Opinion

Nothing in the Budget for rural sector

Ramandeep Singh Mann | Updated on February 16, 2020 Published on February 16, 2020

The allocation under ‘agriculture, allied and irrigation sectors’ in 2020-21 amounts to ₹1.58 lakh crore   -  Vijay Soneji

The Centre has squeezed key farm sector allocations, going against its promise of doubling farm incomes

The Finance Minister has said in Parliament that “Our government is committed to the goal of doubling farmers’ incomes by 2022”. Let’s see whether she has walked the talk.

The government had set up a committee in 2016, under the chairmanship of Ashok Dalwai, with a goal to raise average incomes of agricultural households from ₹96,703 in 2015-16 to ₹1,92,694 in 2022-23 (measured at 2015-16 prices). According to this committee:“Doubling of real income of farmers till 2022-23 over the base year of 2015-16 requires an annual growth of 10.4 per cent in farmer’s real incomes”. But, farmers’ real income has been increasing at a much lower rate of 3 per cent per annum during the last five years, and so the required increase in real income has spiked to 15 per cent per annum.

This is similar to saying that the GDP growth will increase from 5 per cent to 9-10 per cent in two years. In order to compensate for the low growth of “real farmer” incomes in the past five years, we were expecting the government to enhance the Budget allocations for schemes that ensured minimum support price to farmers, and for direct income transfer schemes like PM-KISAN — which has not happened. The Dalwai committee has also inferred that, in order to double farmers’ income by 2022, an additional investment of ₹6.4 lakh crore will be required. Hwever, there has been a dip in allocations to various schemes related to agriculture.

Meagre allocations

The allocation under ‘agriculture, allied and irrigation sectors’ in 2020-21 amounts to ₹1.58 lakh crore, which is only a tad higher than the last year’s allocation of ₹1.52 lakh crore; allocation for these sectors in 2020-21 is 5.45 per cent of the Budget, as against an allocation of 5.2 per cent in the last 2019-20 Budget. When allocation under rural development is included, the allocation in the rural economy amounts to ₹2.83 crore in the 2020-21 Budget, ie 9.3 per cent of the ₹30.4-lakh crore 2020-21 Budget as against an allocation of 9.83 per cent of the 2019-20 Budget.

The allocation of funds under the PM-KISAN scheme, which promises financial assistance of ₹6,000 per annum to all 14.6 crore farmers irrespective of their land-holding, has remained unchanged at ₹75,000 crore, despite the fact that covering 14.6 crore farmers will cost ₹87,000 crore. The Centre has spent only ₹54,370.15 crore in 2019-20 against the budgeted allocation of ₹75,000 crore.

Drastic cuts

Allocations for the Market Intervention Scheme (MIS) and the Price Support Scheme (PSS), which are implemented at the request of State governments for procurement of perishable and horticultural commodities in the event of a fall in market prices, have been cut. For the MIS-PSS, this has been reduced from ₹3,000 crore in 2019-20 to ₹2,000 crore in the 2020-21 Budget.

The PM-AASHA scheme, which was announced in 2018 to ensure that poor farmers growing pulses and oilseeds benefit from higher minimum support prices (MSPs), has been pared as well. The allocation in Budget 2020-21 has been cut to a meagre ₹500 crore from an allocation of ₹1,500 crore in the 2019-20 Budget.

The allocation for Pradhan Mantri Kisan Maan-Dhan Yojana (PM-KMY), which was announced in 2019 as an old-age pension scheme for all land-holding small and marginal farmers, has been slashed by ₹680 crore. A paltry sum of ₹500 crore was kept aside in Budget 2020-21 for the formation and promotion of 10,000 Farmer Producer Organisations (FPOs).

The Finance Minister has proposed to facilitate doubling of milk-processing capacity from 53.5 million MT to 108 million MT by 2025, but the allocation under the Dairy Processing and Infrastructure Fund is only ₹60 crore in Budget 2020-21. However, the government has rightly decided that cooperative societies will be treated at par with corporates, by reducing income tax from 30 per cent to 22 per cent.

Last but, not the least, MGNREGA allocation has been increased by only 2.4 per cent to ₹61,500 crore in thr 2010-21 Budget over last year’s BE, while the revised estimate — what government estimates it will spend by March 2020 — for 2019-20 is ₹71,000 crore.

In contrast, the Centre has chosen to hand out a ₹1.45 lakh crore tax sop to the corporates. These are the same corporates whose ₹6.6 lakh crore worth of NPAs have been written off since 2014-15, against ₹1.5 lakh farm crore loan waivers for crores of farmers.

The writer is a farm sector activist and commentator

Published on February 16, 2020
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