The budget announced on Monday placed a renewed focus on the farm sector in a bid to revive agriculture growth and improve farm incomes at a time when rural India is going through a protracted period of distress.
Farmers and rural India will get the government’s immediate attention and the priority is to provide additional resources, finance minister Arun Jaitley said, adding that the government will aim to double farm incomes in the next five years.
The increased funding in the budget will go into a gamut of irrigation schemes, crop insurance, the creation of a national e-market for farm produce, higher production of pulses and interest subsidy for easing the burden of loan repayment for farmers.
Jaitley said that 2.85 million hectares will be brought under irrigation through the flagship Pradhan Mantri Krishi Sinchayi Yojana (PMKSY) scheme in 2016-17.
The government has made irrigation and drought-proofing a priority after two consecutive monsoon failures in a country where over half of the farm lands are rain-fed.
Further, 89 projects under the Accelerated Irrigation Benefits Programme (AIBP) that are languishing will be fast-tracked.
This will help irrigate nearly 8 million hectare, Jaitley said, adding that the centre will spend ₹ 17,000 crore on these projects next year, and ₹ 86,500 crore in the next five years.
Further, the budget created a dedicated long-term irrigation fund under NABARD (National Bank for Agriculture and Rural Development), with an initial corpus of ₹ 20,000 crore.
The overall budget for the agriculture sector was raised by over 44%, from ₹ 24,909 crore in 2015-16 to ₹ 35,984 crore in 2016-17 (budget estimates).
Rural credit got a boost, too, from a target of ₹ 8.5 trillion in 2015-16 to ₹ 9 trillion next year. And to ease the burden of loan repayment on drought-hit farmers, the budget allocated ₹ 15,000 crore towards interest subvention.
To increase crop yields in rain-fed areas the budget allocated ₹ 412 crore towards organic farming. “The emphasis is on value addition so that organic produce grown in this parts finds domestic and export market," the finance minister said.
For enhancement in pulses production, the budget allocated ₹ 500 crore under the National Food Security Mission. The programme will cover 622 districts in the country.
To help farmers get remunerative prices, a national agriculture market will be launched in April to connect 585 regulated wholesale markets across the country, Jaitley said.
He added that 12 states have already amended their farm produce marketing laws and more states are expected to join the e-platform.
The centre will also strengthen procurement at support prices across the country, Jaitley said, adding that an online procurement system will be introduced by the Food Corporation of India.
The emphasis on irrigation and crop insurance schemes in this year’s budget comes on the back of consecutive monsoon failures, and after the centre faced flak for ignoring the distress in rural India.
While 2014 saw a deficit of 12% in the June to September south-west monsoon, last year (2015) recorded an even worse deficit of 14% with more than 10 states declaring a drought.
The centre spent nearly ₹ 13,000 crore in drought assistance to states during 2015-16.
While repeated crop failures led to a spate of suicides across the country, farm incomes were also hit by low prices of key crops like rice, wheat and cotton, and lower exports due to a global slump in commodity prices.
Reviving the farm sector was a major challenge for finance minister Jaitley as sectoral growth rate of agriculture nosedived to minus 0.2% in 2014-15, from 4.2% in 2013-14. For 2015-16, the growth rate is estimated to be a dismal 1.1%, and is likely to be revised downwards if winter crop yields take a hit.
Agriculture sustains nearly half of all households in India and needs a new paradigm, said the 2015-16 Economic Survey released last week. The survey urged the government to spend on efficient irrigation technologies, support less water intensive crops like pulses and oilseeds, create a national market for farm produce, and revamp the dismal research and extension services.