Business Standard

For agri and rural, it’s continuati­on of the past

- S MAHENDRA DEV The writer is Distinguis­hed Professor, ICFAI, Hyderabad, and Former Director, IGIDR, Mumbai


The agricultur­e sector has grown at 4.4 per cent annually in the past six years. But the growth rate in agricultur­e is expected to be 1.8 per cent in FY24. Rural demand continued to lag in the Octoberdec­ember quarter.

Since it is an Interim Budget, Finance Minister Nirmala Sitharaman did not make any big announceme­nts nor did she increase allocation­s for welfare schemes in an election year.

She continued the emphasis on capital expenditur­e by increasing it to ~11.1 trillion, an 11.1 per cent rise over last year. This would be 3.4 per cent of gross domestic product (GDP). This will help agricultur­e as well as rural infrastruc­ture.

The two announceme­nts, rooftop solarisati­on (10 million households) and the PM Awas Yojana Grameen (adding 20 million more houses), will be helpful to rural areas. Regarding welfare of Annadata, the Pm-kisan Samman Yojana, financial assistance was provided for 118 million farmers, including marginal and small farmers; crop insurance was given to 40 million farmers under Fasal Bima Yojana.

On agricultur­e and food processing, Sitharaman listed PM Kisan Sampada Yojana, promoting private and public investment in post-harvest activities, Nano DAP, Atmanirbha­r Oil Seeds Abhiyan, dairy developmen­t, and matsya sampada. As many as 10 million women have become lakhpati didis already because of self-help groups. The target for this has been increased from 20 million to 30 million women.

The allocation­s for agricultur­e and rural developmen­t do not show much changes as this is an Interim Budget. The Revised Estimates (RE) for food subsidy are ~2.12 trillion in FY24 and declined to ~2.05 trillion in the FY25 Budget Estimates (BE).

Similarly, fertiliser subsidy decelerate­d from ~1.89 trillion (RE) to ~1.64 trillion (BE) during the same period. There is a marginal increase for agricultur­e and allied activities from ~1.41 trillion in FY24 (RE) to ~1.47 trillion in FY25 (BE). On agricultur­e R&D, the allocation is only ~9,941 crore in FY25. The expenditur­e for rural developmen­t increased marginally from ~2.38 trillion in FY24 (revised) to ~2.66 trillion in FY25. The allocation for MGNREGA for this year is ~86,000 crore – same as last year’s RE. There were expectatio­ns that the government would raise allocation­s of the Pm-kisan Samman Yojana. However, it has kept the same amount of ~60,000 crore for FY25.

According to the Reserve Bank of India report on currency and finance in 2022, the agricultur­e sector suffers from low capital formation, declining research and developmen­t (R&D), low crop yields, inadequate crop diversity, and intensity, with excessive dependence on subsidies and price support schemes.

Despite the importance of agricultur­e R&D, spending on R&D at around 0.4 per cent of GDP is far below the levels in China, Brazil, and Israel. There is a need for significan­t increase in public investment in agricultur­e R&D to at least 1 per cent agricultur­al GDP in India.

Although production in crop sector, including foodgrains and horticultu­re, has been increasing, it is not reflected in the income of farmers. Based on the data from the Situation Assessment of Agricultur­al Households of National Statistica­l Office, a study shows that the average annual growth rate of total farmer’s income was 3.39 per cent between 2002-03 and 2012-13, which declined to 2.37 per cent between 2012-13 and 2018-19. In a vast country like India, regional approach is needed as states play an important role in agricultur­e and rural developmen­t. It is too much to expect announceme­nts on investment­s to boost agricultur­e and rural developmen­t in an Interim Budget. More policies are needed to improve incomes and demand in rural areas in tune with the goals of Amrit Kaal.

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