No piecemeal steps

Budget must reboot Indian agriculture

Listing agriculture among the top priorities is a usual refrain of Budget statements every year. The forthcoming Budget for 2017-18 is unlikely to be any different, except this time Finance Minister Arun Jaitley will also need to walk the talk. Given that the plethora of schemes and other piecemeal measures announced routinely in the past have failed to alleviate rural distress, Mr Jaitley will need to change the track. Admittedly, the recent aggravation of farmers’ woes has been due chiefly to two consecutive droughts and the crash in agricultural prices in the wake of a good monsoon-driven higher kharif output and prospects of another bumper harvest in the current rabi. But ill-conceived, improperly targeted and badly implemented policies can also not be absolved of the blame. Some measures aimed at providing instant relief to cash-starved farmers have already been announced outside the Budget. These include a waiver of interest on short-term crop loans for two months post-demonetisation and conversion of kisan credit cards into RuPay debit cards. But these are not enough to mitigate financial woes of rural households on a lasting basis.

The FM’s budgetary proposals for the agriculture sector will, therefore, need to focus sharply on reviving the beleaguered rural economy and to boost rural demand for wider economic gains. This requires greater opportunities for employment and income in the farm as well as non-farm rural sector. The enormous expansion in the annual flow of institutional credit to agriculture – from just Rs 87,000 crore in 2003-04 to over Rs 9 lakh crore now – has resulted only in escalating the debt burden of farmers without a commensurate increase in their income. The Budget would need to aim at mitigating the farmers’ perpetual dependence on borrowed money. For this, the emphasis would have to be on areas which, if suitably strengthened and revamped, could boost farm productivity, input-use efficiency and on-farm and off-farm value addition of agricultural produce — all income-enhancing initiatives. This would also require stress on measures such as irrigation, need-based input use, risk management through the promotion of mixed farming and insurance coverage, and remunerative returns on farm produce through more efficient and transparent marketing. The underlying mantra is to make farming viable by facilitating higher production at lower cost.

There are several other critical aspects of agriculture that have, till now, remained indistinctly focused. A notable one among these is to curb rampant wastage in the agricultural sector, especially the post-harvest wastage of farm produce due to poor handling, outmoded transportation and lack of down-the-line supply chain. Mechanisation of farm operations, especially in the areas where intensive agriculture is in vogue and farm labour is costly, can help raise production at lower cost. Subsidising farm machines may, in fact, prove far more beneficial than subsidising power and water, which encourage wasteful use of these scarce resources. Increased spending on technology generation (read farm research) and technology transfer (read agricultural extension) are equally vital, especially because private investment in these areas is not forthcoming. Ideally, about two per cent of the agriculture sector’s GDP should go into these fields. If the coming Budget can raise it to even 1 per cent, from the current dismally low level of just 0.3 per cent, it will contribute handsomely to putting the agricultural sector on a sound economic footing.