Indian Budget 2016-17 and Indian Agriculture & Agribusinesses

Indian Budget 2016-17 and Indian Agriculture & Agribusinesses

By: Vijay Sardana

Union Budget 2016-17 is dubbed as budget for the rural India by many political and economic commentators. In my view, there is nothing wrong if majority. of the budgetary resources are allocated for the region where majority of the population resides and from where they earn their livelihood. I personally believe that investment in rural India will always give more economic return than investing in urban India because of multiplier effect. Total Allocation for Agriculture and Farmers’ welfare is Rs. 35,984 crores.

In this article I will share the implications of budget highlights for agriculture and agribusinesses.

S.No.	Budget Highlights	Implications
1.	·        Growth of Economy accelerated to 7.6% in 2015-16. India hailed as a ‘bright spot’ amidst a slowing global economy by IMF. ·        Robust growth achieved despite very unfavorable global conditions and two consecutive years shortfall in monsoon by 13%.	·        Demand for food items will continue to rise. Due to constraints in supply side the risk of food inflation remains high. The food inflation in the areas of pulses and vegetables will remain key concern for policy makers and citizens.
2.	·        Risks of further global slowdown and turbulence. Foreign exchange reserves touched highest ever level of about 350 billion US dollars.	·        This will limit the export potential of commodities like rice and oil meals. Unfortunately our exports are limited to commodities only. Global slowdown will hurt commodity trade from India. On the other hand, due to decline in domestic water levels, India is emerging as net food importing country.
3.	·        Comprehensive All India Mantri Fasal Bima Yojana and Allocation of Rs. 5,500 crore.	·        This will bring financial & social security in rural households. Farmers will be inclined to invest in better technologies. Rural distress and farmers suicide should stop with this measure.
4.	·        Undertake important reforms by giving a statutory backing to AADHAR platform to ensure benefits reach the deserving.	·        This will reduce pilferage along the input supply chain and farmers will able to select the right input based on technical requirements in place of low cost or induced prices. This will also rationalize overuse of subsidized inputs like Urea and electricity.
5.	·        ‘Pradhan Mantri Krishi Sinchai Yojana’ to be implemented in mission mode. 28.5 lakh hectares will be brought under irrigation. ·        Implementation of 89 irrigation projects under AIBP, which are languishing for a long time, will be fast tracked ·        A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about ` 20,000 crore ·        Programme for sustainable management of ground water resources with an estimated cost of ` 6,000 crore will be implemented through 3 multilateral funding ·        5 lakh farm ponds and dug wells in rain fed areas and 10 lakh compost pits for production of organic manure will be taken up under MGNREGA ·        Soil Health Card scheme will cover all 14 crore farm holdings by March 2017. ·        2,000 model retail outlets of Fertilizer companies will be provided with soil and seed testing facilities during the next three years ·        Promote organic farming through ‘Parmparagat Krishi Vikas Yojana’ and 'Organic Value Chain Development in North East Region'. ·        Unified Agricultural Marketing ePlatform to provide a common e- market platform for wholesale markets ·        Allocation under Pradhan Mantri Gram Sadak Yojana increased to ` 19,000 crore. Will connect remaining 65,000 eligible habitations by 2019. ·        To reduce the burden of loan repayment on farmers, a provision of Rs. 15,000 crore has been made in the BE 2016-17 towards interest subvention ·        Rs. 850 crore for four dairying projects - ‘Pashudhan Sanjivani’, ‘Nakul Swasthya Patra’, ‘E-Pashudhan Haat’ and National Genomic Centre for indigenous breeds	·        Water and Soil management is key for agriculture productivity. ·        All technologies promoting water conservation, water harvesting, soil health improvement will remain in focus in coming years. ·        Mobile soil testing facilities, soil testing kits, soil health cards, water related activities will become important elements of rural welfare programs.  ·        Cooperative sector will become more powerful in rural India due to extended services under these schemes. ·        Private sector will also include services along with products as part of their offerings to farmers. ·        Linking of MNREGA to agriculture activities will address the labor shortage problems to certain extent. ·        Promotion of organic concept in agriculture production is good provided it is backed by proper research to develop suitable methods to control spread of viral diseases in crops grown in organic cropping systems. ·        Agriculture loan with insurance coverage will extend financial stability in the rural India. ·        It is also important to note that animal husbandry is increasingly becoming important in rural financial stability and this Union Budget has acknowledged this aspect. ·        Shortage of fodder and feed material and management of stray animals are other big challenges which needs serious consideration from the policy makers.
6.	·        Price Stabilisation Fund with a corpus of ` 900 crore to help maintain stable prices of Pulses.	·        Supply of Pulses and edible oil will remain serious concern and food inflation will remain a serious economic and political challenge. These two commodity classes will draining large chunk of foreign exchange next to fossil fuel.

Areas where government must take quick action to revive food security challenge:

Develop food security plan of India.

Another challenge is lack of competitive research, innovation and agriculture extension education in agriculture space. Competition in agriculture research, education and extension services should also be encouraged.

Government should also look at fisheries more seriously as a means of livelihood opportunity for people living in coastal belts and along the water bodies. This will help in maintaining quality of water and preservation of water bodies.

Rationalise Import duty on edible oils to support domestic edible oil seeds production. 

Otherwise, these are right steps in the right direction. The benefit of these steps will emerge only when there is proper and timely implementation of the same.

We all will observe the developments in coming weeks. Food inflation still remains the biggest challenge. Coming months will tell whether government is able to translate its intention on ground or not.