Budget 2024: Economic Survey 2023-24 Favours Agri Reforms, Re-orientation of Policies

There is an urgent need for comprehensive reforms in the agricultural sector in India, according to the pre-budget Economic Survey tabled in Parliament on July 22, 2024. The document noted that the agriculture sector faced several key challenges. The key issues were need to sustain growth while managing food price inflation, improve price discovery mechanisms, and address land fragmentation. 

These issues could impede the country's overall economic growth trajectory, it said. The Survey was tabled in Parliament by Finance Minister Nirmala Sitharaman a day ahead of the presentation of the Union Budget for 2024-25. It said that despite its centrality in India's growth trajectory, the agriculture sector continues to face structural issues that have implications for India's economic growth.

According to the document, policy farmers must strike a delicate balance between incentivising farmers to increasing production and keeping food prices within acceptable limits. This dual objective requires careful policy interventions, it pointed out.

Citing other critical issues like the need to reduce disguised unemployment, increase crop diversification, and enhance overall efficiency in the sector, the document recommended multi-pronged approach.

It suggested upgradation of agricultural technology, the application of modern skills in farm practices, enhancing agricultural marketing avenues, price stabilisation, the adoption of innovation in farming, lowering wastages in the use of fertiliser, water, and other inputs, and improving the agriculture-industry linkages.

The Survey emphasised the importance of technological interventions and skill development in transforming the agricultural landscape and stressed the need for sustainable practices to ensure long-term viability of the sector.

Noting that the policy reforms undertaken by the government over the past decade have laid the foundation for sustained moderate to high growth in the coming years, it said, "To sustain growth for nearly a generation up to 2047 or more and to ensure that it makes people's lives better and fulfills their aspirations, bottom-up reforms are necessary."

In the preface to the Economic Survey 2023-24, Chief Economic Advisor V Anantha Nageswaran advocated a pan-India dialogue on the agriculture sector. He highlighted the need for policy re-orientation despite existing subsidies and support measures and noted that though the government provides substantial support to farmers through subsidies on water, electricity, and fertilisers, along with income tax exemptions and minimum support prices, yet there is room for improvement in policy implementation.

The farmers can be served better with some re-orientation of existing and new policies, the CEA stated. The survey said that current policies, implemented by both national and sub-national governments, often work at cross-purposes, leading to unintended consequences. These include soil fertility degradation, groundwater depletion, environmental pollution, and nutritional imbalances in crop production and dietary habits.

Nageswaran suggested a paradigm shift in viewing agriculture's role in economic development, adding that the farm sector could potentially be an economic "saviour" for India.