Mains Paper 3: Economy
Prelims level: PM KISAN portal
Mains level: Agriculture
•The Union Budget of 2021-22 was presented in extraordinary circumstances. The aim and intent of the budget was very coherent. The government’s message was loud and clear; to revive the economy, accelerate growth and generate employment. It sent a strong signal to the nation on its commitment towards the upliftment of rural India. It reflected the government’s enthusiasm in stimulating investment and diversification, leading to higher incomes for farmers. The global pandemic led to a strict lockdown, affecting all the sectors of the economy, and disrupting global as well as domestic supply chains. However, there was a silver lining in these gloomy times. When the whole economy contracted by 7.2 percent, the gross value added in agriculture sector grew by 3.4 percent.
•The government ensured sustained growth of the sector through slew of measures from time to time, in form of reforms or stimulus packages to boost incomes, prices for the farmers and improve the value chain.
It may seem that the allocations for the Ministry of Agriculture and Farmers Welfare have been reduced, when we compare budget estimates (BEs). However, given that 2020 was a year of exceptional disruptions, comparisons of budget estimates (BEs) of the past two years may not be prudent. However, when we compare the allocations in 2021-22, to the revised estimates (REs) of 2020-21, then we see an increase in allocation of about Rs. 7,000 crores. Table 1 shows the allocations, comparing both BEs and REs of the past year. As it can be seen, the major reduction can be explained by reductions in PM-KISAN allocations.
Registering the beneficiaries:
• The focus of agriculture budget was on developing the existing infrastructure and spurring the investments and credit in the allied sector. Role of infrastructure in agriculture is indispensable for taking the production dynamics to the next level. Development of infrastructure, especially at the farmgate and post-harvest stage minimises wastages and shortages. The post-harvest losses and wastages, due to lack of proper infrastructure facilities, accrues to 15-20 percent. The Agriculture Infrastructure Fund (AIF) announced by the government in May 2020 with the total corpus of Rs. one lakh crore is a huge step in the right direction. It will mobilise medium – long term debt finance facilities for investment in viable projects for post-harvest management. The allocation for the upcoming fiscal is pegged at Rs. 900 crore. It is expected to push entrepreneurs for innovation by leveraging new age technologies including Internet of Things, AI, etc; to reduce post-harvest losses and increase value realisation for farmers.
• While the scheme is already available for entrepreneurs, farmer producer organisations (FPOs), cooperative societies and startups, the budget speech made an important announcement that even APMC market yards would be able to utilise this fund to upgrade their marketing infrastructure. This reiterates the government’s commitment to strengthening the APMC system as well. At the same time, an expansion of e-NAM has also been announced.
• Another step towards investment in agriculture is reflected in a 33 percent increase in the budgeted amount under Rural Infrastructure Development Fund (RIDF) of Rs. 10, 000 crore. These enhanced expenditures on rural infrastructure are likely to benefit farmers in several ways, as there are 37 areas where the RIDF funds can be deployed, including not just agriculture infrastructure, but also social sector infrastructure such as public health institutions, sanitation, solid waste management amongst others.
• The fisheries sector also carries with it potential to significantly increase farmers income. Substantial investment opportunities were highlighted to enhance the Blue Economy, specifically in modern fishing harbors and fish landing centers. Five major fishing harbours will be developed as hubs of economic activity; Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat.
• The extension of the Survey of Villages and Mapping with Improvised Technology in Village Areas (SVAMITVA) scheme to the whole country. The SWAMITVA Scheme was piloted in 2020 to map rural residential land ownership and to create non-disputable records, leveraging advanced technologies, such as drones for measurement.
The scheme has now been extended to all states and UTs. The scheme will be implemented in a phased manner over a period of four years (2020-2024) and would eventually cover around 6.62 lakh villages of the country. This will benefit farmers by providing them with non-disputable records of land ownership, facilitating access to bank credit and the inherent security of owning records of ownership; thus, reducing land disputes and litigation.
• The Budget 2021-22 has reiterated the government’s commitment to the agriculture sector. Following the pathbreaking reforms announced in 2020, this Budget has built on those reforms. Through the AIF, more investments will flow to create farmgate infrastructure, enhance aggregation point infrastructure, amongst others.
• The commitment to the MSP and APMCs has also been reiterated by allowing APMC mandis to access funding from the Rs. one lakh crore AIF. Diversification has been given a further impetus by the extension of Operation Greens to 22 perishable commodities. Fisheries have also received a further thrust. The provisions for the food subsidy have been made more transparent.
• The overall message from the Budget was loud and clear. This was a budget intended to revive and stimulate investment, growth, and job creation. The enhanced capital expenditures, increased by 34 percent, with record capex in roads and railways.
• Development of infrastructure carries with it multiplier effects that accrue from better connectivity. With record levels of capital expenditures for road transport and railways, this better connectivity will impact farmers as well. Terminal markets will come closer, facilitating market access.