Countdown to Union Budget

Every day, the newspapers, radio and television channels are talking about Union Budget- sharing their opinions and speculations. It should not be a surprise to see the Government give a lot of emphasis on agriculture and allied sectors this time.

Initial speculations are also that Government is all set to double its annual spending on irrigation and crop insurance. This is certainly a welcome move as 2015 witnessed massive droughts throughout the country, brought along by the El Nino effect among other factors. Hence, there is no better time to bring forth a robust and dependable irrigation system and crop insurance scheme (Pradhan Mantri Fasal Bima Yojana). Along with the investments in Irrigation, appropriate technology and schemes have to be developed for effective harvesting of rain water and utilization ground water. Every year, rivers drain substantial volume of water into the oceans. Appropriate irrigation schemes can target lifting or diverting this water for better use. Resource allocations for linking of rivers should be taken up to reduce any flooding and thus utilising this water effectively.

Another allocation we are looking forward to is around integration of technology in agriculture. The initial steps are with regards to a national digital platform (National Agriculture Market) for farm produce, thereby ensuring competitive prices and higher margins for the farmers. This would definitely reduce the rural distress caused by frequent droughts in the country. Launched earlier last year, the platform will connect mandis across the country, so that farmers are not restricted to their location/region to sell their produce. The system of National commodity markets has great value in price discovery for farm produce, as middlemen will be removed, thus more income directly to the producer farmer. However, challenges remain in the movement of goods from one location to another in a timely manner. Investments and incentives in rail & road logistics and cold chain will be most important for the farmer to be able to sell his produce anywhere in the country, where he gets the best price.

However, the challenges are deep rooted- global food and commodity prices have hit their lowest levels in turn impacting India?s farm exports and farmer incomes. The Government will have to certainly do more than these short term solutions. In the long term, only public investment in infrastructure and agriculture can help. Through intensifying the infrastructure at the grass root level, the Government can make a marked improvement in the lives of farmers. By reducing costs of production (through technology enabled interventions) and increasing income (through the national farm portals) the government can also assist in increasing the overall profitability of the sector. While technological interventions will help significantly, the scale of production influences the input costs significantly. As land holdings in India are small, either the farmers would have to produce through intensive farming, or would have to pool the lands and produce through cooperative farming, both of which will require technology. Corporate farming is only a concept and has not taken off in a big way. If farming were to be corporatized, it would be possible to attract large corporations where a win-win situation can be fostered, and the economies of scale can be achieved with lower production costs, use of best technology and access to best prices in the market place. Hence incentivising the corporate sector and agriculture in the budget would go a long way in improving the agriculture income and standard of living in the country.

Pulses, grams and tur are very important protein sources for a largely vegetarian population of India. But the cultivation of these commodities has been severely impacted in terms of profitability. Therefore, the sector requires more intervention than just influx of money. Looking at investment rather than subsidies is also a long term solution that the government may consider. And waiving off the loans is also certainly not a long-term but stop gap solution.

The pre-budget consultations held by our Finance Minister, with farmer groups amongst other stakeholders would surely lead to constructive steps. The government has also undertaken creative steps to include the public at large in the decision making. One such is the vote on twitter campaign. In the last two years, profitability in agriculture has reduced to less than 5%, and even negative in some crops. This is against the goals set by the Government aimed at increasing profitability to 50% in 2014. However, we all look forward to a budget guided by rationale, realistic goals and long term sustainability and not just giving in to a sentiment here and a vested interest there.