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Resource centre on India's rural distress
 
 

Laying the ground

-The Hindu Business Line

The Budget’s agriculture focus is welcome, but it could have done better

A Budget with a purported focus on agriculture could not have come at a better time. There has been a sharp dip in agriculture output from a trend rate of growth of 4 per cent per annum in the period 2004-05 to 2011-12 to about 1.5 per cent in the next four years, which includes a decline in 2014-15 and a projected 1.1 per cent growth this fiscal. Studies have pointed to a 7.3 per cent growth in an individual farm cultivator’s income in the 2004 to 2012 period — a result of attractive prices, output growth and shift in population out of agriculture; this, they say, may have dropped to 1 per cent per annum now. In this context, the Budget’s package for agriculture seeks to address endemic concerns — such as yield, imperfect price discovery, delayed payments to farmers, insurance cover and sustainable water use — with an eye for detail. Hence, the 36,000-crore proposals for the sector include the creation of a long-term irrigation fund, an e-market for livestock for better price discovery, an online procurement system to ensure transparency in operations and hopefully, expeditious payment to farmers and a programme for prudent management of groundwater. Crop insurance, which has been allocated 5,500 crore, forms a crucial part of this policy mix. Perhaps realising the adverse impact of stagnant rural incomes on the rest of the economy, the Budget has set aside an additional 5,000 crore for MGNREGA (or 38,500 crore). If this outlay is used to revive water bodies, as promised, it can work as a drought-proofing measure for the future.

However, the Finance Minister has not matched intent with allocations. Of the 36,000-crore outlay for agriculture and farmers’ welfare, 15,000 crore is a transfer item from the finance ministry. Apart from crop insurance, which is a new allocation, none of the earmarked sums are significantly higher. Even in the case of the ambitious insurance programme, the initial outlay is paltry.

Yet, outcomes depend not just on outlays, but also on how effectively States and panchayati raj bodies — which also have begun to receive substantially higher funds under the Fourteenth Finance Commission award — implement policies. An institutional framework — extension services, credit cooperatives, animal health centres and agricultural universities — needs to be in place. Researchers point out that the successes of the 2004-12 period, in which horticulture, livestock and rainfed crops played a big role, were a product of a certain institutional ambience. The Centre should not lose sight of this fact.