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Complete Analysis AGRI BUDGET : 2018-19

KJ Staff
KJ Staff

It is to be noted that at this point of economic history, Doubling farm income is imperative rather than being an option. The government has much stressed on “Doubling Farm Income” and it has been one of the major selling points of the present day government. The budgetary allocation of the agriculture and farmers welfare ministry for 2018-19 has been kept at Rs. 58,080 crore as against Rs. 51,576 crore for 2017-18, for the emancipation of the sector this year, but there are many wings of this sole bird called : Agriculture. The various sectors of the economy directly or indirectly are dependent on each other. Let us explore the various fronts :

Infrastructure :
 A plan has been drafted to build roads to connect rural India’s farms and schools which will augment the better access to the markets. With the increased allocation for the sector, the government will promote establishment of specialized agro-processing financial institutions and to set up state-of-the-art testing facilities in all the 42 mega food parks.

Increased allocation for building warehouses and Institutional credit to raise for agriculture sector to 11 lakh crore for 2018- 19 from 10 lakh crore in 2017-18.

Pricing ( MSP ) :  One of the most welcomed and appreciated points in this year’s budget is the announcement of 1.5 times the expenses borne by farmers. The support price of the kharif crops has been increased aiming to increase the incomes from farm.

Market :  “The government would strengthen e-NAM — the e-trading platform for the National Agriculture Market and would expand coverage of e-NAM to 585 APMCs. Out of that, 470 APMCs have already been connected to the e-NAM network and the rest will be connected by March 2018. Also, an agri-infrastructure fund with a corpus of ₹2,000 crore will be set up for developing and upgrading agricultural marketing infrastructure in the 22,000 grameen agricultural markets and 585 APMCs,” said Mr. Jaitley.  Upgradation of 22,000 rural haats into grain agricultural markets is another appreciable attempt.

Machinery & Automobiles:  Increased spending in rural areas and agri sector is supposed to make a vibrant growth in the two wheeler and tractor companies. Better farm outputs and better prices would eventually hike up the purchasing power of the farmers and more investments would be caught in the machinery and advancements for the field.

MSME : Reduction of corporate tax rates and increased credit support to boost employment and profitability in the sector, could be proved to vanish disguise employment from the farms. Encouraging FPOs through 100% tax deduction, promoting cluster based organic farming by SHG and roll out of “operation greens” is a necessary shot in the arm for increasing agricultural productivity.

Towards Rural India & Women Emancipation: Free cooking gas to be distributed to rural women through “Ujjawala Yojana” considering the health of the women is another prudent highlight of the budget, when the contribution of women in the sector has been increasing at a high pace. The government has agreed to contribute 12% of the wages of the new employees to the EPF for all the sectors. This takes care of the organised sector. Though no thought has been given to the large pool of workers in the unorganised sector. Women SHG would be encouraged to take up organic agriculture in clusters under national rural livelihood programme.

Horticulture :  Encourage clustering in horticulture production and marketing increase the allocation for organic farming provide cheaper credit to small farmers and create infrastructure funds for fisheries and animal husbandry. Higher spends on e-nam in more mandis, special focus in food processing agricultural exports ( from current $30 billion to its potential of $100 billion ) fisheries and aqua culture and animal husbandry.

Dairy & Fisheries :  To meet the working capital needs of small and marginal farmers in fisheries and animal husbandry sector, the government has extended the facility of Kisan Credit Cards (KCC) to the sector. “This would give benefit of crop loan and interest subvention, so far available to agriculture sector only under KCC, for rearing of cattle, buffalo, goat, sheep, poultry and fisheries,” said Mr. Jaitley.

Finance Minister also announced setting up of a Fisheries and Aquaculture Infrastructure Development Fund fisheries sector and an Animal Husbandry Infrastructure Development Fund for financing infrastructure requirement of animal husbandry sector. Total Corpus of these two new Funds would be Rs.10,000 crore.

The deacon to integrate fisheries and animal husbandry with Kisan credit cards and restructure of National Bamboo Mission to enhance the cultivation and consumption of bamboo :) 

Organic Farming :  Sum of 200 crore has been allocated to support organized cultivation of highly specialized medicinal and aromatic plants and aid small and cottage industries that manufacture perfumes, essential oils and other associated products .

Allied Sectors :  
Allocation of 1,290 crore for restricted national bamboo mission  raise hopes for bamboo based industries, NE grows 67% of India’s bamboo, but the resource has been mostly wasting since the population could not make use of the bamboo due to the Forest Act.

Operation Green : This addresses price volatility of perishable commodities such as potatoes, tomatoes and onions at an outlay of 500 crore. This shall promote FPO, agri logistics and processing facilities and professional management in the sector. Announcing a 100% deduction in respect of profits to farmer producer companies having turn over upto 100 crore for a period of 5 years from the financial year 2018-19 in order to encourage professionalism in post harvest value addition in agriculture.

The budget being well appreciated by the agriculture community has still received many criticism.

The market regulation recommendations by Ashok Dalwai committee is not being implemented.It had suggested that the One India market will be benefited if agricultural marketing is brought under the Concurrent List. The much discussed worry of the government like loan-waiver and focus on loan waiver were out of the scope of discussion. No mention of Swaminathan comiitee report. No major outlay for research and development in the agriculture sector, even when economic survey had recognised climate change and is impact on agriculture as a. Major issue. Swaminathan comm report recommended a minimum support price of 50% profits above the cost of production .. major crops as paddy and millets not up for any hike. The government has agreed to contribute 12% of the wages of the new employees to the EPF for all the sectors. This takes care of the organised sector. No thought has been given to the large pool of workers in the unorganised sector.

 Farmer to produce more from the same land at lesser cost and simultaneously relies higher prices for their produce. The outcome is not uniformly benign. Raising farm prices makes little sense at a time when agricultural prices have won an average been rising relative to other prices. The increase in agricultural prices via govt intervention will lower the real income of buyers of food many of whom are amongst the poorest.

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