionals, called Sagar Mitras. A plan is also being chalked out to double the country’s milk processing capacity from 53.2 mt to 108 mt by 2025.

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