Agriculture Expectations from Union Budget 2024

Source: The Hindu Businessline

The Union Budget 2024-25 is on the horizon, and with it comes a wave of anticipation for allocations and reforms from India's agrarian community.There are already numerous existing schemes, but their efficiencies need to improve. India's agriculture sector growth pegged at a 7-year low to 1.8% in the FY24, which lags significantly behind compared to India’s overall economic growth rate of 8.2%. That being said, the other sectors of the economy are growing at tremendous speed. Some reforms are overdue and need to be accepted by the agrarian communities.

Crop Diversification

Today there is an over-dependence on certain limited produce during farming. Diversifying crops based on demand gaps will lead to doubling farm income. India has supply deficits in Dals specially Moong. The Agriculture Minister has even announced that the government will buy up all of Moong Dal at MSP. Alongside agricultural produce, it is essential to enhance collateral activities through product blending on the farm, to keep investments minimal while also boosting income. Schemes like Pradhan Mantri Matsya Sampada Yojana (PMMSY) already support activities such as deficit diversification, dairy farming, and fish farming. Additional budget allocations are needed to further bolster these complementary farm-level activities.

Contributory Small Pension Scheme for Farmers

One of the key announcements that is being expected is the expansion of the Pradhan Mantri Kisan Man Dhan Yojana (PM-KMY) for farmers owning less than two acres of land, currently providing a ₹3,000 monthly pension. This could also be achieved by extending the benefits of the Atal Pension Yojana(maximum of Rs.5,000 p.m) to include subsistence farmers with less than two acres. Many of the 6.6 crore subscribers could be farmers who already benefit from these schemes. The maximum pension could be combined and increased to ₹10,000 efficiently.

Another initiative, the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), aims to create a safety net, offering up to ₹6,000 annually.

This means that by age 60, a marginal farmer could potentially earn ₹1.14 lakhs annually for subsistence farmer, assuming there is no exclusion under Atal Pension Yojana beneficiaries.

The key is effective enrollment and education of beneficiaries are crucial. Farmers should provide evidence of farming activities to ensure benefits reach those genuinely engaged in agriculture, similar to the Production Linked Incentive (PLI) scheme's approach focusing on performance and active participation.

Minimum Support Price (MSP) Reforms-PM AASHA

There is a strong push to make MSP a reference price similar to minimum wages, ensuring it acts as a baseline for agricultural produce sales. This would provide farmers with a guaranteed minimum income level, reducing the risk of market fluctuations. The expectation is that the government will introduce dynamic MSP , reflecting the rising input costs as per the process. It is also necessary to further educate farmers and promote storage in regulated warehouses to combat price fluctuations

Enhancing Crop Insurance

The Pradhan Mantri Fasal Bima Yojana (PMFBY)(Allocation of Rs.14,600 Crores in FY24-25 BE) is crucial to protecting crop losses due to adverse weather conditions and other risks. There are issues around declaring drought in affected farm areas especially where there is no widespread destruction of crops, thus this coverage needs expansion and additional budgetary allocation may become necessary.

Fertiliser procurement and Nano fertilisers

The fertiliser subsidies are 0.50 % of the GDP. Farmers need to move towards using Nano fertilisers to increase efficiencies in the crop management process. Promoting the usage of Nano fertilisers while maintaining traditional fertiliser imports($10 Bn) and domestic production will need additional budget allocation.

Financial Support and Loan Target-MISS Scheme

Demand for agricultural loans is also expected to rise by up to 25% of the Agricultural GDP. Today more farmers have availed of Pre-harvest and Post Harvest Loans loans. This includes Kisan Credit Cards. Agri credit needs to be enhanced for farm productivity capex & seed opex. Interest subvention and loan repayment guarantees (currently Rs.22,600 Cr) will need to be increased to achieve this objective.

Expanding Agricultural Exports

Due to inflation risks , there is always an impending fear of export bans or duties. While it is important to manage inflation a non budgetary method could give a cooling period before which the Ban/Export duty comes into effect.The agri exports today are in the region of $55 Bn. One way to keep exports going is to improve value and marketing such that the agricultural products of higher variety are allowed to be exported. It may be prudent to allocate budget funds toward the production of high-quality value-added products, ensuring it is exempt from export bans or cuts.

In conclusion, we need to enhance, maintain, measure and target budgetary allocation for precise delivery to achieve optimum results.

Jai Bharatam.

Source: The Hindu Businessline