FM vows to invest widely in agriculture infrastructure, but offers little to revive rural income and demand
In terms of new schemes, the budget announced Pradhan Mantri Matsya Sampada Yojana for the fisheries sector and another to boost traditional industries
In March 2018, Rakesh Sangwan, 27, a farmer in Haryana’s Charkhi Dadri, stopped watering his tomato plants. The crop slowly withered away and, subsequently, it was mowed down by a tractor. It was not an easy choice for a farmer to destroy the fruits of his labour, but it was a wise strategy. As wholesale prices dipped to barely a quarter of a rupee per kg of tomato, Sangwan decided to forego his harvest—to save on labour costs and then transporting it to the nearest wholesale market. In one season, Sangwan lost over ₹1 lakh.
But did Friday’s budget bring any relief to Sangwan, and to the millions of other farmers in India, who are reeling under drought and rising debts? The brief answer is “no". This, despite finance minister Nirmala Sitharaman insisting in her budget speech that “gaon, gareeb and kisan (villagers, poor and farmer)" were at the centre of the government’s reforms initiatives.
In terms of new schemes, the budget announced Pradhan Mantri Matsya Sampada Yojana, to plug gaps in the fisheries value chain, and another to promote traditional industries around bamboo, honey and textiles. The finance minister pledged to “invest widely in agricultural infrastructure" and said the government will go back to the basics on one count: zero budget natural farming (ZBNF). “Steps such as this can help in doubling our farmers’ income in time for our 75th year of independence," she added. ZBNF is a farming method which relies on a mix of cow dung, urine and jaggery as the primary soil nutrient instead of chemical fertilizers.
Experts, however, debunked such a possibility. “It is farfetched to even imagine that ZBNF can help improve farmer incomes," said Ajay Vir Jakhar, chairman, Bharat Krishak Samaj, a farm policy advocacy body. “There is nothing in this budget to revive rural income and demand. The allocation for few schemes which the finance minister mentioned in her speech is meagre. Since farmers voted on issues other than their own livelihood, agriculture has lost the symbolic importance it used to enjoy in the budget."
“It is surprising that the government is pushing farmers to traditional agriculture when we need better access to irrigation, seeds and technology... there is no focus in the budget on improving farm gate prices or agriculture exports," said Kedar Sirohi, a farmer leader from Madhya Pradesh.
The budget documents show that funding for the scheme to promote natural and organic farming, the Paramparagat Krishi Vikas Yojana, was a paltry ₹325 crore. Interestingly, the budget for subsidies on chemical fertilizers increased by ₹9,900 crore.
Between 2014 and 2019, the agony of the average farmer turned a full circle. A drought in 2014 and 2015 made way for bountiful harvests in the following years, leading to a collapse in farm gate prices and numerous protests and marches demanding remunerative prices. Following a string of debt waivers by state governments timed to local elections, farmers are again in the throes of a crippling drought, struggling to feed their cattle and stay afloat.
Although the budget did not take note of the drought situation (and allocated just ₹72 crore towards diesel subsidy in deficit rainfall areas), on crop prices it hoped that the existing Agriculture Produce Marketing Committee Act “should not hamper farmers from getting a fair price". It further pledged to create 10,000 new farmer producer organizations to ensure improved bargaining power for farmers while purchasing inputs and during selling their harvest.
“Ease of doing business and ease of living, both should apply to farmers, too," the finance minister said, adding that the Centre and states will ensure that farmers benefit from the electronic national agricultural market, or e-NAM.
“It seems that due to paucity of time, the finance minister could not have a detailed discussion with the agriculture minister and other state governments...so difficult decisions like (required change in) cropping patterns, rationalization of subsidies have been postponed," said Siraj Hussain, a former agriculture secretary.
Overall, data on budgetary allocations show that the budget for agriculture ministry rose from ₹75,752 crore in FY19 (revised estimates) to ₹1.39 trillion in FY20 (budget estimates). The rise is primarily due to the income transfer scheme for farmers (PM-Kisan), which accounts for ₹75,000 crore. The budget for the department of research and education stayed unchanged at ₹8,000 crore.
A thrust on market access, roads and creating farmer companies are positive steps announced in the budget, said Ajay Shriram, chairman of DCM Shriram Ltd, which deals in fertilizers, seeds and sugar. “Farmer producer companies can help in reducing the number of middlemen and farmers who now receive 20-30% of retail price can expect better prices. But it remains unclear how zero budget natural farming can pull the farmer out of the debt trap, or how it might impact crop productivity."
Till 5 July, the southwest monsoon, which accounts for 70% of India’s annual rainfall, has seen a deficit of 26% leading to 27% lower planting in the kharif season. The Centre, which gave financial assistance of over ₹8,000 crore to states in FY19 to address drought conditions, is likely to spend more this year. The move was also testimony to the fact that the crop insurance scheme launched in 2016 had failed to provide timely assistance to farmers, despite insurance companies collecting over ₹25,000 crore in annual premiums shared by the Centre, states and farmers. Enrolment under the scheme declined from 58 million farmers in FY17 to 55 million in FY19. Yet ₹14,000 crore was allocated to the flagship scheme in the budget, up from ₹13,000 crore in 2018-19.
For the Narendra Modi government, which returned to power with a brute majority, the primary challenge will be to keep up to its target of doubling farmer incomes by 2022. Though direct income support of ₹6,000 per year, aided by similar state level schemes, will help it get closer to the goal, the challenge of improving farm gate prices could be back as the spectre of drought subsides. The government also has limitations in implementing agriculture reforms because the sector comes under states, and they are dragging their feet to increase competition and transparency in local mandis. Till Sangwan, and others like him, get access to wider markets, cold chain and processing facilities, they will be forced to abandon their crop for want of a better price.