Tag: budget agriculture

A Grim Future: What Happened to the Promise of Doubling Farmers’ Income by 2022?

The most important takeaway from this Budget is an utter lack of accountability.

What would the Union Budget contain for farmers in the year following the historic farmer protests? This was a question on many minds as the Union Budget speech unfolded on February 1.

After all, the farmer agitation, which held the nation’s attention for more than a year, did not end but was merely suspended in December 2021. The suspension was based on written assurances given by the government on their key demands in addition to the repeal of the three farm laws.

The most important of these demands is the legal guarantee of Minimum Support Price (MSP), on which a committee was promised but has not materialised until now. The farmer organisations made it clear that if the assurances are not met, nationwide protests would be relaunched.

Considering this context, what did the Budget offer to farmers?

Strikingly, there was no attempt in the Budget either to address the immediate demands like MSP or to offer other solutions to the farmers’ underlying concerns about lack of remunerative prices, unfair markets and rising input costs. Neither did the Budget announce a major give-away to farmers to shift the conversation as many had speculated – such as an increase in PM-KISAN benefit from Rs 6,000 per family to Rs 10,000.

Also read: No Special Focus on Farmers’ Demands, Agri Budget Devotes Itself to ‘Tech-Based’ Models

Instead, the share of Agriculture and Allied Activities in the total Budget was reduced to 3.8%, whereas it was 4.3% in the Budget Estimate of 2021-22 and 3.9% in the Revised Estimate.

Many key allocations have been reduced and the fertilizer subsidy has seen a steep drop of 25% from the previous year’s revised estimate. The share of Rural Development in the total Budget fell to 5.2% compared to 5.5% in the previous year, underlined by a deep cut in the budget for the MGNREGS from last year’s revised estimate of Rs 98,000 crore to Rs 73,000 crore in this Budget.

Many farmer organisations have interpreted the Budget as the Centre’s act of vengeance against the farmers for their agitation. If that seems extreme, at the very least this Budget is telling the farmers and rural India, “We don’t give a damn what you want.” This at a time when even the corporate sector was telling the government that rural incomes need to be boosted because the low rural demand for goods is hitting the economy.

This year is notable as it was the goal for doubling farmers’ income which was promised six years ago in February 2016 and has been a staple item in all Budget speeches and the speeches of ruling party leaders including the Prime Minister.

Now, when we have reached 2022, the Budget speech did not even mention it, let alone give an account of the progress.

Here is a quick accounting that shows why the Union finance minister chose to stay silent. As per the government’s Doubling Farmers’ Income Committee report, the benchmark household income of 2015-16 was Rs 8,059 per month and this was promised to be doubled in real terms, taking inflation into account. As such, the target income by 2022 is Rs 21,146 per month.

At the mid-way point of the six-year period, the estimated monthly income of farm households in 2018-19 was Rs 10,218 per month in nominal terms, as shown by National Sample Survey Office’s (NSSO) 77th Round data released in 2021.

A projection for the next 3 years adjusting for the annual agricultural growth rates gives an estimated income of Rs 12,445 per month in 2022. The target of Rs.21,146 remains a mirage.

Doubling Farmers’ Income: Promise vs Reality

Note: Income for 2022 is projected adjusting for annual agricultural growth rates.

The finance minister began the section on agriculture proudly declaring that in the present year 2021-22, the procurement of paddy and wheat will reach 1,208 lakh metric tonnes benefiting 1.63 crore farmers with Rs.2.37 lakh crores in direct payment of MSP value. Such large figures are designed to catch budget day headlines even though the 2.37 lakh crore figure is not a budgetary allocation towards farmers, but simply the purchase value paid by procurement agencies to farmers in return for their grain.

But in reality, these figures exposed a reduction in procurement compared to the previous year, when the figures were 1,286 lakh metric tonnes from 1.97 crore farmers spending Rs 2.48 lakh crore.

 

It is more important to look beyond paddy and wheat procurement to examine the implementation of MSP. On the one hand, the Budget speech of 2018 by the then Union finance minister Arun Jaitley declared a commitment to ensure that all farmers are able to sell their crops at the declared MSP.

Since then, this government and PM Modi have repeated their verbal assurances on MSP. On the other hand, the government claims that bringing a legal guarantee for MSP is not practical. The best way for the government to make its case would have been to expand and strengthen the existing MSP schemes and show that it can ensure that the largest majority of farmers get the MSP in all the 23 crops under the support price regime, without requiring a law.

However, the PM-AASHA scheme (Pradhan Mantri Annadata Aay Sanrakshan Abhiyan), introduced in 2018 as the flagship scheme for implementing MSP, has turned into a hopeless ‘niraasha’ with its budget allocation dwindling from Rs.1500 crore in 2019-20 to Rs 1 crore in 2022-23.

Even the Price Support Scheme-Market Intervention Scheme (PSS-MIS), which implements Price Support and Market Intervention and saw a high of Rs 3,596 crore in 2021-22, is allocated only Rs 1,500 crore in 2022-23. These schemes fall far short of what is required because the annual shortfall between the declared MSP value of crops and the average market value received by farmers is more than Rs 50,000 crore. It is this utter lack of commitment to ensuring MSP that justifies and fuels the farmers’ demand for a legally guaranteed MSP. 

MSP REALITY CHECK
Allocations for the 2 schemes meant to ensure MSP to farmers
Year PM-AASHA  PSS-MIS
Budget Estimate Revised Estimate Budget Estimate Revised Estimate
2019-20 1,500 crore 313 crore 3,000 crore 2020 crore
2020-21 500 crore 300 crore 2,000 crore 996 crore
2021-22 400 crore 1 crore 1,500 crore 3596 crore
2022-23 1 crore 1,500 crore
Compare to Rs 50,000 crores: Estimated shortfall between declared MSP value of crops and average market value received by farmers as per 2017-18 data. Estimated to be higher now.

A close look at the figures shows the performance of many initiatives. The one lakh crore Agriculture Infrastructure Fund was announced in May 2020 as part of Atmanirbhar Bharat package. However, after nearly two years, only Rs 2,694 crores have been disbursed as loans and projects worth a total of Rs 6,700 crores sanctioned (source: Agri Infrastructure Fund website). This is dismal performance for a much-hyped package meant as a stimulus for an economy in crisis.

The Pradhan Mantri Fasal Bima Yojana (PMFBY) allocation has been reduced marginally to Rs 15,500 crore, but more importantly the scheme is floundering as evident from the number of major states which have pulled out of it including the Pradhan Mantri’s home state of Gujarat. The much-heralded “10,000 Farmer Producer Organisations” scheme had a paltry allocation of Rs 700 crores last year and the revised estimate reduced it to Rs 250 crore. 

The new emphasis on natural and organic farming is to be welcomed in view of the widespread degradation of soil, water and biodiversity, and the changing climate. However, a rational and evidence-based approach is required rather than a dogmatic one. The strange preference to focus on a 5-km corridor along the river Ganga in the first stage beats logic and may only serve to delay the promotion of natural farming in rain-fed regions that are more amenable.

Also read: Budget: Digital Models and Catchphrases Cannot Dissolve Inequality

Despite the rhetoric, the budget figures are not encouraging. The Paramparagat Krishi Vikas Yojna (PKVY) scheme which was meant to promote sustainable agriculture was allocated Rs 450 crore in the previous year but only Rs 100 crore was spent. In the new Budget, PKVY as well as many other schemes have been subsumed under an expanded umbrella of Rashtriya Krishi Vikas Yojana (RKVY) with no clarity on allocation for different sub-schemes. The existing guidelines of RKVY give autonomy of planning to the state governments, and this will hopefully be continued. 

More disconcertingly, the Budget speech also seeks to promote drones on a large scale for spraying pesticides and chemicals. The emphasis is on high-tech agriculture and digitisation as the way forward. The agri-digitisation process has already led to serious concerns about compromising the interests of farmers in favour of agri-business companies and digital platforms. With no data protection laws in place, and with land record digitisation already resulting in lakhs of small and marginal farmers getting dispossessed from lands, the push to accelerate digitisation and high tech services in public–private partnership mode is not in the interests of farmers. 

The most important takeaway from this Budget is an utter lack of accountability. Flagship schemes are falling apart without finding a mention. A major goal post was set to be reached by 2022, and now there is complete silence about it.

Instead, a new goal post has been set up for 25 years hence. Once again, an unmistakable way of avoiding all accountability. Even as ‘Amrit Kaal’ is being used as an abracadabra to conjure up a distant future, farmers seem to have no place even in such a future vision. 

Kirankumar Vissa is a national working group member of All India Kisan Sangharsh Coordination Committee, and one of the founders of Rythu Swarajya Vedika, a farmers’ organisation in Telangana and Andhra Pradesh.

Note: This article was edited after publication to fix an error in the allocations listed for the PKVY scheme.

No Special Focus on Farmers’ Demands, Agri Budget Devotes Itself to ‘Tech-Based’ Models

While the budget ensures assured income to wheat and paddy farmers, with the allocation of Rs 2.37 lakh crore for their MSP payments, plans for broader implementation are not mentioned.

Mumbai: From ‘Kisan drones’ to the Ken-Betwa linking project, Union finance minister Nirmala Sitharaman emphasised on promoting a “tech-enabled model” of agriculture this year.

The annual budget also focuses on ensuring assured income to farmers, with an announcement of Rs 2.37 lakh crore towards direct payments for minimum support price (MSP) to wheat and paddy farmers for the fiscal year 2022-23.

Sitharaman announced, “Inclusive development is the government’s priority which includes the procurement of wheat, paddy, kharif and rabi crops, benefitting over 1 crore farmers.”

She further added, “1,208 lakh MT of wheat and paddy is [to be procured] from 163 lakh farmers. 2.37 lakh crores will be the direct payment of Minimum Support (MSP) value to their accounts.”

The budgetary estimate for the fiscal year 2022-23, however, only saw a marginal increase from the past year. Last year, the sector got Rs. 1,31,531.19 crore; this year, Sitharaman allotted an additional Rs 982.43 crore taking the year’s budgetary estimate to 1,32,513.62.

Also read: Top Eight Takeaways From Nirmala Sitharaman’s Union Budget Speech

The Revised Estimate shows that Rs 1,26,807.861 crore was spent on the department of Agriculture and Farmers Welfare (Rs. 118294.24 crores) and Agricultural Research and Education (Rs 8513.62 crore) for the past fiscal year.

In her 92-minute-long budget speech, of which only two and half minutes were dedicated to agriculture-related announcements, Sitharaman said, “Use of Kisan drones for crop assessments, land records, spraying of insecticides is expected to drive a wave of technology in agriculture and farming sector.”

She also laid emphasis on the Union government’s interest in promoting “chemical-free natural farming and public-private partnerships for the delivery of digital and high-tech services to farmers across the country”.

“Chemical-free natural farming will be promoted throughout the country, with a focus on farmers’ lands in 5-km wide corridors along river Ganga, at the first stage,” she read from her Budget speech.

Also read: Budget: Huge Fillip to Modern Infra Belies Prominence to Climate Action, Renewable Energy

Sitharaman announced that the National Bank for Agriculture and Rural Development (NABARD) would be roped in to facilitate a co-investment model and promote finance start-ups for agriculture and rural enterprises which are relevant to the farm produce value chain. The activities, the FM announced, will provide support for Farmer Producer Organisations, machinery for farmers on rental basis at farm level, and technology including IT-based support.  

The FM announced the government’s plan to implement the Ken-Betwa River linking project at a sum of Rs 44, 605 crores. The project, planned in the drought-prone region of Bundelkhand, spread across 13 districts in Uttar Pradesh and neighbouring Madhya Pradesh. The Union minister indicated that the project would benefit more than 9 lakh hectares of farmland.

It is important to note that the project covers a significant part of the poll-bound state of Uttar Pradesh. The project, Sitharaman said, is expected to provide drinking water supply to about 62 lakh people besides generating 103 MW of hydropower and 27 MW solar power.

“Implementation of Ken Betwa Linking project at an estimated cost of Rs 44,605 Crore to be taken up with irrigation benefits to nine lakh hectare farmland,” Sitharaman said. A budget of Rs 1,400 crores has been allocated for the project in 2022-23, she added.

The year 2021 has been one of direct confrontation between the farmers and the government. After a year-long protest by tens of thousands of farmers, the government was forced to withdraw three farm laws in November last year. Farmers had expected the budget would give special focus on their demands.  

Prominent farmers’ leader Yudhvir Singh, general secretary of the Bhartiya Kisan Union (BKU) is reported to have told NDTV, “Agriculture employs more than half the working population in the country, yet the centre paid little attention and did not deliver on its promises to farmers including that of doubling farmers’ incomes.”

Singh said that even after a year-long protest, the budget turned out to be disappointing, as their core issues like MSP still remain unresolved.

‘Empty Budget’: Farmers’ Unions Allege Centre Gave Least Priority to Agriculture

The share of agriculture and allied activities in the total budget fell from 5.1% last year to 4.3%.

Mohali: The unions which have been at the forefront of the farmers’ struggle against agri-marketing reforms for the last six months have expressed disappointment over the Union budget for agriculture presented today.

In a pre-budget and post-budget analysis, farmers’ leaders Yogendra Yadav, Avik Saha, Kavita Kuruganthi, Kiran Vissa and other agricultural experts said that the Union budget presented on Monday “has proved the farmers’ apprehensions right – that this government is on a path of withdrawing support to agriculture, not strengthening it.”

“Despite the huge farmers’ protests and deep discontent at their economic plight, the government of India gave the lowest priority to agriculture in this budget,” the statement released after the analysis session read.

Compared to last year, the share of agriculture and allied activities in the total budget fell from 5.1% to 4.3%. In absolute terms, the allocation fell from Rs 1.54 lakh crores to Rs 1.48 lakh crores.

Quoting these figures, the statement by protesting unions read: “While the recent Budget speeches gave the appearance of high priority to agriculture by addressing it as the first sector, it was relegated to a later part of the speech this time, as the government did not have significant announcements to make.”

Kirankumar Vissa, a farmers’ leader associated with Rythu Swarajya Vedika and a part of the AIKSCC (All India Kisan Sangharsh Coordination Committee), which is leading the protest against the three farm laws said: “On the major issues faced by farmers – ensuring Minimum Support Prices, access to market infrastructure, effective crop insurance when they face losses due to natural calamities, and rural employment through MGNREGS – the Budget has nothing to offer.”

Also read: Budget 2021: The Winners, Losers and the Largely Unaffected

Kiran Vissa said that the two schemes – PM-AASHA (Pradhan Mantri Annadata Aay SanraksHan Abhiyan) and MIS-PSS (market intervention scheme and price support scheme) – meant to ensure that farmers get MSP in the market have faced massive budgetary cuts rendering them “meaningless”

PM-AASHA:

Year Budgetary allocation
 (Rs in crores)
2019-20 1500
2020-21 500
2021-22 400

MIS-PSS:

Year Budgetary allocation (crores)
2019-20 3000
2020-21 2000
2021-22 1501

“The farmers suffer a loss of more than Rs 50,000 crores in a year because of the shortfall of prices below MSP. This shows that the government has no commitment to MSP despite their rhetoric,” Vissa said and provided the aforementioned data to media correspondents.

“This is all the more reason why farmers are demanding legal guarantee of MSP. Otherwise, MSP is meaningless if the government doesn’t back it with budget support and market intervention,” he added.

Avik Saha of Jai Kisan Andolan lashed out at the government saying that the ‘Atmanirbhar Bharat’ package, which was supposed to provide a stimulus in the context of the COVID-19 lockdown and recession, has proven to be a “lie” for agriculture and allied sectors.

“Nothing has been spent out of the Agriculture Infrastructure Fund of Rs 1 lakh crores or the Animal Husbandry Infrastructure Fund of Rs 15,000 crores, as shown by the Chapter 7, Volume 2 of the Economic Survey. Only Rs 2,991 crores was received ‘in principle sanction’ to Primary Agricultural Credit Societies as of mid-January 2021, eight months after the package was announced,” Saha said.

Watch | ‘Farm Bills Are an Attempt to Wipe Out the Fortunes of Farmers’: P. Sainath

Yogendra Yadav, the president of the party Swaraj India and a member of the Samyukta Kisan Morcha, who has been leading the protest, said, “Five years after announcing the target of doubling farmers’ income by 2022, we are entering the final year for meeting the target, but there is no announcement about how much the incomes have been enhanced until now, and how far we have to go.”

Yadav criticised the government for not having prepared a report card concerning major schemes and funds announced in the last few years to keep track of the progress of these schemes, if any.

“The empty budget for farmers shows that the government is not looking at addressing the slowdown by putting resources in the pockets of the people at the bottom, but instead using this crisis as an opportunity to implement economic reforms that corporate India has been demanding,” Yadav said.

Budget 2019 Reeks of a Lack of Real Ambition

While troubles on the low investment are simply assumed away, the silence on major issues like job creation and the viability of agriculture was deafening. 

In terms of economic vision, it has always been difficult to make sense of the Narendra Modi government. 

The previous five years were hardly inspiring in economic terms: relatively little was done in terms of positive changes to address the major problems in the economy. Most economic policies of the earlier government – including some more problematic ones – were simply continued, often in a renamed or repackaged form, while the regime was punctuated by the twin disasters of demonetisation and the badly botched and rushed implementation of the goods and services tax.

Meanwhile, especially before the general election, the government put its head in the sand and simply denied the most obvious economic problems. It encouraged changes in the estimation of the GDP that were opaque and appeared to be unfortunately partisan, creating scepticism about the reliability of the data within and outside the country.

It suppressed unsavoury economic data like the report of the employment and unemployment survey emanating from its own statistical agency, which showed falling labour force participation especially of women and historically high open unemployment. It refused to admit the problem of low investment rates that were afflicting industry.

It offered a minor sop of cash transfers to some farmers in lieu of addressing their significant and growing problems that had resulted in a year of almost continuous farmers’ protests. Overall, it kept insisting that everything is fine in the economy, despite all evidence to the contrary.  

Also read: Union Budget 2019-20: All You Need to Know

Even so, a lot was expected from this first Budget to be presented by the new government. After all, this government now has enormous political capital, having just comprehensively won the recent election, despite all concerns about how that election was run, and so it can afford to announce big policies. Modi had already shown himself to be able to make bold decisions (demonetisation was certainly a bold decision, albeit a crazy and disastrous one).

The prime minister and other government officials have gone on record over the past few days, with extravagant claims of transforming the country through a ten-year vision of a “new India”, in which the size of the economy will supposedly more than double in just five years. (This is what the prime minister’s goal of achieving a $5 trillion size of GDP by 2022 amounts to, even with the optimistic assumption of a stable exchange over the period.) 

And there was much talk of blue sky thinking and bold moves to deal with the economic challenges ahead.

So what did the Budget finally deliver on these expectations? In the wake of all the promises, most people were left scratching their heads trying to identify even one big idea or significant move. 

Certainly, the silence on major issues like job creation and the viability of agriculture was deafening. 

The low investment rate was simply assumed away – in line with government arguments that investment has anyway bottomed out and will now increase. The problems in the banking and non-bank finance sector did get some much-required attention, but the proposed moves are minor and may well be inadequate to deal with the scope of the problem. Despite much emotion expended on small enterprises, there is really nothing that would improve their conditions significantly. 

People watch Nirmala Sitharaman’s Union Budget 2019-20 speech at an electronics store in Kolkata. Image: PTI

As has become usual in the last few years, the Budget was extremely optimistic in the matter of estimating future revenues. GST revenues are projected to go up by more than 13% over last year’s receipts, a tall order given the already poor receipts of the first quarter. 

There is a sop to the middle classes in terms of the increase in the exemption rate to Rs 5 lakh income per year, which it is claimed will be counterbalanced by slightly higher taxes on the very rich. The Centre has continued to centralise and bypass Finance Commission awards – surcharges and cesses, which do not have to be shared with state governments, are projected to account for around 16% of the projected tax revenues.

On the expenditure side, the lack of action may be even more surprising. The only big increase is on the pre-election scheme of cash transfer to farmers, the PM-KISAN, which will eat up Rs 75,000 crore. Infrastructure development is supposed to be a big priority of this government, but only the railways gets a reasonable additional allocation of just under Rs 13,000 crore (leaving out the high hopes of vast amounts to be raised through Public-Private Partnerships). 

Also read: Union Budget 2019: Fiscal Deficit Target for FY’20 Pegged at 3.3%

Road transport and highways get an increase of only 5.6%, barely keeping pace with projected inflation, while rural development fares even worse, with an increase of less than 5%.  

Other social sector spending mostly just about increases in line with the increase in nominal GDP, in other words remains around the same. The absence of any mention of the supposedly flagship Ayushman Bharat health insurance scheme in the Budget speech fits with its absence in the detailed budget papers, but it is no less surprising for that. 

Instead, the Rashtriya Swasthya Bima Yojana – which was supposed to be rendered defunct by the new scheme – has seen its tiny allocation increase from Rs 2,770 crore to Rs 6,656 crore – a tiny drop in the ocean of the projected requirement. As it happens, I am not an admirer of this scheme, which seeks to substitute two layers of private providers for a better funded public delivery scheme. But does the lack of outlay suggest that the government is also no longer so enamoured of this scheme? 

The surprise, then, is in the lack of ambition. 

But perhaps this confirms something that became quite clear before the elections: this is a government that is less interested in improving people’s economic conditions than in capturing people’s hearts and minds for its own goals. 

That is why one of the chapters in the Economic Survey, when combined with the new “ease” of taxation using only Aadhaar as announced in the Budget speech, should give us all pause. For those of us worried about the possible abuse of Big Data, its forthcoming marriage with Big Brother, as indicated by this Budget, may be the single most important indicator of the future intentions of this government.

Jayati Ghosh is a professor of economics at Jawaharlal Nehru University.

Expert Gyan: Is Budget 2018 Really Putting Farmers First?

Ambiguities and more talk than outlays mean that little is likely to change.

Ambiguities and more talk than outlays mean that little is likely to change.

Do the numbers and the plans really live up to the talk? Credit: Reuters

Do the numbers and the plans really live up to the talk? Credit: Reuters

New Delhi: In his 2018 Budget speech, Union finance minister Arun Jaitley said, “My government is committed to the welfare of farmers… My prime minister gave the clarion call to double farmers’ incomes by 2022. We consider agriculture to be an enterprise and want farmers to produce more on the same land and also get better returns from their produce.” Jaitley said that the minimum support price (MSP) for kharif crops – crops cultivated during the monsoons – will be set at 50% more than the cost of production, launched ‘Operation Green’ with the aim to promote farmer producer organisations and agri-logistics associations, increased the agricultural credit target to Rs 11 lakh crore, allocated Rs 10,000 crore to boost fisheries, aquaculture and animal husbandry, and proposed a cluster-based approach for horticulture farming.

How significant is the government’s turn to the farm sector? The Wire spoke to three experts on what they think.

Raman Mann
Agricultural analyst

Raman Mann. Credit: Twitter

Raman Mann. Credit: Twitter

The first thing is this. The committee that they had recently formed to look into doubling farmers’ incomes – the Ashok Dalwai committee – had basically said that Rs 6.4 lakh crore investment is needed for this. But in this year’s Budget, the allocation has increased by Rs 4,845 crore. So this is a clear-cut indicator that incomes aren’t going to double anytime soon.

Then the other thing they have said is that they will increase MSPs for the kharif crop to 50% above costs. There is some ambiguity here, on what they will take as costs – A2 + FL (the costs of inputs paid plus the imputed cost of family labour) or C2 (inputs plus family labour plus working capital plus imputed rent of land).

As of now, MSP is below costs for some crops like wheat if you calculate on C2. For wheat, for example, the MSP was Rs 144 less than C2 per quintal. So do they really mean that they will now give 50% more than C2?

Even if we assume that yes, that is what they mean, we must remember that the Shanta Kumar committee had said that procurement for 94% of farmers doesn’t happen at MSP. So they won’t get anything even if there is an increase.

The other point is that if they really want to do something on the ground, they should have ensured some form of assured direct income. But there was no talk about that.

This is basically for the elections – the government is posturing through the Budget so that when they go to ask for votes, they can say they fulfilled the Swaminathan committee recommendation for MSP at 50% above cost. But again that’s only if they use C2 – we still aren’t clear on that. Of course 94% of farmers will still not get anything, but for elections they can say that what we promised you in 2014, we have done it. The common farmers, though, won’t see any difference.

Abhijit Sen
Retired professor of economics, Jawaharlal Nehru University, 
Former chairperson, Commission for Agricultural Costs and Prices

Abhijit Sen. Credit: Youtube

Abhijit Sen. Credit: Youtube

This is a Budget which is proposing a number of things that people had been crying about. The most important one of that is the MSP. Jaitley has said that he is going to have MSP at 50% above cost. Although this is over a period, it is not happening immediately. They are saying that since this is what you guys want, we will give it to you. But it is not budgeted. How much it’s going to cost – it’s going to cost quite a bit – is not budgeted. It’s ramifications for the rest of the system are also not spelt out. So the big thing on agriculture, on the MSP, is almost an afterthought.

He talked about Rs 11 lakh crore going to agriculture, but that’s not the number in the Budget document. Obviously what’s happening is that most of what he’s talking about are off-budget items, mainly through NABARD or other banking systems. So these are not costs being incurred by the government, but expected to be incurred by somebody else.

Overall, the agricultural and rural issues that Jaitley’s talked about are a whole set of promises most of which are off-budget, and many which are prospective, which means they are not even fully off-budget – there doesn’t seem to be an expenditure plan on these things. This is especially true of the things spent a lot of time on about which a lot of people are talking about – horticulture, fisheries and all of these things he’s adding by saying Rs 10,000 crore here, Rs 10,000 crore there. All of these are again NABARD windows – just opening up new NABARD windows.

So basically on agriculture it’s a lot of talk, backed up by very little money from the Budget, possibly more from institutions like NABARD. But much of it, even if the money comes from elsewhere, is prospective, like the MSP thing. It’s not very clear that it’s been thought out, because the implications of MSP at 50% above C2 cost would be huge. But they might turn around and say it’s some other cost. So what they’re promising, they haven’t really spelt it out. Because he can actually say he meant A2 cost, not C2 cost.

Ashok Gulati
Chair professor for agriculture at ICRIER

Ashok Gulati. Credit: SmartIndianAgriculture

Ashok Gulati. Credit: SmartIndianAgriculture

One needs clarity on whether promise of the MSP at 50% above cost is based on C2, comprehensive cost, or A2, the paid out cost. If they are talking of 50% increase over comprehensive cost, that would require, in paddy, an increase of about 45% in the MSP. Can they do that? In a single year? I don’t think so. And if they do it, what implications does it have in terms of food inflation, the food subsidy bill, distortions in cropping patterns, etc. If they announce and they want to do deficiency payments, what is likely to be the bill that will come? All these things will have to be carefully thought through. I hope they have done that, but the details are missing – it’s just a policy statement, and a very vague policy statement. I’m not sure whether they have the guts to increase MSP by 45-50% in a single year. They did not do it in four years, so how will they do it in one?

If they are talking about A2, then more then 50% of that is already in place. So then what are they talking about?

I welcome the other move, which is the fund created for fisheries and animal husbandry – Rs 10,000 crore. But this is for how many years? We don’t know if it’s for a single year, for five years, for two years. It’s not clear.

The other things are quite small. Rs 2,000 crore for agricultural marketing infrastructure, Rs 500 crore for Operation Green. Those are small.

I would say there’s nothing negative, but there’s nothing there that can double farmers’ incomes either.