Budget, a mixed bag for farmers

Sukhpal Singh | Updated on February 04, 2020

While proposals on agri-warehousing and viability-gap funding are positive, MGNREGA cutbacks could have been avoided

The Economic Survey had a full chapter on agriculture and food management issues, highlighting the role of agricultural GDP; Minimum Support Price (MSP) regime, mechanisation of agriculture, farm credit, crop insurance, agri research and education, including in allied sectors such as livestock and fisheries, food processing and agricultural trade, besides rationalisation of food subsidy and Direct Benefit Transfer (DBT) in food and fertilisers.

But, the Survey is silent on marketing aspects of the farm economy and is preoccupied with production-related aspects most of the time. Another chapter in the Survey, which focusses on role of government intervention in markets, also dwells on the Essential Commodities Act (ECA) as an impediment to agricultural sector growth and again dwells on the role of Food Corporation of India (FCI) in the foodgrains markets and argues for its curtailment in terms of procurement and buffer stocking of foodgrains, especially paddy rice and wheat.

It is in this context that we need to examine the provisions of Budget 2020-21, from a smallholder farmer and market efficiency perspective.

Focus on 100 water-stressed districts is welcome as is on solar power projects and their use in the farm sector. And there are some modest targets like 20 lakh standalone and 15 lakh on-grid solar pumps and the use of barren and fallow lands for the same.

The other big-ticket measure is the focus on the agri-warehousing and cold storage sector and tying it up with WDRA for warehouse receipts, which can really help the farmers realise somewhat better prices by providing holding capacity for the farmers in local areas. Involvement of Food Corporation of India (FCI) and Central Warehousing Corporation (CWC) in this is also a desirable step as is bringing women self-help groups (SHGs) into it with support from Mudra and NABARD Rural Infrastructure Development Funds (RIDF) loans, besides asking NABARD to do geo-tagging of such storages.

Most importantly, the viability-gap funding would be the real game changer here. Also, linking warehouses with e-trading and e-National Agricultural Market (e-NAM) platforms is a good measure. Many Primary Agricultural Co-operative Societies (PACS) and other Farmer Production Organisations (FPOs) are already into warehousing and can get into it as they are locally based. If they can be recognised for warehousing and negotiable receipts, they can fill a big gap in helping farmers realise better prices.

The cluster approach to developing horticulture under One District-One Product is another good measure to give thrust to quality exports from India and which was long due. Similarly, Krishi Udaan and Kisan Rail initiatives to speed up transport of perishable produce, especially from North-East States are welcome.

NREGS funding

The focus on livestock insurance and use of Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) for fodder production is also timely and well thought out. But, how would it happen when the MGNREGS funds have been cut down by 13 per cent compared with previous year’s allocation?

In fact, cutting down on food, fertiliser and MGNREGS in the times of rural distress and economic slowdown is unfortunate and beyond comprehension and follows blindly the prescriptions of the Economic Survey. The scaling down of FCI and its procurement operations would hit farmers’ interest wherever it was reaching them as a price and market assurance mechanism, even though only a small percentage of farmers could avail of it.

The argument that MGNREGS cut is compensated by the PM Kisan scheme is not valid as they are not substitutes for each other; MGNREGS mostly caters to landless and tenant farming households whereas PM Kisan is for land-owning households only. This would hurt the interest of the most marginalised in rural India and take away the last resort of their livelihoods.

But, many of the 16-point proposals in the Budget on agriculture are statements of good intent and do not really offer anything new.

For example, we have been talking about the need for reforms in land and farm produce markets and the Budget just states that three new model Acts have been designed by the Centre and handed over to States in 2016 (land leasing), 2017 (APLM) and 2018 (contract farming), respectively.

But, what would States do with them and when is anybody’s guess given that only a couple of States have amended the APMC Act during the last one-two years ever since the models Acts (APLM and CF) were floated; the nature of recent amendments carried out by Punjab in its APMC (not APLM) Act does not bring much clarity.

Similar is the case with bringing a good balance between chemical and bio-inputs and promotion of traditional, organic and Zero Budget Natural Farming (ZBNF). But, the encouragement to ZBNF in the Budget as a part of sustainable and green methods agricultural paradigm is perhaps misplaced as sustainable agriculture does not mean only one model; there are others which should also be equally supported in the same way as all FPOs are being supported, not one or the other type.

The announcement of promotion of 500 fish FPOs (Farmer Producer Organisations) is only about a shift in focus to some extent as it is only a part of the earlier announced promotion of 10,000 FPOs over the next five years in the last Budget. The most common form being used presently is the producer company which is a legal institution innovation and hybrid form combining the features of a co-operative and a company.

But, the promotion need not be in terms of targets, and the argument that every marginal or small farmer needs to be a part of an FPO is misplaced. Further, if the support to these FPOs after their setting up is not continued for a few years continuously, then it is a job half done. People’s institutions take time to build and can’t be created just like that if they have to be sustainable in their operations and robust in their governance.

Loan waivers

The Budget document claims that during the last 10 years, farmer incomes have improved due to loan waivers at the State level. Even if that is true, how can the present government at the Centre claim credit — in terms of the last 10 years as well as what is done by State governments?

More surprisingly, improving marketing efficiency has been only stated in terms of model Acts following the Economic Survey recommendation which only discusses production issues and mechanisms. Of course, one can say that agricultural markets is a State subject but so are many other subjects addressed by the Union Budget in the agri and rural domain.

The writer is Professor and Chairperson, Centre for Management in Agriculture, IIM Ahmedabad

Published on February 04, 2020

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like