Proposals inadequate to make a dent on inflation

G. Chandrashekhar Mumbai | Updated on February 28, 2011 Published on February 28, 2011

The Union Finance Minister, Mr Pranab Mukherjee, devoted 20 paragraphs in his Budget speech enumerating various proposals and for making observations on the agriculture sector. Suggesting that agriculture was showing a rebound, he said supply response of agriculture to rising demand needs to be improved. He also admitted that food inflation remained a matter of concern.

Carrying on from where he left last year, the Minister has attempted to pay attention to a number of issues such as green revolution in the eastern region, focus on 60,000 villages for pulses production, special attention to oil palm and millets as also improved vegetable supply chain and so on.

Without doubt, individually, each one of these is important and deserves attention; but taken together these proposals are most unlikely to make any dent in the present farm situation, which is characterised by sluggish output growth, volatile prices, high input and output costs as well as inefficient supply chain management.

If anything, these proposals with budgetary allocation of Rs 300 crore each for as many as six programmes including animal protein development and fodder development will have no perceptible impact in the short run either on output or on prices.

Inadequate allotment

For instance, Rs 400 crore for improving rice-based cropping system in the eastern region is meagre. This region accounts for almost 40 per cent of the country's acreage under rice (16 million hectares out of 46 million hectares); but yields are poor at about 1.2 tonnes a hectare while the national average is 2.1 tonnes a hectare. What can Rs 400 crore achieve is anybody's guess.

Similarly, integrated development of 60,000 pulses villages in rain-fed areas for increasing crop productivity and strengthening market linkages has been allocated Rs 300 crore, which translates to Rs 50,000 a village, an amount too small to make any significant difference. Importantly, it is unclear how this amount is going to be spent. How the allocation was spent last year has not been explained. Interestingly, it was “oilseeds and pulses” last year; but oilseeds seem to have been dropped this year.

On sustainable agriculture, Mr Mukherjee has made the right noises about promoting organic farming methods, combining modern technology with traditional farming practices such as green manuring, biological pest control and weed management. However, no specific allocation or strategy has been unveiled.

On serious flaws that have been exposed in the supply chain by the recent episode of inflation in fruits and vegetables, the Budget has no solution offer, not even a proposal for a meeting of State Chief Ministers to exhort them into action. The same goes for recognising the big difference between wholesale and retail prices of essential food products, but offering no tangible solution.

The overall view emerging within the agribusiness circles is that Mr Mukherjee missed an opportunity to propose measures to tackle farm-related issues head-on and to rein in food inflation.

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Published on February 28, 2011
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