These moves around the farming sector and their timing underscore the pivotal role this sector plays in the Modi government’s agenda of making India the third-largest economic power in the world.
Experts say that the upcoming budget that is set to be tabled by Union Finance Minister Nirmala Sitharaman in the second half of July will have some populist measures for farmers as last month’s Lok Sabha election results didn’t happen the way BJP wanted them to, mainly because of the party’s performance in rural and semi-urban India and the Hindi heartland.
The agriculture sector is likely to grow at 3.7 per cent in the current fiscal, compared to 1.4 per cent last year, according to CII.
Sowing seeds for upcoming state elections
As Budget 2024 looms closer, the agricultural sector is likely to get the spotlight as it is the life support for about 250 million farmers and informal labourers.
The BJP’s vote share dipped in semi-urban and rural areas, with 36.6% and 35%, respectively. This marked a significant shift from 2019 for the BJP, which then had a 39.5% vote share in rural areas, 36.8% in semi-urban sectors, and 33.6% in urban areas.
Having suffered at the recent elections, mostly in rural areas, the new NDA government would most certainly find newer ways to support farmers in the upcoming budget, also because some key agricultural states like Maharashtra and Haryana are up for state elections soon, as per Shweta Saini, an agricultural economist and co-founder of Arcus Policy Research who also feels that “Indian policymaking is very tricky- particularly in agriculture.”
“There is a strong possibility for the announcement of incentive and welfare schemes for development in rural and semi-urban areas,” reiterated Tulsi Lingareddy, senior economist, Financial Markets, Sustainable Finance and Agriculture.PM-KISAN scheme in focus
During the interim budget, a significant hike in the instalment of the Centre’s flagship cash transfer scheme PM KISAN scheme was expected. But defying those expectations, Sitharaman kept the outlay unchanged.
However, experts now feel that there is a strong case for strengthening the scheme in the Union budget 2024.
The current disbursement under PM Kisan accounts for approximately 3-5 per cent of a farm family income. The disbursement started in 2019, and given the cost inflation over the last 5 years, along with the backdrop of export curbs on few commodities, there could be an enhancement in the quantum disbursed per farm family, says Pushan Sharma, Director of Research at CRISIL.
The extra disbursement could be given to farmers as a subsidy to cover the costs of different inputs needed for farming, he says. This could increase their spending on better agricultural products like advanced pesticides, hybrid seeds, and crop nutrients, leading to higher yields, adds Sharma. “Moreover, with climate change and unpredictable monsoon patterns affecting farmers, this additional income support can help them use more resilient farming methods.”
Agriculture infrastructure needs “intervention”
Experts say the need of intervention is ardently required on the agri infrastructure front as farmers often face the woes of post-harvest losses.
“As of FY23, CIPHET reported post-harvest losses of Rs. 92,650 crores annually and thus, if the budget allocation is increased under the Agriculture Infrastructure Fund (AIF) scheme, it may boost the storage and warehousing capabilities in the country which would help farmers in reducing post-harvest losses thereby improving their realisations,” says Sharma.
When asked about the expectations of farmers for the upcoming budget, Dr Lingareddy said “Focus may be on connecting farmers/FPOs (Farmers Producer Organisations) to markets through promoting digital infrastructure and e-commerce in addition to promoting physical market infrastructure and warehousing.”
Agriculture exports
The government has prohibited exports of wheat and non-basmati white rice and has also imposed curbs on sugar exports.
“Having suffered on account of banned exports and lower crop due to El Nino, some support may be extended for sugarcane farmers,” says Saini.
India’s agriculture exports, at present over $50 billion, are expected to double by 2030 and reach $100 billion, as per the government.
Crop diversification, promotion of exports and import substitution in oilseeds/pulses are areas where enhanced policy interventions are needed, according Anand Ramanathan, Partner and Consumer Products and Retail sector Leader, Deloitte India.
Potential in Agribusiness Ecosystem
Industry experts feel that the Agriculture Accelerator Fund and Digital public infrastructure fund are likely to be focused on strengthening the agribusiness ecosystem in the country.
Startups focused on infield technology like drone applications, precision farming, satellite imagery and IoT, which would help farmers in transitioning to modern agriculture from conventional practices, need to be prioritised, Sharma says.
Interim budget recap
In the interim budget, FM Sitharaman had announced that the govt will formulate a strategy to make the country self-reliant in edible oils by boosting domestic output of oilseeds, come out with a comprehensive programme to support dairy farmers, and set up five integrated aqua parks and launch a new climate resilient scheme for the blue economy 2.0 for fisheries development.
Making India self-reliant in oilseeds such as mustard, groundnut, sesame, soybean and sunflower is expected to remain a focus area of the budget as India currently has to import a large quantity of edible oils to meet its domestic demand. During the 2022-23 marketing year (Nov-Oct), India imported nearly 165 lakh tonnes of cooking oils worth almost Rs 1.4 lakh crore.
