Why Union Budget 2017 proposals fall short of Modi govt’s commitment towards farmers

Hardly anybody would quibble over the fact that rural India has been severely impacted with the sluggish agricultural activities and other means of livelihood in the post-demonetization phase. Some of the important measures being implemented for the rural economy, particularly for the agriculture sector, include, Pradhan Mantri Fasal Bima Yojana, Krishi Sinchai Yojana, Long-term corpus fund for Irrigation with NABARD etc. It was hoped that these programmes and interventions would get a boost, along with other important schemes like Rastriya Krishi Vikas Yojana, National Food Security Mission and National Mission for Sustainable Agriculture; however, many of these did not register any improved priority in the budget for 2017-18.

 Why Union Budget 2017 proposals fall short of Modi govt’s commitment towards farmers

Representational image. Reuters

The Budget Speech of the Finance Minister gave top priority to ‘farmers’, but the allocations for the sector imply it is business as usual. The budget allocated for the farming community seems inadequate in the aftermath of demonetisation and its adverse impact on the rural economy. The total allocation for the Union Ministry of Agriculture and Farmers’ Welfare has been increased to Rs. 51,026 crore in 2017-18 (BE), which is only Rs. 3,053 crore higher than the 2016-17 (RE) outlay.

The Ministry’s total allocation, both as percentage share of the total Union Budget and as a proportion of the GDP, shows a decline in the current budget compared to 2016-17 (RE). The promise of doubling the income of farmers has not been accompanied by the introduction of any comprehensive scheme in the budget.

There have been a couple of announcements, including the increase of agricultural credit target to Rs. 10 lakh crore, for which the Primary Agriculture Credit Societies will have to ensure seamless flow of credit to small and marginal farmers, with a special attention to be given to underserved areas. The Pradhan Mantri Fasal Bima Yojana, launched in 2016-17, would now cover 40 percent of the cropped area in the next fiscal, which is an increase from 30 percent from the current fiscal 2016-17.

But the additional tax revenue generated through Krishi Kalyan Cess (KKC), which the tax payer contributes towards with the hope that there would be a comprehensive programme to make farming a viable occupation again, has not been utilised very effectively. The government has substituted the entire premium for the Fasal Bima scheme with the revenue accrued through KKC. There has been a sharp decline in its allocation to Rs 9,000 crore in 2017-18 (BE) from Rs 13,240 crore in 2016-17 (RE). The sum insured under this scheme has increased from Rs 69,000 crore in Kharif 2015 to Rs. 1,41,625 crore in Kharif 2016; the entire premium for the scheme, for the year 2017-18, will be covered from Krishi Kalyan Cess (KKC).

The benefit of interest subvention only benefits a few farmers, who have access to formal sources of credit. As tenant farmers and sharecroppers are excluded from bank loans, interest subvention will not help them. In fact, the allocation for this purpose pegged at Rs 15,000 crore in 2017-18 (BE), is the same as that in 2016-17 (BE). A portion of this allocation (Rs 1,800 crore) would be met from the collections of KKC. The allocation for RKVY in the current budget has declined marginally to Rs 4,750 crore, over the previous year’s allocation of Rs 5,400 crore. However, due to the change in fund sharing pattern, it is expected that States’ would contribute the matching share (of 40 percent) towards the programme and the total allocation for this scheme would be close to Rs 9,000 crore.

Total allocation for PMKSY in the current budget saw a decline to Rs 7,377 crore from actual spending reported in 2015-16, i.e. Rs 7,781 crore. There is no such increased allocation noticed for National Food Security Mission (NFSM), National Mission on Oilseeds and Oil Palm (NMMOOP) or Paramparagat Krishi Vikas Yojana in the current budget. The National Horticulture Mission received an increased allocation of Rs 2,320 crore compared to actual expenditure of about Rs 1,700 crore in 2015-16. A slight increase has been noticed in the allocation for Green Revolution scheme; however, this would hardly be able to relieve the stress of the farming community. Further, there is no special provisioning for the small, marginal and tenant farmers in the current budget, which was actually the need of the hour.

Given the reverse migration happening due to closure of manufacturing and construction industries at the destination, labourers are depending heavily on MGNREGA in the rural areas. However, the budget for this crucial wage employment programme did not receive any impressive allocation in the current budget (only Rs 500 crore) compared to the allocation for 2016-17 (RE), i.e. Rs 47,500 core. Thus, a closer look at the relevant numbers for various programmes and schemes that are meant for the development and welfare of the farming community indicates that the government is falling short of meeting its commitment towards farmers.

(The author is with Centre for Budget and Governance Accountability, Delhi; views expressed are personal. He can be contacted at nilachala@cbgaindia.org )

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Updated Date: Feb 02, 2017 17:33:39 IST