Small farming needs a budget boost

The asks of the Agriculture sector are many but what all must the budget focus on? A National Convention on Budget 2015-16 by the Centre for Budget and Governance Accountability looks at these.
Farmer in Palamau; Image: VSK, Palamau Farmer in Palamau; Image: VSK, Palamau

The agriculture sector has been playing a significant role in shaping India’s overall growth trajectory. What promising initiatives should the Budget 2015-16 come up with? Should it extend timely credit facilities to farmers belonging to all the farming categories? Should it extend crop insurance facilities to all farmers and for all crops? 

What should the new budget do on agricultural research and extension? Should it focus more on the long-term environmental impact of agricultural methods and practices? Should it focus more on efficient use of agricultural inputs and natural resources like water?

A National Convention on Union Budget 2015-16 by the Centre for Budget and Governance Accountability, New Delhi dealt with these issues. Held on 8th and 9th January 2015 it brought together around 200 Civil Society Organisations from more than 20 States to discuss the policy asks related to agriculture. 

The agriculture sector needs a push

  • Extend timely credit facilities to farmers belonging to all farming categories

A recent survey estimates that 52 percent of agricultural households in India are in debt. 60 percent of this is from institutional sources like nationalised banks, regional rural banks and cooperative societies. Among the farming community in India, small and marginal farmers, tenant farmers, oral lessee and sharecroppers face difficulties in availing the benefits of government schemes and programmes, as well as credit facilities. Although they have been included in the institutional mechanism for credit and insurance coverage in recent times, tenant farmers, oral lessee and sharecroppers are still excluded.

  • Convert Kisan Credit Card into a Smart card cum debit card

The Kisan Credit Card introduced in 1998-99 should be converted into a Smart card cum debit card. Further, in order to counter distress sale by farmers and to encourage them to store their produce in warehouses against warehouse receipts, the benefit of interest subvention scheme should be extended to share croppers, oral lessee and tenant farmers. 

  • Extend crop insurance facilities to all the farmers and for all crops

Financial support should be provided to farmers in the event of crop failure as a result of natural calamities, pests and diseases. Among the existing agri-insurance schemes, the National Agricultural Insurance Scheme (NAIS) is available since 1999 to all the farmers - loanee and non-loanee irrespective of their size of holding.

All the food crops (cereals, millets and pulses), oilseeds and annual commercial/horticultural crops are covered. The premium rates for different crops are different. At present, small and marginal farmers are entitled to a subsidy of 10 percent of the premium charge from them, which is shared equally by the Centre and State Governments.

The scheme is operating on the basis of ‘area approach’ i.e., defined areas for each notified crops – block, tehsil, mandal, firka, circle, Gram Panchayat etc. However, per a recent survey, a very small segment of agricultural households utilized crop insurance.

An easier and more farmer friendly scheme, the Modified National Agricultural Insurance Scheme (MNAIS) which is being implemented on a pilot basis in 50 districts from 2010, needs to be extended to all districts. To bring more farmers under the fold of crop insurance, the pilot weather-based crop insurance scheme (WBCIS) launched in 20 states in 2007 needs to be extended to all districts. WBCIS aims to provide insurance protection to farmers against adverse weather incidence, such as deficit and excess rainfall, high or low temperature, humidity etc. Further, in the existing insurance schemes, there should be scope for tenant farmers and sharecroppers. 

  • Allocate 1 per cent of agriculture-GDP towards agricultural research and education

Research should shift from commodity-based approach to farming systems approach. This should be done through convergent efforts of research agencies within each agro-climatic region to address local problems. Further, within the framework of agriculture research and education in the country, educating farmers should be at the top of the agenda. 

  • Increase budgetary allocation for strengthening institutional mechanisms under Rashtriya Krishi Vikas Yojana

The Rashtriya Krishi Vikas Yojana (RKVY) is a flagship programme of the Union Government of India to revive the agriculture sector. Under RKVY, states have been given adequate flexibility to design programmes and schemes appropriately to accommodate local needs. The allocation for RKVY during the Twelfth Five Year plan was Rs. 63,246 crore (at current prices), however, it has been observed that the states are unable to spend the proposed amount fully. There is a need to strengthen institutional capacity to carry out proper planning and budgeting at the grassroots level.   

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