A farmer spreads manure in a field in a village in Madurai. , Photo Credit: PTI
YesGlobally, there is a twin crisis in agriculture: in food and in fertilizers. On the one hand, there is a possibility of decline in global production and availability of food grains. The rise in food inflation has been a matter of serious concern for the government and the Reserve Bank of India. On the other hand, global fertilizer prices have increased by almost 200% in the last two years. As a result, the prices of fertilizers and other agricultural chemicals have also increased in India.
Domestically, the central government has the unenviable task of explaining why it has failed to double farmers’ real incomes between 2015 and 2022. Official figures show that there has been an absolute decline in real income from agriculture after 2015. The annual growth rate in agriculture and allied sectors has been stable between 3% and 3.5% between 2020-21 and 2022-23. Agricultural exports have increased, but outside of a handful of items, the effect has been negligible.
Thus, the objectives of the budget can be formulated in two ways: one, it should protect farmers and consumers from food and fertilizer crisis; And two, it must have taken steps to increase net income from farming.
disappointing allotment
It was widely expected that food and fertilizer subsidies would be maintained or increased. The restructuring of food distribution guidelines, which effectively ended a part of the free supply of food grains under the Pradhan Mantri Garib Kalyan Anna Yojana, was a disappointment even before the budget. The budget has reaffirmed that stance and reduced food subsidy from Rs 2.87 lakh crore in 2022-23 (RE) to Rs 1.97 lakh crore in 2023-24 (BE). Fertilizer subsidy has also been reduced from Rs 2.25 lakh crore to Rs 1.75 lakh crore. In fact, these cuts will expose farmers to the uncertainties of the global market and make the economics of agriculture more fragile. Landless households in rural areas are also likely to be adversely affected, as the allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme has been reduced from ₹73,000 crore in 2022-23 (BE) to ₹60,000 crore in 2023-24 (BE) Is. ,
The cut in fertilizer subsidy will increase the cost of cultivation for farmers, but no improvement can be expected from a compensatory increase in output prices. The increase in minimum support price between 2020-21 and 2021-22 only covered for the increase in input cost and left no room for higher net income.
Editorial | A flurry of concessions amid consolidation: On Budget 2023-24
There is no respite on the production front as well. The yield in agriculture remains low. Rising fertilizer prices have led to reduced fertilizer consumption on farms, leading to unbalanced nutrient use and reduced yield potential. On the other hand, the government is promoting types of “natural farming”. Rs 459 crore has also been allocated in the budget for a new National Mission on Natural Farming. But there is no scientific validation of natural farming and it is likely to reduce crop yield by 25-30%. If yields fall, how can farming remain viable in the face of rising input prices and stagnant output prices?
Capital expenditure
Amidst all the talk of increasing capital expenditure, agriculture presents us a story of gross neglect. Capital investment in agriculture is needed not only for irrigation but also for the construction/improvement of agricultural markets (mandis). The government’s total capex in 2022-23 was Rs 7.5 lakh crore, but the allocation under the capital accounts of crop cultivation, animal husbandry, dairy and fisheries was just Rs 119 crore. It is expected to fall to Rs 84.3 crore in 2023-24. Under the capital account of irrigation and flood control, the budgetary allocation was only Rs 350 crore in 2022-23, which is expected to come down to Rs 325 crore in 2023-24. Agriculture Infrastructure Fund (AIF) is another much discussed scheme. The budgetary allocation for the AIF in 2022-23 was ₹500 crore, of which only ₹150 crore was spent. The allocation of Rs 500 crore has been retained in 2023-24.
The finance minister made a series of other announcements on agriculture in his speech, but allocations for these schemes or plan components are not listed in the budget documents. Essentially, these are all fragmented allocations spread across diverse departments with only an indirect or marginal impact on the agriculture sector. Agriculture Accelerator Fund, PM-Pranaam, Gobardhan, Indian Natural Farming Bio-input Resource Center, Mishti and Amrit Dharohar are good examples of this. A lot of time was spent in the speech on Bajra too, but without any clear allocation other than upgrading the Center for Excellence in Hyderabad. Another announcement was made on a targeted investment of ₹6,000 crore under the Pradhan Mantri Matsya Sampada Yojana, but the actual increase in allocation in the budget papers is only ₹121 crore.
The budget has failed to address the most pressing problems of Indian agriculture. The lack of a scientific and grounded vision that would ideally have driven the quantum and direction of the allocation is telling.
R. Ramkumar is Professor at Tata Institute of Social Sciences, Mumbai