Interim Budget 2019: Agri focus increases, but a lot more needs to be done

Farm-gate prices of most commodities have slumped in the four and half years of this government mainly owing to a drop in global commodity prices and oversupply in domestic markets, along with a decline in demand.

Though the first two years, 2014 and 2015, saw back-to-back drought, the production of foodgrains and oilseeds fell marginally.

When the monsoons improved in 2016, output rose, pulling down prices of agriculture commodities and creating a situation of distress in rural areas.

The government in its response has been increasing the budgetary allocation for agriculture and the rural sector and also announced measures to boost farmers’ income.

Between the Modi government’s first Budget of 2014-15 and the last full Budget of 2018-19, the allocation for agriculture and allied activities rose to around Rs 2.11 trillion, which was over 70 per cent more than the allocation for the sector in the preceding five years, that is between 2009-10 and 2013-14.

However, a big change came from 2016-17, when the budgetary allocation for the sector rose to over Rs 44,000 crore from around Rs 22,000 crore in just one year.

But, a big reason for the sharp increase was the shifting of expenditure on interest subvention on short-term credit from the ministry of finance to the allocation for agriculture and allied activities.

This not only bloated the overall Budget allocation but also presented a misleading picture about the expenditure made for the sector.

That apart, the five Budgets of the Narendra Modi government also marked perhaps for the first time the creation of corpus funds of almost Rs 70,000 crore in the National Bank for Agriculture and Rural Development and various other financial institutions for easy credit to a variety of sectors. 

These include Rs 40,000 crore special dedicated funds for long-term irrigation projects, Rs 10,881 crore for developing infrastructure in the dairy sector, and Rs 7,550 crore for developing infrastructure in the fisheries sector.

Experts said these off-Budget allocations were an ideal way to provide finances for specific purposes without impacting fiscal discipline.

The success in using the funds lies in the rules and guidelines framed for operating the funds.

In the early days of the government, allocations for various Central schemes and programmes were slashed because many were rationalised following the recommendations of a high-powered panel of chief ministers.

This also meant the role of states became more important in running central schemes.

In the 2015-16 Budget, a big amount of the agriculture ministry’s annual allocation was slashed on its flagship programme — the Rashtriya Krishi Vikas Yojana (RKVY). The allocation was slashed by almost half to Rs 4,500 crore under this head for the year against the 2014-15 revised estimate of Rs 8,444 crore. 

The allocation to the National Food Security Mission (NFSM), under which the government planned to raise the production of pulses, oilseeds, wheat and rice, was lowered by almost Rs 530 crore in 2015-16 as against the revised estimate of 2014-15. The allocation was around Rs 630 crore less than the Budget Estimate of 2014-15. 

Several programmes were launched during the four years with a dedicated focus on making Indian agriculture drought-proof by completing 99 irrigation projects.

The government launched a television channel for farmers called ‘Kisan' TV’ with an allocation of Rs 100 crore. 

In the 2018-19 Budget, the government announced creating a special mechanism to ensure procuring commodities and reiterated its commitment to ensure an MSP (minimum support price) 50 per cent more than the cost of production and doubling farmers’ income by 2022. 

But, if the elections in Chhattisgarh, Rajasthan and Madhya Pradesh are any indication, a lot more is required to satisfy farmers.