 "Will Budget 2025 signal bold decisions for the agriculture sector?")
One section that looks forward eagerly to the Union Budget is the farm and rural sector.
Though agriculture is a year-long process and some of the major decisions on the farm sector lay within the state’s domain, the Union Budget does provide some sort of direction and peek into how the Central government views this vital part of the Indian economy.
Adequate funding for the agriculture and rural sector also lifts the overall economy and drives consumption growth.
It is in this context that many economists look for signals about the Centre’s outlook on the rural sector from the budget announcements for the agriculture and rural sector.
Ever since the NDA government came to power in 2014, the Union budgetary allocation for the agriculture and allied sectors have grown manifold.
Though, some critics say that some of this is due to pure accounting adjustments such as the expenditure on interest subvention on short-term crop loans was brought within the budgetary domain of the ministry of agriculture in one of the years from the earlier head of department of financial services.
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But, there has been a rise in allocation, such as the expenditure on annual allocation for PM-Kisan (started from 2018 Budget onwards just ahead of the Parliamentary polls), and also rising expenditure on subsidies on crop insurance under the Pradhan Mantri Fasal Bima Yojana.
The Narendra Modi government in its third term now has a new minister in the ministries of agriculture and rural in the form of highly-experienced former Madhya Pradesh Chief Minister Shivraj Singh Chouhan.
Chouhan, ever since taking charge in June 2024, has tried to set a new working example in the hallowed corridors of Krishi Bhawan, where states and dialogue have a bigger role to play while keeping the objectives and priorities of the Modi government firmly in place.
Some of Chouhan’s major decisions have reflected this change, which includes tweaking some procedural issues in schemes to ensure their better implementation and wider acceptability.
However, critics say that so far, the Modi government in its third term, despite having a highly dynamic and experienced minister at the helm, has resisted from making any bold or path-breaking initiatives for the farm sector.
The forthcoming Union Budget provides it with another opportunity for the same. If sources are to be believed, the Budget might expand the loan entitlement under Kisan Credit Card from the existing Rs 300,000 to Rs 500,000 per farmer.
It might also move towards lowering the GST on farm equipment though, decisions on GST is usually taken by the Council and are outside the domain of the Union Budget.
The usual focus on startups and agritech is expected to continue with talks of a dedicated fund for agritech companies to be set up to further boost their growth.
But, the million-dollar question remains, will the Union Budget 2025 be a breakthrough in terms of its funding for research and development in agriculture or in other words, will it strive towards a quantum jump in share of expenditure on research and development in agriculture as a proportion of the total farm budget.
With the climate crisis becoming more acute in the days to come, the country’s farming systems need to be made future-ready.
The big elephant in the room is that the food and fertiliser subsidies are expected to grow given the Modi’s government extension of free food grains scheme for five years and reluctance to raise the market price of fertilizers such as urea and DAP.
For the rural sector, the focus is expected to be adequate funding for the rural housing and rural roads scheme. A special attention on the ‘Lakhpati Didi’ scheme is also expected, given its all-round benefit for the rural households.
For rural houses, the Union cabinet has already cleared a proposal to build 20 million new homes over the next five years. This is over and above the almost 30 million already built. The rules for eligibility has already been tweaked and the process of surveying the new beneficiaries started for the new rural homes.