Budget 2021: Investments in agricultural infrastructure will pay off

Union Budget 2021 India: The Budget provisions in the agricultural sector, implemented with enthusiasm and spirit, will boost investments, promote diversification and raise incomes of farmers. The most notable feature of the Budget for the agricultural sector is its enhanced outlay and facilitation for direct and supportive infrastructure

Indian Union Budget 2021-22: The Budget for the current fiscal has been presented during extraordinary circumstances, when the country is recovering from the Covid-19 pandemic. It aims to improve the health of the economy and the well-being of citizens. The broad objective of this Budget is to transform India through four ‘I’s (investment, infrastructure, institutions and innovations). It intends to revive the economy, accelerate growth, generate employment and improve the environment. The Covid-19 pandemic and the resulting lockdowns has adversely affected all sectors of the economy, except agriculture. In fact, the farm sector has emerged as the main driver of economic growth during these difficult times.

The government announced a slew of measures during the lockdown and later to revive the economy through several packages under AtmaNirbhar Bharat. The agricultural sector also received several measures to boost incomes of farmers, ensure remunerative prices for their produce and improve supply chains of essential food commodities. The provisions in this year’s Budget are in continuation of the announcements made during the pandemic period.

The Budget is expected to promote agricultural diversification towards financially worthwhile and high-value horticulture, dairy and fisheries sectors that are all the more important for consumers in a post-Covid-19 world. These are, interestingly, untouched of minimum support prices and the procurement mechanism. To promote horticultural commodities, the Operation Greens scheme is now extended from TOP (tomato, onion and potato) to 22 other perishable commodities. It was in continuation of the earlier announcement made during the lockdown, when all fruits and vegetables were included under the scheme for six months. The main aim of the scheme is to protect the growers of fruits and vegetables from making distress sale.

The Budget has extended the scheme to minimise the price risk of fruits and vegetable growers. Under this scheme, the government provides subsidy at the rate of 50% of the total cost on transportation from surplus to deficit regions, and hiring of appropriate storage facilities for the eligible crops. This will strengthen the value chains of fruits and vegetables due to transport subsidy and stabilise prices through facilitating storage when prices crash due to excess supply. The scheme will also contribute to stabilising incomes of fruits and vegetable growers and minimise wastage. The Budget has provisions to strengthen 1,000 more mandis and connect these under e-NAM.

This will expand the scope of e-trading through the electronic platform and ensure better prices for agricultural commodities. The most notable feature of this year’s Budget for the agricultural sector is its enhanced outlay and facilitation for direct and supportive infrastructure. In fact, infrastructural development in any form (roads, ports, shipping, waterways and power) will contribute towards boosting the agricultural sector, especially perishable commodities, as these effectively connect production areas with consumption centres. These will also contribute to better integration of markets and stabilisation of prices of agricultural commodities.

The fisheries sector is going to receive investments for the development of modern harbours and fish-landing centres; this will help develop modern markets for this sector. A significant population of India’s 8,100-km stretch of coastline depends on exploitable coastal and marine resources. Indian coastland has enormous potential for growth of seaweed. The Budget has provided to establish a multipurpose seaweed park. Promoting seaweed production, processing and marketing will open new income and employment opportunities for the poor living along the coastline.

Enhancement of the allocation to the Rural Infrastructure Development Fund (RIDF) from ₹ 30,000 crore to ₹ 40,000 crore will have a positive impact on the rural and farm economy, driving inclusive growth. The Agriculture Infrastructure and Development Cess of ₹ 2.5 and ₹ 4 a litre on petrol and diesel, respectively, is expected to generate, as per estimates, an additional amount of ₹ 30,000 crore. Interestingly, this cess has been offset by equal amounts of reduction in the basic excise (and special additional excise) duties on the fuels. It’s a great relief for both farmers and consumers. The proposal for usage of agriculture infrastructure funds to augment facilities in APMC yards is another welcome announcement.

Reverse migration during the lockdown saw many informal and gig workers and labourers returning to their native places, mostly in rural areas. As a part of the stimulus package, the government had made a record allocation (₹ 1,11,500 crore that includes additional outlay of ₹ 61,500 crore in FY21) under the MGNREGA. This year’s Budget estimate for this important rural scheme is ₹ 73,000 crore, which is expected to take care of job seekers in rural India, including migrant labourers who would have stayed back home and not returned to their previous workplaces.

Few other Budget announcements such as raising the target of agricultural credit to ₹ 16.5 lakh crore; doubling the micro-irrigation fund to ₹ 10,000 crore; and extension of the SWAMITVA scheme (for mapping of village lands with modern technology and tools) to all the states and Union territories will directly and indirectly support the farm sector.

Another welcoming feature in the Budget is the provision for setting-up of a National Institute of ‘One Health’, as an interlinkage between human, animal and plant diseases, is getting recognised. It has been scientifically established that there are several zoonotic diseases that are transmitted from animals to human beings. Therefore, a well-integrated health management system will reduce the extent of plant and animal induced diseases.

The Budget provisions in the agricultural sector, implemented with enthusiasm and spirit, will boost investments, promote diversification and raise incomes of farmers. Targeted outlays for infrastructure development in the farm sector will prove to be rewarding.

By Dr PK Joshi and Dr AK Padhee

Dr PK Joshi is former South Asia director of the International Food Policy Research Institute (IFPRI) and Dr AK Padhee is country director-India of the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT). Views are personal