Though the Budget 2023 pays lip service to the farm sector, it does not address the issues that are holding it back

At a time when there is a twin crisis in agriculture: in food and fertilizers, creating fears of a fall in production and availability of food, rise in food inflation, and shooting up prices of fertilizers and other farm chemicals, the budget miserably fails in addressing the most pressing problems in Indian agriculture. Unfortunately, it lacks scientific and grounded vision which was the need of the hour. The farmers were expecting that food and fertilizers subsidies would be retained or increased. But, the budget proved otherwise.

The expectations of the farm sector from the budget were two-fold. One, it must have taken steps to raise net incomes from cultivation, and two must-have protected farmers and consumers from the food and fertilizer crisis. But, the budget has failed on both counts. The food subsidy was cut from Rs 2.87 lakh crore in 2022-23 (RE) to Rs 1.97 lakh crore in 2023-24 (BE). Fertilizer subsidies have also been cut from Rs 2.25 lakh crore to Rs 1.75 lakh crore. These cuts would prove disastrous for the farmers and would leave them at the mercy of the market forces. The already disturbed input and output ratios of the production of crops would put the survival of farm families at stake.

The agriculture sector proved to be a saving grace in boosting the economy when all other sectors were on the decline, especially during the crucial phase of Covid-19. This stands authenticated by economic surveys which say that the agriculture sector has grown at an average annual growth rate of 4.6% in the past six years. However, instead of getting a better deal, agriculture and rural incomes are under stress. The purchasing power of the rural population has declined due to higher inflation in rural areas which has resulted in negative real rural growth and has been a matter of concern for the fast-moving consumer goods and other consumer durables players.

Official data show that between 2020-21 and 2022-23, annual growth rates in agriculture and allied sectors have been stagnant between 3% and 3.5%. The real incomes from cultivation have fallen in absolute terms after 2015. The rise in support prices between 2020-21 and 2021-22 barely covered the rise in input cost, hardly leaving any space for higher net incomes. Yields in agriculture remain low on the production front as well.

There has been lower consumption of fertilizers in farms due to rising fertilizer prices which has led to imbalanced nutrient application and even poorer prospects of yield rise. On the other hand, there is a provision of Rs 459 crore in the budget to the National Mission on Natural Farming to promote “natural farming” which is likely to further reduce crop yields by 25-30% at the initial stage. The pertinent question is how can farming stay viable in the face of rising input prices and stagnant output prices. Does the government also need to explain why it failed to fulfill the promise of doubling the real incomes of the farmers between 2015 to 2022?

Although the Finance Minister made a series of announcements on Agriculture, the allocations for these schemes or scheme components are not listed in the budget documents. These are fragmented allocations thinly spread across diverse departments with only an indirect or marginal impact on the agricultural sector. Agriculture Accelerator Fund, PM-Pranam, GOBARdhan, Bhartiya Prakritik Kheti Bio-Input Resource Centres, Mishti, and Amrit Dharohar are some examples. Much time was spent on millets, but, nothing much came out in terms of budget allocation except upgrading a Centre for Excellence in Hyderabad. Yet another announcement was on a targeted investment of Rs 6,000 crore under the Pradhan Mantri Matsya Sampada Yojana, but, the actual increase in allocation in the budget papers is only Rs 121 crore. Capital investment is required in agriculture not just for irrigation but also to create and sustain the infrastructure of agricultural markets/mandis. The total capex of the government in 2022-23 was Rs 7.5 lakhs crores, but, allocation under the capital accounts of crop husbandry, animal husbandry, dairy, and fisheries was just Rs 119 crore. This is expected to fall to Rs 84.3 crore in 2023-34. The budget allocation for irrigation and flood control in 2022-23 was only Rs 350 crore which is slated to fall to Rs 325 crore in 2023-24. The budget allocation for Agriculture Infrastructure Fund (AIF) in 2022-23 was Rs 500 crore, of which only Rs 150 crore was spent and the allocation of Rs 500 crore has been retained for 2023-24.  Much needs to be done for improvement in agriculture. The main challenges to be faced are climate change, rising input costs, fragmented land holdings,sub-optimal farm mechanization, low productivity, and disguised unemployment.

There is a need for investment (both private and public) in infrastructure and Research & Development to be raised by having a relook on subsidies. Focus is needed on diversification to millets, pulses, oilseeds, horticulture, animal husbandry, dairying and fisheries, raising rural manufacturing and services, and more push on policies is required for revival of incomes and employment of MSMEs. The Centre needs to work closely with states to improve the incomes and livelihoods for growth and sustainability in agriculture and rural areas.

(The writer is a senior journalist and Chairman of the Panwar Group of Institutions, Solan, Himachal Pradesh. The views expressed are personal