India’s Budget: Agriculture sector announcements reiterate govt’s rural focus

The government has, through Budget 2021, sent a clear signal to rural India that it is completely committed to their cause. This was amply evident from the new levy, the agriculture infrastructure and development cess.

To compensate for the additional cess [tax], the government has reduced the excise duty component, resulting in no additional cost to the consumers.

The increase in the agriculture credit with a target of Rs 16.5 lakh crore and the allocation of infrastructure fund for the development of APMCs reiterates the government’s commitment to the welfare of farmers, and is a great move.

In driving farm productivity and asset creation, access to credit is crucial for the sector. The enhanced credit outlay of Rs 16.5 lakh crore should ensure there is no shortage of resources. Significantly, this should also benefit the fastest-growing sub-sectors – animal husbandry, dairy and fisheries.

A 25% allocation hike from Rs 30,000 crore to Rs 40,000 crore towards the Rural Infrastructure Development Fund will promote better price realisation for farmers via lower losses and better value capture. This outlay is for APMCs to augment their infrastructure facilities.

This was long overdue, especially for cold chains. Besides, the water conservation commitment stands further enhanced since the Micro Irrigation Fund corpus has been increased from Rs 5,000 crore to Rs 10,000 crore via NABARD.

Moreover, by levying Agri Infrastructure Cess on palm oil, the Centre has achieved many objectives as this will ascertain lower imports while boosting domestic oilseeds production and stimulating crop diversification.

Meanwhile, extending ‘Operation Green Scheme’ from tomatoes, potatoes and onions to cover 22 perishable products would be vital in strengthening these crops’ production clusters, creating farm gate infrastructure and linking them with consumption centres. This will nudge FPOs to offer better prices to farmers.

Adding 1,000 mandis to e-NAM will help boost transparency in the agri markets, which is the need of the hour. Another welcome and innovative measure is the creation of a Multi-Purpose Seaweed Park.

Such measures can help India leverage its vast ocean resources and R&D capabilities. Additionally, it will offer immense employment opportunities in coastal districts while giving an impetus to organic farming.

The government spends in the procurement of four key crops no doubt contributed to the vibrant demand from rural regions during the pandemic. The Centre’s commitment to an MSP that is 1.5 times the production cost across all commodities stands reconfirmed.

Hopefully, the announcements should help in dispelling fears farmers may harbour.

By Ajay Shriram

The author is Chairman and Senior Managing Director of DCM Shriram.

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