Marginal hike in agri sector spending
The FM said a new cess is expected to raise around ₹30,000 crore a year, which will go towards upgrading agri infrastructure
NEW DELHI: The Union Budget marginally raised spending for the “agriculture and allied activities” sector by 2% in fiscal 2021-22, numbers in budget documents showed on Monday, even as finance minister Nirmala Sitharaman announced a new cess to fund farm modernisation, steps that come amid a widespread agitation by farm unions against a set of pro-reform farm laws.
Total money set aside for a sector (including fisheries and animal husbandry) that employs half of all Indians stood at ₹1,48,301 crore for 2021-22 , up from ₹1,45,355 crore spent in 2020-21 (revised estimates), a hike of ₹2,946 crore.
The amount budgeted for 2021-22 does not include any contribution from a fund announced in May to boost agricultural infrastructure, and proceeds from a cess introduced in this budget towards the same end.
The amount set aside for the sector for the next financial year is 4% short of the ₹1,54,775 crore initially allocated (budget estimates) in the 2020-21 budget, although the government ended up spending only ₹1,45,355 crore.
The finance minister on Monday proposed an “Agriculture Infrastructure and Development Cess” “on a small number of items”, saying there was an “immediate need to improve agricultural infrastructure”. This cess “will ensure enhanced remuneration for our farmers”, she said.
Agriculture is the only sector that has clocked positive growth despite the pandemic, growing 3.4% both in quarter 1 and quarter 2 of 2020-21, and cushioning the economy. In contrast, India’s overall economy shrank 24% and 7.7% in the two respective quarters.
Directionally, the budget continued a focus on farm modernisation through funding of an Agriculture Infrastructure Fund announced by the Modi government last year as part of the first aatmanirbhar (self-reliance) stimulus tranche. The fund, of ₹1 lakh crore, is to be used to modernize regulated markets known as agriculture produce marketing committees (APMC).
In an interview, Sitharaman said the new cess is expected to raise around ₹30,000 crore a year, which will also go towards upgrading agri infrastructure, and be in addition to the fund.
“The budget announcement for the agriculture sector (has) maintained the reform momentum but lacked coverage of wider issues of the sector. But announcements such as extension of farm credit provision to farmers, commodity expansion to Operation Green and extension of the agriculture infrastructure fund to APMC did hit the target,” said Ajay Kakra, Leader of food and agriculture at PWC India.
Of the total amount, agriculture and farmer’s welfare alone received 5.63% more in 2021-22 at ₹1,31,531 crore, half of which will be spent on the flagship PM-KISAN, a cash transfer scheme for cultivators, for which nearly ₹65000 crore has been set aside. For the 2020-21 fiscal year, the revised estimate for agriculture and farmer’s welfare was ₹1,24,519 crore, according to the budget documents.
Some economists argued the total allocation is low given the potential of the sector at beating back the pandemic.
“The resolve of doubling farmers’ income again showed a lack of allocations and the required policy shifts,” said Sudhir Panwar, a former member of the erstwhile UP Planning Commission.
To benefit domestic growers, the budget raised customs duty on cotton from zero to 10% and on raw silk and silk yarn from 10% to 15%.
The government will be withdrawing end-use based concession on denatured ethyl alcohol and rates are being uniformly calibrated to 15% on items like maize bran, rice bran oil cake, and animal feed additives, the budget stated.