The Union Finance Minister Arun Jaitley named agriculture as one of the 10 important sectors that were the focus of his budget for 2017-18. He backed it up with announcements of crucial measures towards raising farmers’ incomes including enhancing credit availability, formulation of a Model Law on Contract Farming for linking horticulture with agro-processing and setting up of Dairy Processing and Infrastructure Development Fund for additional source of income to farmers in the dairy sector.
In a major boost to the sector, the Finance Minister raised the availability of credit for farmers to a record Rs. 10 lakh crore. “For a good crop, adequate credit should be available to farmers in time. The target for agricultural credit in 2017-18 has been fixed at a record level of Rs. 10 lakh crores. We will take special efforts to ensure adequate flow of credit to the under serviced areas, the Eastern States and Jammu and Kashmir,” he said.
A new Dairy Processing and Infrastructure Fund will be set up to encourage dairying as an additional source of income for farmers. Availability of milk processing facility and other infrastructure will benefit the farmers through value addition. The fund will be under NABARD with a corpus of Rs. 8,000 crores over three years. Initially, the fund will start with a corpus of Rs. 2,000 crores. The intention is to revive and modernise a large number of milk processing units set up under the Operation Flood Programme.
Looking to the vagaries of monsoon– when 60 per cent of Indian farming is under rain-fed conditions–Mr Jaitley set aside Rs. 9000 crore under the newly-launched Prime Minister’s Fasal Bima Yojna. This spending under this programme in the 2016-17 Revised Budget estimates was Rs 13,240 crore against an estimate of Rs. 5,500 crore, which underscores the long-felt need for such a scheme that covers farmers from the losses to their crop due to inclement weather. The sum insured under this Yojana has more than doubled from Rs. 69,000 crores in Kharif 2015 to Rs. 1,41,625 crores in Kharif 2016.
The coverage of this demand-driven programme will be increased from 30 per cent of cropped area in 2016-17 to 40 per cent in 2017-18 and 50 per cent in 2018-19. The scheme was launched from April 1, 2016 and is a shift from claim-based insurance scheme to upfront subsidy for premium-based system with minimal burden to farmers.
As an immediate relief to farmers who have been demanding loan waiver, the government granted 60 days’ interest waiver on loans availed by farmers from the cooperative credit structure. If this could be extended to loans availed from other lending institutions including banks, this could have dulled the demand for a loan waiver.
However, for seamless credit to farmers, the Finance Minister announced the government’s support to NABARD for computerisation and integration of all the 63,000 functional PACS with the Core Banking System of District Central Cooperative Banks in three years at an estimated cost of Rs.1,900 crores, with financial participation from State Governments. Primary Agriculture Credit Societies (PACS) act as the front end for loan disbursements.
The Soil Health Card project of the Ministry of Agriculture and Farmers Welfare has been operational since last year. The scheme is to enable farmers get a thorough assessment of the health of the soil following which use of calibrated application of fertilizers would enhance fertility. The programme has gathered momentum but the real benefit will accrue to the farmers only when soil samples are tested quickly and the nutrient level of the soil is known. For this the government will set up new mini labs in the 648 Krishi Vigyan Kendras and ensure 100 per cent coverage. In addition, 1000 mini labs will be set up by qualified local entrepreneurs. The government will provide credit linked subsidy to these entrepreneurs which will accelerate the programme.
Since linking every field with water supply (Har Khet Ko Pani) is a commitment of the government towards raising farm incomes, the total corpus for the Long Term Irrigation Fund under NABARD has been raised to Rs. 40,000 crore with the addition of Rs. 20,000 crore announced earlier. A dedicated Micro Irrigation Fundfor drip and sprinkler irrigation will be now also be set up in NABARD to achieve the ‘per drop more crop’ goal with an initial corpus of Rs. 5000 crore. Ninety-nine irrigation projects are targeted to be completed by 2019 under the programme and the budget allocations indicate an effort to boost this critical programme.
Over 250 markets have been connected through an electronic platform (e-NAM) under the National Agriculture Market programme which was launched last year. This is meant to enable farmers to get better prices, in a transparent manner, for their produce in the post-harvest phase. The coverage of e-NAM will be expanded to 585 APMCs. For this, the government will provide assistance up to a ceiling of Rs. 75 lakhs to every e-NAM market for establishment of cleaning, grading and packaging facilities for value addition to the farmers’ produce. Towards this end, states will be urged to undertake market reforms and de-notify perishables from the Agriculture Produce Marketing Committee Act (APMC). This will not only give opportunity to farmers to sell their produce and get better prices but also bring transparency to the system in terms of price realisation.
Contract farming programme in the past has had a few concerns about regulations and protection to farmers from agri-processing giants. The government now wants to revive the scheme and sees in it an opportunity to integrate farmers who grow fruits and vegetables with agro-processing units for better price realization. For this it will bring a Model Law on Contract Farming which will be circulated to States for adoption.
The budget allocation to the Ministry of Agriculture and Farmers Welfare was more than doubled in 2016-17 to Rs. 35983.69 crore from Rs. 15296.04 in 2015-16. The allocation in the Revised Estimates was Rs. 39840.50 crore. In the 2017-18 Budget, the Ministry has an outlay of Rs. 41855 crore. Keeping inflation under check particularly the prices of pulses through “macro-management” has been a pressing need for the government last year after such a hue and cry was raised.
If the farm sector including dairying, fishery and horticulture grows by 4.1 per cent as was estimated by the Finance Minister, it will be a big boost to the overall economy. Farm sector share to the GDP is around 15 per cent.
Last year the government made a road map for doubling farmers’ incomes in five years with programmes like Fasal Bima Yojna, Soil Health Cards, e-market and Prime Minister’s Krishi Sinchai Yojna. In this year’s budget an attempt has been made to plug loopholes in these programmes and consolidate them with adequate budgetary provisions.
*Author is an award-winning, senior journalist. She is based in New Delhi.