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  • Ajay Kakra - Leader, Food and Agriculture, PwC

    Ajay Kakra

    Leader, Food and Agriculture, PwC

    DATE: January 27, 2017, 11:45 AM

    SUBJECT: What announcements could FM Jaitley make for the agriculture sector in Budget 2017?

    BUDGET->BUDGET 2017

CHAT CLOSED. READ TRANSCRIPT BELOW

  • MODERATOR:

    Hello and welcome to a webchat with Ajay Kakra, Leader Food and Agriculture, PwC, to discuss what announcements FM Jaitley could make for the agriculture sector in Budget 2017.


    AJAY KAKRA:

    Hello, everyone


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    PRATYUSH RAJ

    This financial year, the overall agricultural output was expected to grow at 4%. But with the government's demonetisation move, that has likely to be dented What kind of favourable policies can we expect to heal the agriculture sector?

    AJAY KAKRA

    Agricultural growth is fundamentally governed by output of food grain and other crops which is showing no sign of decrease. The Rabi crop is also expected to be normal except a shortfall in rabi paddy. Therefore the sector will see a growth over last year. Demonitization had only a one time effect on the agricultural transactions but has not shown any sign of slowdown in food storage and distribution and even consumption. I believe the policies will look at strengthening the coverage of greater no of farmers in the formal banking system and providing more credit in terms of crop loans, equipment purchase, technology adoption. Currently only 52% of total farming community of 9.2 crore is covered under financial net. The govt should aim at increasing it by another 10%. Apart from this we may see policies and incentives towards irrigation and insurance of farm crop.


  • K

    KESHAV BHATT

    In his New Year's Eve speech, Prime Minister Modi talked about giving certain concessions and incentives to farmers. It is hoped that the government will follow that up with further concessions and incentives for the agriculture sector in general, and the agro-input industry in particular in the coming Budget. What can we expect?

    AJAY KAKRA

    one of the key focus of the honorable PM was to have greater access of farm credit. In my view as well this can be a key area of focus to strengthen the farming sector. As far as the agri Input sector is concerned, access to seed, agro chemical and fertilizer is a essential requirement for ensuring farm output. The budget can look at strengthening the distribution network of agri inputs to ensure availability at the time of sowing or beginning of the season. The rabi sowing has been more or less normal while the offtake of fertilizer has also not been dampened due to cash crunch at the time of demonitization.


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    ATUL MEENA

    Is the government's digital push any good for the Indian farmer? What will be the overall impact of the so-called 'Digital India' on the country's farmers and agricultural labourers?

    AJAY KAKRA

    Our economy is getting digitized, so should the farming sector be. I completely agree that a digitized farming community can be much more efficient and informed than the current one. However, this will be a challenge to both the farmers and the stakeholders working with the farming community. Currently the mobile penetration in farming community is less than 40% therefore limiting the potential to have mobile based digital services. However on the long run digitization can bring in benefits such as better price information, response to climate changes, adoption of new technologies, better working capital management etc. On other hand private and public organizations working with the farmers also need to bring in digital business models to have efficiency in procurement, extension, payment solutions, farmer/ vendor management etc.


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    PRATYUSH RAJ

    The Modi government has already promised to increase Indian agriculture's profitability threshold to more than 45% in the next few years, and to double the agricultural production by 2020. Is it even possible? If it is, how?

    AJAY KAKRA

    The agricultural sector is fundamentally challenged by multiple issues such as low mechanization, dependency on rainfall, high cost of inputs, unorganized market structure, inadequate infrastructure, availability of credit, limited farm insurance etc. Making the agricultural operations viable for marginal or small farmer will be a very uphill task although not impossible. Similarly the target of doubling production will require strong focus on R&D , a very effective extension mechanism and above all convincing farmers to adopt to a new age agriculture.


  • A

    AASHISH PRATAP

    According to DIPP report, the Indian agricultural services and agricultural machinery sectors cumulatively received FDI equity inflows of about $2.28 billion from April 2000 to March 2016. What's your take on FDI inflows in this sector? What policy push does it require to attract more foreign money?

    AJAY KAKRA

    The focus of many states is changing to streamline its policy and investment environment to boost investor confidence. This can be seen from the examples of Gujarat which has been able to attract global investors in agricultural sector. AP and Telengana and many other states are following suit. The equity flow of foreign investors will depend on the state of basic infrastructure (roads, agri markets, land availability, storage and processing capacities etc) policy framework (investment policies, availability, ease of doing business etc) and suitability to the business plans. Appropriate policy measures to improve these areas needs to be undertaken. There is likely more investors to get in agricultural and food processing sector. We can expect investment in field of agri logistics, warehouses, processing infrastructure. We can also see more home grown investors participating in the new projects. However this needs to be supported by financing through banks/ PE firms. .


  • A

    AKASH SINGH

    CSO estimates show that the share of agriculture and allied sectors in FY16 was 15.35% of Gross Value Added. In spite of being a major contributor to the economy, investment in this sector, on which more than 60% of the country's population depends, has grown at a slow rate in the past few years. What can be done to improve that?

    AJAY KAKRA

    The Gross Value Add (GVA) of agriculture is INR 10.5 lakh crores. Indian agricultures contribution to the economy is more than the world average of 6.1%. As the economy will progress the contribution will lower while the contribution of value added segment of processing and services in the sector will increase. In order to make agriculture sector more robust we need to have huge amount of public sector investment in providing fundamental facilities such as roads, markets etc. which will enable the sector and make is more attractive for private sector investment. The private sector investment will flow in areas of agri input, farm services, storage and logistics, processing infrastructure etc which are more business oriented spends. If we take a horizon of 10 years we can find increase in private sector investment if public expenditure is increased to enable the sector.


  • N

    NEHA ANAND

    The Indian agrochemical industry is expected to grow 7.5% annually to reach $6.3 billion by 2020, with domestic demand growing at 6.5% a year and export demand at 9% annually. Do we expect anything more for this industry in Budget 2017?

    AJAY KAKRA

    The consumption pattern of agro chemicals has been more or less same in the last few year as there was no major crop shift seen. The growth has started to come in export market specially through entry into the african markets. The budget may look at policy measures for faster registration and patenting of new molecules. we also need strong R&D in this sector so that we can come out with effective products for field crops.


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    PANDYA SINHA

    A large cultivable area in the country is still unirrigated which liits the per-unit productivity of agricultural operations. How can this challenge be addressed?

    AJAY KAKRA

    The governments measure to create irrigation infrastructure under Pradhan Mantri Krishi Sichai Yojna is an excellent initiative. The budget outlay for the same was INR 5500 crores. We can expect to see more budget allocation under this scheme. With an irrigated land the per unit productivity can go upto 2.5 times therefore this should be a key focus area for the sector and the budget


  • P

    PRATYUSH RAJ

    Shouldn't the finance minister announce a nationwide policy framework to promote R&D in the agriculture sector?

    AJAY KAKRA

    Our R&D has brought out good products in the seed,animal husbandary, soil, irrigaton and other segments. However the key disconnect is the commercialization of these new technologies and products. There should be greater focus on commercial research and commercialization of products derived out of such research. If there has to be a policy, it should focus on the above concerns.


  • K

    KASHIF

    Agriculture is one of the major sectors of the Indian economy, but it is still not taxed. Can we see some sort of taxation on the agriculture sector in Budget 2017?

    AJAY KAKRA

    this is highly unlikely.