Even as north Indian farmers’ organisations are gearing up for the next phase of protests demanding a legal framework on MSP (minimum support price) to ensure good prices for their produce, Union Finance Minister Nirmala Sitharaman appeared completely unfazed. The agriculture budget allocation for the financial year 2024-25 makes it clear that the BJP-led government is in no mood to change the path it took in 2021-22, which includes strengthening the post-farmgate ecosystem and not tampering too much with market prices.
In the last five years, agriculture and allied sectors have recorded an annual average growth of about 4.2 percent. This is the lowest during any period in the last four decades. The country’s farmers contribute 18.2 percent to the GDP and about 42 percent of the population is dependent on agriculture. Despite this, there has always been a complaint of step-motherly treatment by the Center towards agriculture and rural economy (now this complaint will increase further because the interim estimates for 2023-24 show that the agriculture sector grew at a meager rate of 1.4 percent, which is very low compared to 4.7 percent in 2022-23). This is the biggest reason for the dissatisfaction of the farmers unions and finding a solution to this through government spending is no less than a complex puzzle for the budget makers.
On July 24, the day after the budget was presented, farmer union leaders from Punjab and other states met Leader of Opposition Rahul Gandhi in his office in Parliament. The purpose was to put pressure on the ruling party. In the recently concluded Lok Sabha elections, the BJP had to bear the brunt of farmers’ anger in many states of North India as well as in Vidarbha and Marathwada regions of Maharashtra.
During the last decade, the BJP has left no stone unturned to transform itself into a new party of the villages of North India while maintaining its urban dominance. A different picture seen in rural India has inspired it to reconsider. Assembly elections are due in Jharkhand, Maharashtra, Haryana and Jammu and Kashmir later this year and party strategists were hoping that Sitharaman would ease their burden a bit.
According to sources, they believe that they missed this opportunity by not increasing the amount of the income support scheme (PM-Kisan Samman Nidhi Yojana) for poor farmers. It is still Rs 6,000 per annum, which was fixed in 2018. Another big issue for farmers could be the cut in fertilizer subsidy, which has been reduced to Rs 1.64 lakh crore; the actual expenditure in 2022-23 was Rs 2.5 lakh crore. (The Center claims that this has been rationalized in view of the softening of crude oil prices.)
In Modi 3.0, the agriculture sector is facing three major challenges—failure to diversify agriculture to higher yielding and climate-friendly crops; farmers’ incomes remaining stagnant; and lack of adequate supply chains. Moreover, the rural economy is also facing a severe shortage of non-agricultural jobs. There is no magic wand to solve these problems. Amidst all this, this year’s Economic Survey has revealed that given the demographic change, India will need at least 78 lakh jobs in the non-agricultural sector in the next seven years.
Along with this, Union Agriculture Minister Shivraj Singh Chauhan also has another responsibility. In her budget provisions, Sitharaman has set aside Rs 1.52 lakh crore for agriculture and allied sectors, which is Rs 11,318 crore more than last year. This has been set aside for increasing expenditure in the rural sector, which has increased by 10 percent to Rs 2.66 lakh crore. Out of this, the Ministry of Rural Development (which is also headed by Chauhan) will get Rs 1.77 lakh crore, whereas last year the ministry had spent Rs 1.71 lakh crore.
This year, the ministry has received a price stabilisation fund of Rs 10,000 crore to maintain buffer stocks of pulses, oilseeds, onion and potatoes. The scheme allows the ministry and central agencies such as NAFED (National Agricultural Cooperative Marketing Federation of India Ltd) to work with states to provide interest-free loans and fund farmers’ working capital in the procurement and distribution of these commodities.
Apart from this, Sitharaman has increased the allocation for Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-ASHA) three times to Rs 6,437 crore this year to ensure MSP remunerative prices to farmers. With this amount, central agencies have the freedom to buy up to 25 percent of the marketable surplus crop of farmers in eligible crops. This is apart from the purchase of grains for the buffer stock of the country.
Chauhan has received funds from states to set up large-scale vegetable production centres near big cities. But for this, he will have to use a better network of farmer-producer organisations (FPOs), cooperatives and start-ups to strengthen the process of collection, storage and sale of vegetables.
In the past, vegetable farmers suffered huge post-harvest losses due to inefficient supply chains and consumers had to buy vegetables at a higher price. With limited market access and a significant number of middlemen, farmers usually receive only a small portion of the final market price of their produce.
The objective is to change this system so that farmers get more profits and they get a good market to sell their produce. Modi 2.0 tried to achieve this goal by making three new agricultural laws in 2020 but had to withdraw the laws due to the displeasure of farmer unions. Then there was an attempt to bring corporate/private sector money towards the agriculture sector. But now the focus is on strengthening the cooperative model so that the expected results can be achieved and farmers can also benefit.
The budget has also allocated funds for some ambitious schemes, such as Rs 500 crore has been kept for Prime Minister Narendra Modi’s favorite scheme ‘Drone Didi’. This will prepare one crore ‘Drone Didi’ in the next three years. These rural women will be provided with UAVs and will also be proficient in the use of drones for agricultural purposes.
Apart from this, one crore farmers will be prepared for natural farming in the next two years. The Cooperative Ministry led by Amit Shah has made two big announcements on this – a comprehensive national cooperative policy will be made to develop the cooperative sector. Ministry officials say that this policy will grow the rural economy rapidly and employment opportunities will also increase. Apart from this, an assistance of Rs 500 crore will be given to the National Cooperative Development Corporation (NCDC) to strengthen the cooperative sugar mills (CSM).
There is also a political aspect behind the second scheme as sugar mills are a major cause of farmer agitation in the upcoming election states of Maharashtra and Haryana (mainly areas bordering western Uttar Pradesh). The ministries of cooperation and agriculture, in collaboration with the states, have worked hard to strengthen agricultural cooperatives and FPOs during the last five years, including digitalization.
All PACS (Primary Agricultural Credit Societies) as well as Agriculture and Rural Development Banks are being digitised and linked to NABARD (National Bank for Agriculture and Rural Development) so that real-time data is available. This is a big step towards pushing formal credit institutions to help farmers. The Finance Minister has also promised a comprehensive review of the agricultural research framework to increase yields. Under the scheme, 109 varieties of 32 types of agricultural and horticultural crops have been released which give higher yields and are climate friendly. There are many new promises for the farming community in the budget but whether these will really be fulfilled and whether farmers will adopt these schemes is a big question.
Special things
●Price Stabilisation Fund of Rs 10,000 crore to maintain buffer stock and control prices of essential commodities
●Digital Public Infrastructure (DPI) covering all agricultural land in the country. Kharif crop survey in 400 districts in 2024
●Big cuts in fertilizer (Rs 1.64 lakh crore) and food (now Rs 2.13 lakh crore) subsidies
● Rs 6,437 crore allocated under PM-Asha in 2023-24 for MSP compensation
● Rs 9,941 crore set aside for agricultural research and development. India currently spends less than 0.4 per cent of agricultural GDP on research. This is much less than China, Brazil or Israel
●One crore farmers will be taught the tricks of natural farming in the next two years