Agriculture and the rural economy was the first subject on which the Union Finance Minister Arun Jaitley focused in his budget speech. He outlined a slew of measures to boost agricultural production and the rural economy, announcing new projects as well as enhanced support for existing schemes to the tune of Rs 14.34 trillion in the Union Budget 2018.
The steps are:
1. One of the first steps the Finance Minister announced was setting the minimum support price (MSP) at 1.5 times the cost of production of the kharif (summer) crops, given the situation where many product prices have been forced below MSP in recent times.
2. Jaitley also announced an increase in agricultural credit to Rs 11 trillion.
3. He spoke about the development and upgradation of 22,000 rural haats or markets for which he will set aside Rs 2,000 crore. The government announced full implementation of eNAM system (online agriculture marketplace) by March 2018.
4. Rs 500 crore were allocated for “Operation Green” to promote agriculture logistics.
5. The government will also make efforts to link villages and rural roads to agricultural markets.
6. Increase in funds allocated for the National Rural Livelihood Mission under the Rural Development Ministry to Rs 5,750 crore in 2018-19.
7. Rs 2,600 crore to ensure irrigation facilities in 96 irrigation deprived districts, besides funds to boost fisheries and animal farming.
8. The 21% increased allocation towards crop insurance schemes, at Rs 13000 crore, will help in stabilizing and stabilizing farmer incomes.
9. The government has allocated Rs 2600 crore towards irrigation reforms.
10. The allocation for rural institutional credit has been enhanced to Rs 11 lakh crore.
11. The Budget has allocated Rs 70000 crore for fertilizer subsidies.
The government needs to focus more on the process of collecting crops from the farmers and there has been no announcement regarding this. This is essential for the agricultural sector. All the announcements need to be substantiated with increased governmental involvement in procuring crops.
The government has also failed to substantiate any proper policy of debt reduction or for waiving farm debts. This was the electoral promise of the BJP and has been consecutively avoided for the last four years. The Finance Minister has increased the agri-loan distribution to Rs 11 lakh crore for this financial year. But there is no proper budget allocation for this case. As always the loans will be distributed from the commercial banks, cooperative banks and rural banks and we have seen that institutional loans hardly ever reach the small and marginal farmers. The Budget does not reflect any policy to reach out to these marginal farmers who remain out of the ambit of institutional credit. The announcement of easy loan for share farmers has also not been substantiated by any objective step.
Demonetisation has hit the Indian cooperative sector. The agricultural sector is highly dependent on cooperative banks and such banks need to be strengthened to aid the agricultural sector. Increasing the agri-loan distribution target is only a half measure. According to the 2016 statistics, one fourth of total agri-loans have been distributed by the urban branches of different banks. Simultaneously 14% of the agri-loans were of more than Rs 1 crore. It is evident from this, that the corporate companies have bagged these loans.
The Finance Minister has announced a bunch of policies like Kishan Credit Card, eNAM for 22 thousand rural markets and Rs 10 thousand crore for fishery, aquaculture, animal farm. He has announced Rs 500 crore for ‘Operation Green’ in order to stabilise agricultural production and to control the price of tomatoes, onions and potatoes. The amount is a pittance and reflects a paltry sum of around Rs 10 per farmer for approximately 50 crore farmers.
The Budget has no focused programme for the bamboo sector and it has decided to revitalize the National Bamboo Mission (NBM) with appropriate restructuring and by giving adequate emphasis production, product development and value addition activities. National Bamboo Mission got Rs 1290 crore and organic production got Rs 200 crore in the budget.
The Budget was full of announcements and promises but they were not validated by any proper arrangement. According to the Bengal Chamber of Commerce, “…utilisation of increased infrastructure funds for agriculture into roads development and logistics growth and bringing in relief for women and senior citizens are some of the wide-ranging positive announcements. In agriculture, fixing MSP at 1.5 times the production cost may bring in inflationary pressures.”
Recurring losses and debt have pushed many farmers to commit suicide in the past years. The Budget hardly reflects that reality. It lacks objective analysis of the situation and no policy reflecting the agony of the agricultural sector has come through. The government needs to address the fundamental contradictions of the agrarian sector first and that is missing from this budget.