What budget has for farm and rural sectors

There is a sharp rise in allocations for rural and agriculture sector in this budget.
The budget has a slew of initiatives to revive the farm sector. (Image: Azhar Feder, Wikimedia Commons-CC-BY-SA-3.0)
The budget has a slew of initiatives to revive the farm sector. (Image: Azhar Feder, Wikimedia Commons-CC-BY-SA-3.0)

This year’s budget was expected to be extensively farmer- and rural-sector oriented. And that is exactly what it turned out to be. The distress in the agrarian sector has intensified and its political implications were rife this year considering the Lok Sabha elections are scheduled next year. The budget’s immediate context is of an “economy that has undergone a slowdown and faces a challenge of reviving agriculture and rural development and creating jobs,” as noted by the Economic Survey (2017-18).

"Despite the claims of greater support for the farm sector, the allocation for agriculture has been raised by 12.8 percent, which is the same as the last year. The allocation for the rural sector has been increased by only 1.8 percent which is substantially lesser than the 19 percent hike in the previous budget. The increase in the allocation for social sector schemes, which largely benefit the farming population, is 14.5 percent in this budget as compared to 21.4 percent in 2016-17,” says Rahul Banerjee, an Indore-based activist and researcher, speaking to India Water Portal. Within the agriculture ministry’s allocation, a chunk of the growth goes to the Department of Animal husbandry, Dairying and Fisheries.

Within the ministry’s schemes, the ones that received the maximum rise in allocation from last year are Blue Revolution (113 percent), White Revolution (36 percent), Pradhan Mantri Fasal Bima Yojana (21 percent) and the National Mission on Horticulture (15.8 percent). The allocation for Rashtriya Krishi Vikas Yojana has declined substantially (18 percent) while that of the Integrated Child Development Services (ICDS) has increased marginally (7 percent). The budget has enhanced the food subsidy for Food Corporation of India by almost 35 percent. The allocation towards crop insurance has been enhanced by 21 percent to help stabilise farmer incomes. The budget assured that the minimum support price (MSP) for a majority of rabi and kharif crops would be one-and-a-half times the production cost.

Promises kept by the government

There is a feeling that the budget has attempted to link small and marginal farmers to markets to get adequate remuneration for their produce. “We welcome the budget for its focus on the rural economy, employment and welfare of the poor. Our long-standing demand was of a minimum support price (MSP) at not less than the cost plus 50 percent to make agricultural activities remunerative for farmers. The government has finally relented. The government’s procurement operations cover all crops, so farmers who have diversified based on the government’s encouragement are also going to benefit,” says Dr Ashwani Mahajan, from the Swadeshi Jagran Manch speaking at a panel discussion held by the Centre for Budget and Governance Analysis (CBGA).

“The pro-farmer, pro-poor budget is in the right direction. The best ever allocations to the rural sector and agriculture will lead to agricultural growth and rural development and it is committed to the welfare of farmers and to generating higher incomes for them,” says Karia Munda, BJP member and former deputy speaker, Lok Sabha, during the panel discussion.

“The farm and rural sectors have been the primary target of the budget. Thus, from a macro-economic sense, these sectors have gotten a fair share of the budget itself. In terms of the overall impact of agriculture to the economy, the budget may be rated as average,” says Ashish Gupta, former vice-president of the International Federation of Organic Agricultural Movements (IFOAM), Asia.

Promises made without financial allocation

“The budget speech had lengthy homilies on its intent to ensure lower costs of cultivation and higher prices for agricultural produce but no real allocations. For doubling farmers’ incomes by 2022, the slew of measures proposed under the budget is inadequate and farmers are full of dismay and disbelief that they all could be made fools like this. The increase in allocation under ‘white revolution’ will not be enough to counter the depredations made on the viability of cattle rearing by the violent activities of the so-called gau rakshak (cattle protectors), who have made it difficult for farmers to rear cattle,” says Dr Jayati Ghosh of Jawaharlal Nehru University, speaking at the panel discussion.

“The budget was deeply disappointing as it lacked the roadmap and accountability of the implementation of the schemes. We have concerns over the change in fiscal architecture with the government allegedly withdrawing from education, health and infrastructure sectors, leading to their likely privatisation. All the big schemes announced by the government would cost Rs 14.2 lakh crore and it has been stated that Rs 12 lakh crore out of that would be borrowed from the market. The government is creating circumstances for people to go in for the private sector, and this is not a healthy thing,” says Dr Anand Sharma, Congress MP, speaking at the panel discussion.

“The government has played a hoax on people by saying that it will provide 1.5 times the financial cost and the monetised value of the internal family labour which is less than what prevails currently for most of the MSP supported costs. It has not acceded to the demands of the farmers that the MSP should include the cost of the interest foregone on the capital investments made by the farmers. There is only a 10 percent increase in credit support to the farm sector which is insufficient. Under these circumstances, far from doubling the income of farmers by 2022, the present budget will fail to revive the farming sector and only drive farmers deeper into debt and destitution,” says Banerjee.

“In any case, the procurement operations exist for major food grains and cover only a small number of states, most of which are better irrigated (like Punjab, Haryana, western Uttar Pradesh, and Andhra Pradesh). The rest of the farmers (94 percent) in the dryland areas who are hit by the agrarian crisis and have almost no access to public procurement and MSP have been left high and dry. It is not clear as to how the upgrading of rural haats to Gramin Agricultural Markets will ensure that farmers get adequate price for their produce,” says Dr Ghosh.

MGNREGS continues to be underfunded

“The budget for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has not been increased from last year's Rs 55,000 crore. This amount has proven insufficient to pay the wages in the current financial year and there are huge arrears that have accumulated as people have not been paid for months and someimes, years together. With the statutory rise in the wages to account for inflation, the amount of work available under the scheme would be less than in the previous year,” says Banerjee.  

“MGNREGA, which has the potential to boost rural wages and purchasing power, is underfunded and this year’s allocation is the same as last year’s revised estimate. Its allocation has been declining in real terms (to cover inflation) as also as a proportion of GDP. There is a need to work on key components like budget transparency, public participation and budget oversight,” says Nikhil Dey of Mazdoor Kisan Shakti Sanghatan (MKSS) and NREGA Sangharsh Morcha, a countrywide coalition of organisations and individuals at the panel discussion.

“We have concerns over the delay in wages under the MGNREGA and the absence of grievance redressal. There are cases of Aadhaar linkage with wrong accounts, delayed and inadequate wages, especially to thousands of women, and centralisation of the programme. There is a need to reaffirm the ‘legal entitlements’ of the people. Technology is undermining MGNREGA and Aadhaar and is, in fact, making things less transparent,” Dey adds.

Thrust on agriculture marketing

The budget announced full implementation of eNAM system (online agriculture marketplace) by March 2018 to empower farmers with ample bargaining power to fetch justified prices. There is a push for food processing and liberalisation of agricultural exports. “The exemption from tax given to farmer producer organisations is a very welcome step. A lot of us who are trying to bring formality to this informal sector of small holders, especially organic farmers, are encouraged to go ahead with the creation of more FPOs managed professionally for the favour of the small holders. However, it remains to be seen how this will be implemented on the ground where excessive regulation in this roll-out can choke it rather than promote it. As the devil lies in the details, it will depend on how this is implemented by the income tax department and what kind of scrutiny they deem suitable to avoid obvious loopholes in its implementation,” says Ashish Gupta. 

Pointing to the need to have mandis run by farmer conglomerates and not traders, Gupta says that the cost of acquiring any trade point in the mandi is steeped in corruption and involves high cost for farmers. “I am yet to see any small farmer organic initiative which has successfully, cleanly acquired a mandi phad (licence) and is operating for the benefit of smallholders in terms of transparent market access. Such a scheme may be implemented through grameen haats being proposed by the budget. Again, here, if the traders take hold of this market, then it is not going help. These green haats should be given to FPOs to be managed. That will change the situation on the ground,” he adds.

“The Fisheries and Aquaculture Infrastructure Development Fund and Animal Husbandry Infrastructure Development Fund have been created with a total corpus of Rs 10,000 crore but the actual allocation in the budget is only Rs 47 crore. An agri-market infrastructure fund of Rs 2000 crore has been announced but there is no budgetary allocation for the same. The allocation for the crucial supply of electricity to agriculture in the budget for 2018-19 is only Rs 3500 crore against the announcement made last year that it would be Rs 8720 crore. The allocation for the Pradhan Mantri housing scheme for rural areas has been cut from Rs 23000 crore in the current year to Rs 21000 crore in 2018-19. Thus, there is a serious lack of funding for the agricultural and rural sectors,” says Banerjee.

“Schemes like Pradhan Mantri Fasal Bima Yojana and Pradhan Mantri Krishi Sinchai Yojana are more or less the same. In Himachal, access to these schemes is steeped in corrupt practices. The utilisation of these schemes was low last year and is unlikely to increase in future. Frankly, farmers are tired of such schemes," says Gupta.

No steps to strengthen nodal body of organic agriculture

“It is disappointing to see that the nodal body of India for organic agriculture, the National Centre of Organic Farming (NCOF) has not been given teeth other than to implement the previous Paramparagat Krishi Vikas Yojana scheme. This body can potentially be strengthened to provide a backbone to promoting something each citizen of India needs--safe food not laced with agrichemicals. Sadly, no steps are being taken to strengthen this organisation. Rather, large allotment has been made for the National Rural Livelihoods Mission, to create cluster SHGs of women organic farmers. The move is laudable but it should have been rolled out with the assistance from NCOF. Perhaps, in the fine print of the budget before the roll out in 2018, the situation may change,” says Gupta.

It remains to be seen whether these allocations will work towards the improvement of rural incomes. “Actually even if there is a greater budget allocation, unless the paradigm of agriculture changes globally, there is little hope for farmers worldwide,” sums up Banerjee.

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