Budget-2018 - Test of Modinomics & Political Courage

Budget-2018: 

Test of Modinomics and Political Courage

Can Modi Government address Farmers' Concern & Rural Economy in Budget 2018?

By: Vijay Sardana

Views are personal

Before reading this article you can also read Election manifesto of the government as well.

To read please click here: Agriculture & BJP Election Manifesto 
(Can Modi Government deliver?, I wrote this article in Jan. 2015)

Agriculture Produce Marketing is the biggest rural economic activity. Short-sighted political considerations has ruined rural economy by creating highly inefficient agriculture marketing system, created state-sponsored cartels of middlemen linked to political parties to exploit farmers and consumers. This has not only resulted in far lower than expected private investment in rural economy of India and drain of tax payers and government revenues.

This is leading to unemployment, food inflation, food social indicators and growing crime in urban centers.

What are the expectation from Budget-2018?

My proposed measures will help in reducing inflation, reduction in cost of food production, employment generation and export promotion. The multiplier effect of all these factors on economy will boost industrial growth and GDP as well as social indicators in the country. These reforms will also result in more income for government and these should be treated as investments for perpetual revenue generation from rural economy.

Income security for the farmers is linked to the food security of the consumers. It is very strange that on one hand in a country where 30% consumers are suffering from hunger, 50% of children are suffering from malnutrition, 60% of woman and girl child is suffering from nutritional deficiencies and 30% of food is wasted every year, rural employment is going up.

On one hand, farmers are suffering from income insecurity, debt trap, and poverty. At the same time, the political system of the country is claiming everything is under control and we will be developed nation soon may be in next 5 years.

It is high time we must be realistic to the ground reality in place of making claims which are hiding the facts and hurting the masses.

The 2018 budget will be the last full budget of the current government because in 2019 the chances are there will be Vote-on-Account due to upcoming national elections.

Following should be the priority for the government:

1.Introduce National Unified Agriculture Marketing Act (NAMA): Today, we are preparing India for 2019 elections with an act which was first passed in 1937 based on the working concept of 1918.  (Narela Grain Mandi was established in 1918 and then came Agricultural Produce Markets Act, 1939)

Please read the provisions of the Act of 1939, they all remains the same, nothing has changed for the farmers in last 100 years but world has changed so much for everyone else. This shows there is no political will to adopt to the changed ground reality and farmers are forced to remain away from developments. On the lines of GST, which was created to benefit industries and services sector, the government must work with all the states to ensure a Unified Agriculture Marketing Act for ensuring a fair marketplace for all. Today, agriculture markets are outside the formal economic system and the biggest sufferer is farmers and biggest beneficiary is the middleman. Unless the government is going to create competition for all, things on the ground will not improve. There must be an incentive for farmers to collect bills so that he can seek benefit under National Food Security Mission.

2.National Agriculture Warehousing Infrastructure Grid (NAWIG): Every year as a nation we are wasting food worth about Rs. 1 lakh crores (about USD 15 billion) due to various reason. It is important that India must have storage infrastructure for about 50% of her food consumption. This will help farmers in selling in distress and will help in controlling food inflation and industry will get proper agro-based raw material to create employment and value addition. I propose budget must allocate about Rs. 12000 crores every year to create warehousing facility in place of waiting for the private sector to invest. This infrastructure can be given on lease for the private sector to manage on long terms basis to recover the cost and to ensure maintenance.  The target should not be, there should not be wastage due to a shortage of warehousing in the country. This will create employment in rural India, processing clusters. This will also address food inflation and will also support exports. All warehousing in the country must be linked to National Warehousing Grid of the country.

3.Create a National Agribusiness Information Network (NAIN): The government must allocate about Rs. 5000 Crores to create 1000 Performance Centres infrastructure for training, grading stations laboratories for soil testing and food-related testing with micro-FM stations management, price tickers and internet cables. These should be managed by cooperatives, FPOs, and local stakeholders whose income will depend upon these centres. The operating cost must come from stakeholders in the form of user charges to ensure its proper accountability and functioning. All these centres can be linked to Agri-Services Network. This can be linked to other marketing platforms and system to link producers and buyers.

Few pilot projects can be initiated this year. A model can be perfected to create good models all over the country. Local KVK, college or school should be in-charge of the micro-FM station.

4.Agribusiness Knowledge Network of India (AKNI): High time mandate of ICAR and all agriculture-related departments and universities must be reviewed in consultation with stakeholders. All universities and R&D centers must have 51% representation from stakeholders. Each state-funded university must be made accountable for at least 3 principle crops and one livestock sector of that area. These universities must cover all aspects of the value chain and its economics. These university centers must be made accountable to share their knowledge on micro-FM stations and internet-based knowledge network in local languages.

Caution: After the Gujarat elections, there is a change in mood mainly in rural India and it will be challenging task for anyone single party to form next government with the full majority to bring major policy changes. The current government must take some serious steps to bring reforms in agriculture marketing space so that rural economy benefits and average rural citizen feels that there are visible changes in their life. This may also bring political dividends for the ruling party. This will also expose all those elements who are not keen for meaningful reforms in agriculture marketing reforms which will benefit farmers.

If any government wants any help in development of execution plan, let us discuss the same.

Do share your views what should be the priority for Union Budget 2018 of Government of India.