Farmers sidelined on pathway to growth

If the 2023-24 Budget has rolled out the roadmap for ‘Amrit Kaal’ — the 25-year period culminating in the centenary of Independence — agriculture has been clearly left behind. Amid the glitter of an increase in capital expenditure, fiscal consolidation and the promise of continuity in growth policies, the Budget certainly makes the right noises. But then, there is another part of India —popularly called Bharat — comprising two-thirds of the country’s population, where a deafening silence prevails.

With 70 per cent of the rural population dependent on agriculture, they are trying to ascertain as to why they have been ignored and given short shrift on the pathway to attaining growth.

No miracle can be expected in agriculture without first making adequate investments. Over the years, public sector investments have been on a steady decline. As the RBI had observed, between 2011-12 and 2017-18, public sector investments had hovered around 0.3 and 0.4 per cent of the GDP. Compare this with just the revenue foregone to the industries, around 5.5 per cent of the GDP, and you get a fair idea as to why agriculture, which engages 47 per cent of the workforce, remains largely neglected. Further, the celebration around this year’s Budget provisions is a clear pointer to the economic priorities.

Nevertheless, continuing with the RBI’s projections for declining investments in agriculture, the Economic Survey-2022-23 too acknowledges that public sector investments in agriculture in 2020-21 were the lowest in the decade. Add to it the total allocations announced for agriculture and allied sectors in this year’s Budget, it becomes obvious as to why agriculture seems to have been pushed off the growth track. Let’s be clear. There can be no separate ‘Amrit Kaal’ for agriculture. It has to be an integral part of the broader economic design.

As percentage of the total budget, the share of agriculture has come down from 3.84 per cent to 3.2 per cent. According to the Press Information Bureau, the allocation this year is Rs 1.25-lakh crore. This is against the revised estimate of Rs 1.51-lakh crore a year earlier. Two years earlier, Budget-2021 had made an allocation of Rs 1.48-lakh crore for agriculture and allied sectors. This clearly shows a significant cut has been made in the budgetary provisions for agriculture this year. 

Further, this year, the projection for the PM Fasal Bima Yojana — the flagship programme for crop insurance — has come down by 12 per cent, and that of the PM-Kisan Samman Nidhi Yojana by 12 per cent. This scheme provides farmers with a direct income support of Rs 6,000 per year. The MGNREGA allocation, too, has been drastically reduced by 33 per cent.

More glaring is the steep reduction in the allocation for the two schemes that provide for price stabilisation support to farmers, outside the wheat-paddy procurement system. The budgetary provisions for the PM-Aasha scheme that offers minimum support price (MSP) for oilseeds and pulses, which was drastically curtailed last year, has now been left with a provision of only Rs 1 lakh. Similarly, the budgetary provision for the Price Support Scheme (PSS) and the Market Intervention Scheme (MIS) — which provides for Rs 1,500-crore market intervention and price support — has also been reduced. This support meant a lot for farmers who were throwing on the streets crops like tomato, potato and onion, and also for plantation crops like rubber, coffee etc.

Apple growers from Himachal Pradesh and Kashmir are a worried lot. They are not sure how these drastic cuts in the MIS allocation will impact the procurement of 60,000-80,000 tonnes of C-grade apples that the HP Government makes under the MIS, for which 50 per cent share comes from the Centre. This scheme provides a cushion to the apple growers from a price shock.

Apart from the reduction in allocation for the schemes that ensure price protection, what irks farmers is that the Budget is silent on the MSP. After the withdrawal of the three contentious laws, farmers have been demanding a legal assurance for the MSP that is announced for 23 crops every year, but which largely remains on paper, except for wheat and paddy in some states. Since the average monthly income of a farm household (including from non-farm activities) has been estimated at a low of Rs 10,218 by the Situation Assessment Survey for Agricultural Households-2019, any turnaround in agriculture obviously hinges on enhanced and assured price support for the farmers.

This makes a strong case for guaranteeing higher prices for the farmers. After all, if the government can introduce a minimum sale price for sugar mills, increasing it now to Rs 31 per quintal, this is exactly what the farmers are also demanding. If the mills can be ensured a guaranteed price, farmers too can be guaranteed a higher price. No amount of a dedicated fund for agricultural startups, building the digital public infrastructure, and boosting the agriculture value chains can ensure higher incomes to farmers. It hasn’t happened anywhere in the world.

Making MSP a legal entitlement is, therefore, the only way out of the tangle. If farmers get more money in their hands by way of a guaranteed MSP, it will eventually flow into the markets, thereby boosting rural demand.

While the first step towards a green transition in agriculture has already been spelled out, it has to be backed up by an elaborate time-bound programme. Funding for 10,000 bio-input resource centres and the promise of leading one crore farmers away from chemical to non-chemical farming systems in the next three years is a laudable initiative for the food systems’ transformation. Being the International Year of Millets, shifting towards nutritiously rich and ecologically safe millets cultivation too would require a package of public support, including higher MSP, to make their cultivation attractive.

To achieve the topmost of the seven priorities spelt out in the visionary statement, inclusive development will be possible only if agriculture becomes economically viable and reorients towards climate resilience. While the shift towards a greener economy is quite apparent, a ‘beautifully balanced Budget’ cannot meet expectations by keeping agriculture out.