Budget 2018: FM Jaitley expected to focus on agri to improve rural economy

The focus could be expressed by policies and allocations to activities that ensure good prices for crops, food and nutritional security, minimum wastage and higher processing of produce

In the upcoming Budget 2018, Finance Minister Arun Jaitley is expected to significantly focus on agriculture with a view to improving rural economy and livelihoods.

This focus is likely to be expressed by policies and allocations to activities that ensure good prices for farmers’ crops, food and nutritional security for the population, minimum wastage and higher processing of produce.
Good returns from agriculture can be achieved through a combination of factors like reducing risks faced by farmers and increasing the rewards for their labour.

Risks will need to be reduced through better and wider implementation and monitoring of risk-mitigating policies like crop insurance, irrigation support and access to quality inputs.

Higher rewards for the farmer can be achieved through interventionist state procurement mechanisms and improved market access which allows the farmer to link to the food value chain within and outside the country.

Improved market access will, apart from policy changes, need a higher level of investment in infrastructure, including in cold chains, packaging and transportation, and that needs to be encouraged with fiscal incentives and policy facilitation to move food from the producers to consumers in an efficient manner.

Giving an impetus to the food processing and retailing industry will help address problems of food price volatility, reduction of food loss and wastage, and ensure efficient supply of safe and nutritious food besides creating more employment.

In addition, a more predictable policy and regulatory environment with the agility to react to the surpluses and deficits that may be caused by the vagaries of weather or global factors will be needed to prevent price shocks on the higher or lower side.

There is a need for continuing the encouragement to shift away from wheat and rice cycle to oilseeds, pulses, dairy, protein, maize, fruits & vegetables. Recently, the government has increased the import duty on some edible oils and pulses.

However, leaving the import duties unchanged for certain oils like cottonseed and corn oil has left the job incomplete and will hurt the farmers growing these crops and distort the trade. Therefore, the government should make the duty hike consistent across different oils.
 
While a lot of measures are already a work in progress, this year in particular will probably see actions that bring an urgency in implementation and call for immediate/direct outcomes from the efforts.

The author is chairman of Cargill India Pvt Ltd