A cautious approach in agri sector

The Budget, which was announced on Monday in the background of prolonged farmers’ protest, was expected to roll out doles in the form of farm loan waiver, increase in cash under PM-KISAN scheme for farmers and off clarifications on the MSP policy.

However, it turned a damp squib for many who were eyeing with expectations. Having spent a significantly higher amount on food and fertiliser subsidy in 2020-21 to support the farm sector amidst the pandemic, the Finance Minister took a cautious stand and limited spending across different heads in agriculture for 2021-22. The total spending on MSP support and procurement was an astronomical ₹4.22-lakh crore in 2020-21, up from ₹1.08-lakh crore in 2019-20. The amount of fertiliser subsidy provided for in 2020-21 was ₹71,309 crore, but the actual spending was ₹1.33-lakh crore.

For 2021-22, for food subsidy, the FM has provided ₹2.42-lakh crore and for fertiliser subsidy, ₹79,529 crore.

Amount budgeted for PM-KISAN is lower than what was originally provisioned for 2020-21 (₹75,000 crore) but equal to the revised amount for 2020-21 at ₹65,000 crore. This is because against the initially targeted 14.5 crore farmers, the government has been able to identify only about 10.5 crore farmers to make the pay-out.

Agri GVA (gross value added) growth has been extraordinary during 2020-21 despite the pandemic, thanks to a good monsoon and a bumper output. The farm sector did well vis-à-vis most other sectors in the last one year, also because of timely government interventions through additional procurement centres closer to villages during the peak of lockdown.

Outliers

The two schemes close to heart for the NDA government – PMFBY (Pradhan Mantri Fasal Bhima Yojana) and organisation of Farmer Producer Organisations, managed to get a decent share of the Budget.

For the crop insurance scheme, the Budget allocated for 2021-22 is ₹16,000 crore, versus ₹15,307 crore for 2020-21 (revised) and ₹12,539 crore for 2019-20 (actual). While the coverage under the scheme dropped in Kharif 2020 with it being made voluntary recently, looks like the government expects it to rev up and finish the year witnessing a higher expenditure on premium. The FM has also set aside more funds for formation and promotion of FPOs to help farmers benefit from collective selling. For 2021-22, this amounts to ₹700 crore, up from ₹250 crore spent (revised) in 2020-21.

Hopefully, before this spending is done, the implementation agencies take stock of the condition of the already existing 5,000-plus FPOs, say market experts. Most of the existing FPOs are struggling to survive and see members continuing to transact outside it.

Agriculture infrastructure funding has also received thrust in this year’s Budget. The government is likely to spend about ₹900 crore for the year 2021-22. With the FM announcing that this fund will be available for APMCs to use too, it shows that the government is not in the idea of pulling down the APMC structure – a thought that has been haunting the farmers of Punjab and Haryana.