In every Union Budget presentation, agriculture is given a place of prominence. This is not surprising, given that 50% of India’s population is dependent on agriculture. Budget 2017 was no different. Both the Economic Survey and the Budget speech stressed heavily on improving agricultural infrastructure and augmenting farmer incomes.
The key drivers expected to set this off are areas such as investment in irrigation infrastructure, development of mandis and market infrastructure for small landholders, better market linkages and a thrust on improving the dairy sector. The combination of these efforts, along with effective administration, shows enormous potential to move toward a paradigm where the focus on income can translate into long-term, healthy development of the farm sector.
Considering that India is home to 17% of the world’s human population, 15% of livestock and only 4% of the world’s water, the focus on irrigation is important. The Budget promises an additional allocation of Rs20,000 crore to the long-term irrigation fund set up by the National Bank for Agriculture and Rural Development (Nabard), and also introduces amicro irrigation fund with an initial corpus of Rs5,000 crore. This will especially help the farmers in rainfed areas, whose farming is often a gamble on monsoon.
To accelerate access to credit services, GoI has set a target of Rs10 lakh crore as credit to farmers with participation by both the Union and state governments. This, along with the end of the two-year drought, has set expectations for this year’s agricultural growth to increase to 4.1% as opposed to mere 1.2% last year.
An increase in production alone does not always translate into higher income for farmers. It is only when production is supported by organised market structures and opportunity that an environment of growth is possible. This long overdue focus on income can equip the farmer with tools for a healthy integration in the present economic and sociopolitical context.
But the fragmented nature of the agricultural sector and weak institutionalisation of government programmes often deter the fulfilment of these goals. Given that many farmers have very small landholdings (an average of 1.5 hectares), it becomes imperative to build the foundational capacity of both farmers and market processes.
Investment in programmes such as the Electronic National Agriculture Market (e-NAM) system, efforts in the outlay for grading and sorting facilities in mandis, as well as emphasis on post-harvest optimisation of value of the produce, will give farmers the opportunity to realise the full market value of their produce. Further, the aggregation of the fragmented agriculture sector, through institutions such as the farmer producer organisations and cooperatives, and collective actions at the mandi level through combined markets and mechanisms such as the national commodity exchange NCDEX, can enable this.
Apart from allocations towards cultivation and production, the Budget also set aside Rs8,000 crore for the dairy sector. India is the world’s largest producer of milk. However, the numbers speak more of the sheer number of cattle as opposed to efficiency. Dedicated efforts towards building efficient systems for dairy production and expansion can have cascading positive implications. This is significant also because 78% of the dairy workforce are women and 85% are small farm holders.
The 24% increase in allocation for rural, agriculture and allied sectors, combined with programmes that focus on digital services and entrepreneurship, can address one of the biggest bottlenecks of Indian agriculture: the access to knowledge. More importantly, with women dominating the workforce of the dairy and livestock sectors, attention here can rescue them from several systemic deterrents such as denial of access to land ownership, education and health facilities.
Direct action from the Budget mandates must reflect ground realities, so that money moves to the right places at the right time. The transformation of the agricultural ecosystem is awaited.
This article was originally published in The Economic Times, on March 10, 2017