Budget to sustain recovery in agriculture growth

INDIAN AGRICULTURE is characterised by a cyclical trend of good growth and poor growth. The stagnant growth rate at low level combined with decline in size of land holding implies much slower growth in farm income per holding. This calls for three pronged strategy: lifting growth trajectory upward; imparting stability to production and focusing on farm income.

The last year’s Budget announced major initiatives focused on this strategy. These include renewed emphasis on irrigation under Pradhan Mantri Krishi Sinchai Yojana, upgrading agricultural markets under E-NAM, crop insurance plan Pradhan Mantri Fasal Bima Yojana, soil health card for balanced and efficient use of fertiliser, push to agricultural and rural infrastructure and increased supply of institutional credit for agriculture.

The Budget 2017-18 provides strong push to the initiatives started in last two years beside covering some of the much needed reforms in agricultural marketing. PMFBY has received strong response from farmers. The sum insured in kharif season 2016 was 60 per cent higher than kharif 2015 and number of nonloanee farmers who opted for crop insurance increased six times. Higher allocation for PMFBY this year will help in raising coverage and addressing production risk faced by farmers.

Among various components of PMKSY, micro irrigation, which involves use of drip, sprinkler and such irrigation devices, is the most important component for getting quick results in raising irrigation coverage, achieving efficiency in water use and raising productivity. Dedicated allocation of Rs 5,000 crore for micro irrigation is a step towards ‘more crop per drop’.

Capital formation in agriculture, both on public as well as private account show decline in real terms after 2011-12. The decline in total capital formation was 2.4 per cent during 2014-15 and 5.2 per cent during 2015-16.

The Budget raises target for institutional credit supply to agriculture by 11.1 per cent, from Rs 9 lakh in 2016-17 to Rs 10 lakh in 2017-18. Trend and pattern in institutional finance for agriculture in recent years show a decline in share of cooperatives, decline in share of term credit and highly skewed distribution across states. More allocation is needed for cooperatives and for term loans. The distribution of credit should be changed from the states saturated with credit towards the credit starved states such as Bihar and Odisha.

Unscientific use of fertiliser without reference to fertility status of the soils is causing nutritional imbalance, economic loss and deficiency of micro nutrients. Most of the farmers do not have the access to soil labs to check for the proper use of various plant nutrients for their crops. Setting up of mini soil testing labs in all KVKS and by private entrepreneur will promote scientific use of fertiliser and help in cost saving and productivity increase.

The target of doubling farmers’ income cannot be met without improving terms of trade for agriculture or higher price realisation for farm produce. This requires complete revamping of agriculture marketing system and infrastructure. The country has been discussing reforms in agricultural markets for a long time to liberalise agricultural market, attract private investments in post harvest value chain and to use modern technology and commerce in various transactions. But the change has been very slow, diluted and mainly notional.