Contrary to general apprehensions of possible cuts in outlay and several likely proposals for mobilising resources, the Union Budget 2013 has a higher outlay by 29.4 per cent for Plan expenditure and adequate outlay for all the welfare and developmental schemes.

There are also several positive moves to stimulate savings and investment. There have not been any big imposts or levies that could be called burdensome on any one specific segment.

However, on certain key growth-stimulating aspects for the agri-business industry, the Budget has been disappointing. The increase of the crop loans kitty, the rural farm credit increase to Rs 7 lakh crore and expanding the incentive for repaying loans to private sector banks on time, will provide some relief to farmers.

However, the Indian farming sector was reeling under severe problems like failure of the monsoon and shortage of labour. In this scenario, we were expecting key initiatives to help address soil nutrition, and water and power availability issues. Budget has not addressed this sector holistically.

The increased allocation to MNREGA will increase the burden on the farmer because it will impact the availability of labour for farming activity.

From the perspective of the fertiliser industry, given that the fiscal deficit target committed by the Finance Minister is at 4.8 per cent GDP for 2013-14, it can be reasonably expected that much-needed reforms in the urea segment of fertilisers will be carried through.

It would be desirable to introduce nutrient-based subsidy for urea also to encourage the balanced use of fertilisers. However, a substantial increase in urea price will be called for to remain within the budgeted expenditure on fertiliser subsidy for 2013-14.

An investment policy for fertilisers, especially for urea, is already in place and 15 per cent investment allowance will further improve viability of projects/major plant and machinery replacements. We should see at least four to five urea projects achieving financial closure during 2013-14.

From the sugar industry perspective, the request for removing levy obligations, imposing flexible duty on sugar imports and ethanol blending have not been addressed, thus stifling the growth of the industry.

(A. Vellayan is Executive Chairman, Murugappa Group)

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