The Budget spells green shoots for agri-subsectors

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The Budget spells green shoots for agri-subsectors

  • Though there were are no major announcements on agriculture and rural development in the budget but the allocations seem to be right.
  • Given the recent turmoil as a result of the farmers’ protests and the repeal of the farm laws, this was a little surprising.

Allotments, key subsectors

  • Agriculture registered a robust performance during the COVID-19 pandemic and has clocked decent growth rates of 4.3% and 3.6% during 2019-20 and 2020-21.
  • Growth is projected to be about 3.9% in 2021-22, which is a very satisfactory performance indeed!
  • Within agriculture, livestock and fisheries are two sub sectors that have shown an average annual growth rate of 8% or more in the last five years.
  • These two subsectors roughly contribute about 33% of the gross value added in agriculture. Also, as per the Situation Assessment Survey 2019, more than 15% of income is derived from livestock subsector.

An increase

  • The allocation for the National Livestock Mission has also increased by more than ₹100 crore (42%). Similarly, the Pradhan Mantri Matsya Sampada Yojana, a flagship programme of fisheries, has received an increase of about ₹679 crore (57%).
  • The production-linked incentive scheme for food processing has received a huge increase, from ₹10 crore to ₹1,022 crore (a 10,000% jump). Similarly the allocation for micro food processing, which can help in really small enterprises such as pickle and jaggery making, has increased by 125% to ₹900 crore.
  • In keeping with the broad thrust on capital expenditure in the Budget, the allocation for the Rashtriya Krishi Vikas Yojana, or RKVY has been increased by a whopping ₹8,000 crore, a 400% increase.
  • Various other programmes such as the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) , the Paramparagat Krishi Vikas Yojana etc. have been brought under the RKVY fold this year.
  • The allocation for the Agriculture Infrastructure Fund (AIF) has been increased by 150% to ₹500 crore. The central sector scheme called the “Formation and Promotion of 10,000 Farmer Produce Organisations (FPOs) has also received an allocation of ₹500 crore (100% increase).

But a decrease here

  • For instance, the PM-AASHA, which is the flagship programme to provide enhanced Minimum Support Price (MSP) of 50% above the cost of production to farmers (started with a lot of expectation in 2018), has received an allocation of just ₹1 crore! The only conceivable reason for this could be the impending formation of the committee to address the issue of MSPs.

Not much for NREGA

  • With nearly 40% of income being derived from wages by agricultural households, it is imperative that rural development is looked at in conjunction with agriculture.
  • Most major rural development programmes such as the Pradhan Mantri Gram Sadak Yojana , the Pradhan Mantri Awas Yojana and the National Rural Livelihood Mission have received small increases in allocations.
  • This flagship rural employment programme, which has been instrumental in reducing distress in the rural economy during the waves of the COVID-19 pandemic, has received lower allocation — by about ₹25,000 crore (25% decrease) from RE 2021-22 of ₹98,000 crore.

Transformative steps

  • The adoption of modern technology in agriculture should not only help reinvigorate the rural economy but could also possibly encourage the younger generation to consider agriculture as a career option — generally perceived to be a laborious and drudgery-laden sector.
  • The allocations appear to be in the right direction. The thrust seems to be on important sub sectors such as livestock, fisheries and food processing and also on improving infrastructure in the crop sector.
  • Although the allocations on MGNREGS and food and fertilizer subsidies are somewhat lower, there are positives in terms of adoption of technology