With a strong 46% of the working population employed in the Agri and allied sectors, policy reforms or interventions catering to the large farming community is imperative as the sector continues to contribute around 15-20% to the national GDP of the country.
Despite badly hit Covid periods, India was able to achieve record foodgrains production last year, which was overshadowed by the withdrawal of three Agri-reform laws and a spike in cooking oil prices. The sector is expected to register a growth rate of 3.5 percent by March 2022. The government has been promoting huge investments in agri-tech startups that are working in the area of farm advisory, provisions of inputs, and marketing support among others.
A special emphasis is expected for the agricultural sector considering upcoming assembly elections in farming states like Punjab and Uttar- Pradesh.
Challenges of Agrarian Sector
The agricultural sector in the country is bogged down by several challenges that pose a high risk to the growth of the industry. This includes the following factors; Farm holding that is fragmented, Low capital formation, High input cost, Lesser productivity, Low price for produce those results in farmer debts, Restrictions laid down by the agricultural produce market committee (APMC), thinking that is supply-driven, lack connectivity with processing units, the risk associated with agriculture as a whole.
Despite farmers’ opposition, the government is working on a digital ‘stack’ of agricultural datasets, with its core as land records. Applications built over the stack will provide farmers with recommendations on which seeds to buy, and best practices to maximize their yield, along with updates on weather, agricultural credit, insurance, and more.
The central government has been advocating for Zero budget natural farming, which is a type of farming that promotes chemical-free agricultural practices, for quite some time now. While current farming practices are driven by using chemicals, zero-budget natural farming promotes low-cost inputs such as the use of cow dung, aged cow urine, jaggery, pulse flour, and other plant-based extracts. Zero input farming or Natural farming is being promoted under Bharatiya Prakritik Krishi Paddhati Programme, which has been adopted in Andhra Pradesh, Karnataka, Himachal Pradesh, Gujarat, Uttar Pradesh, and Kerala.
The 2022 Budget is expected to be momentous also in the context of finally resolving the issue of a legal guarantee of minimum support price (MSP) for crops. As food inflation becomes a global phenomenon, 2022 will also test the government’s resolve to free up agricultural trade.
The growth in the number of FPOs in the country is a testament to a farmer’s choice towards newer and efficient production systems. Supporting this, the Government of India has also announced a goal of incorporating 10000 FPOs by 2023, which can cater to the larger farmer community and land area as well.
After unwillingly withdrawing the three farm laws and with elections coming closer, the government’s approach to bringing new Agri policies has taken a backseat.
For the improvement of the rural economy and for amplifying non-farm incomes, the propagation of rural employment schemes is necessary. This is one of the areas that the Union Budget 2018 is expected to focus on. Reforms like the Pradhan Mantri Fasal Bima Yojana, crop insurance, profitability for farmers, facilities to trade electronically, and improvement in agro-processing will help in the revival of the segment as a whole and boost farmer income.
The budget is also likely to focus on the agriculture of vegetables, fruits, and dairy. This sector has the potential to observe a growth of 3-4 times. Dairy and animal husbandry accounts for 30% of the agricultural share of the GDP. The growth rate in the segment is observed to be 14% as well. The time has come for the dairy industry to be treated on par with the agrarian sector with additional fund allocation. It is also necessary for this segment to receive the income tax exemption. In order to meet the challenges of the future, the government should lay down the framework for additional milk processing facilities and aid in the doubling of income of dairy farmers.
The government may increase the budget allocation for farm research and education by up to 15%. The allocation in the 2018 Budget for the same is hence, expected to be close to Rs.8,000 crore. The funds are likely to be used on a priority basis. The government will focus on agro-innovations in tribal areas and 150 backward districts where farming is practiced. There is also a consideration on initiating programs for the use of sensors for agricultural purposes. Animal cloning, bio-fortification, and genome editing are other areas where there will be increased attention.