Budget unlikely to lift the farm sector

G Chandrashekhar | Updated on July 08, 2019

Zero-budget farming and cash sops won’t help. Roping in the States to address structural issues is the need of the hour

Budget 2019-20 must have been somewhat of a dampener for those expecting significant proposals or a roadmap to bring about a resurgence in the beleaguered farm sector.

The Budget proposals are unlikely to help address the ongoing agrarian crisis characterised by falling incomes, weather risks, and weak sentiment.

In her Budget speech, Finance Minister Nirmala Sitharaman referred to a slew of issues including the need to strengthen agri-infrastructure, promote biofuels, expand the national electronic agricultural markets, and encourage formation of 10,000 farmer producer companies. But there is little by way of an action plan or time-line for implementation.

While the proposals by themselves are welcome, they are unlikely to help address the ongoing agrarian crisis.

In experimental stage

Worse, the attempt to promote to zero-budget farming appears somewhat regressive given the context of the country’s farm sector. To be sure, Indian agriculture is fragile and vulnerable. Land constraints, water shortage and climate are challenges the sector has to grapple with.

The Finance Minister seems to assume that the country’s food security would be advanced by adopting zero-budget farming which shuns the use of chemicals and envisages use of inputs like bio-fertilisers and bio-pesticides. This system of farming is still being experimented in select regions and there is no national acceptance.

There’s need for adequate empirical evidence that this kind of natural farming system will not compromise the country’s much-treasured food security. For instance, are we sure this system of farming would help effectively address the ongoing menace of Fall Armyworm which has wrought havoc?

PM-Kisan scheme

The Budget speech seems to be a continuation of the initial disconcerting noises that emanated from Krishi Bhawan. The Agriculture Minister is keen to push ahead with the PM-Kisan Yojana, which is an income-support scheme for farmers. A 100 per cent Central scheme, it will give farmers ₹6,000 per annum in three equal instalments. From the current fiscal, the scheme has been extended to cover all farmers.

According to the government, the total beneficiaries will be 14.5 core. However, in a recent meeting, the minister urged the States to ensure enumeration or listing of all eligible farmers for direct transfer of the cash benefit. If the government does not already have a list of eligible farmers, it is a mystery how this estimate of 14.5 crore farmers was arrived at.

Be that as it may, the proposed payment of ₹6,000 per farmer is nothing but a dole touted as income support. It is unclear what the support seeks to achieve in terms of positive economic impact on the farm sector. Agreed, Indian agriculture is generally in a distressed state and farmers continue to suffer less-remunerative prices. They deserve to be supported.

But handouts are no solution and PM-Kisan is a facile option. The expenditure of ₹6,000 per grower per annum totalling ₹87,000 crore (going by government estimate of 14.5 crore farmers) is unlikely to bring about any dramatic transformation in Indian agriculture and will remain a fiscal burden without any corresponding tangible benefit.

Anecdotal evidence suggests landowners who never bothered to cultivate crops on the land they possess are now rushing to register their land records in order to receive the cash benefit. Such ‘farmers’ or absentee landlords will enjoy a small windfall of ₹6,000 a year.

Importantly, the real value or utility of ₹6,000 for a small farmer in, say, Odisha will be far different for a farmer from in Punjab or Haryana, for instance. In its present setting, the scheme ignores the unequal status of resource-poor farmers and resource-rich farmers in different regions of the country. In other words, the scheme seeks to treat unequals as equals.

One would actually have liked the both the Agriculture and Finance Ministers to highlight the government’s vision and strategy — policy, investment, research — to bring about resurgence in the farm landscape so as to ensure sustained growth as also remunerative prices for growers.

The sector is critical because it provides livelihood to over 50 per cent of the country’s workforce. It is actually a matter of concern whether the new government will holistically address the structural problems of the farm sector or just do more of the same thing it did in the last five years.

Agriculture must grow

Unless agriculture grows sustainably, India cannot grow sustainably. Growth in agriculture will unleash a virtuous cycle and deliver several spin-off benefits, including substantial improvement in India’s low rank in the human development index.

For agriculture to grow without the cash sops of the kind now being handed out, various structural problems need to be fixed. Little attention was paid to the problems relating to input supplies, irrigation, technology infusion, rural infrastructure, market reforms, capacity building, and so on. While the Centre can dole out generous cash sops to growers, the structural issues have to be addressed in conjunction with State governments. It is the responsibility of the Centre to take State governments on board to design and implement a new national agricultural policy with regionally differentiated strategies.

The strategy must surely take into account challenges such as land constraints, looming water shortage and global warming. Environmental concerns especially in frontline States such as Punjab and Haryana cannot be glossed over anymore.

In our country, problems relating to agriculture are known, and we believe we are aware of the possible solutions. There seems to be a lack of political will to catch the bull by the horn, as it were. Hope the new government will seriously apply itself to ensuring a farm resurgence.

The author is a policy commentator and commodities market specialist. Views are personal

Published on July 08, 2019

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