The Union Budget of 2011-12 takes a distinctly long-term view of the agriculture sector. Though it has emphasised on food insecurity and problems of farm sector, the Budget largely omits bold structural economic reforms in areas such as privatisation and labour market. The Budget seeks to correct long-term distortions in supply-demand issues in agricultural sector.
Most prominent thrust of Budget is on the ailing agricultural sector. It allocates `1 lakh crore credit for agriculture and provides `3,000 crore to NABARD. It has allocated `100 crore for micro finance as well. It proposes to build 15 mega food parks. The government plans to raise average annual farm growth from an average of 2 per cent in the past five years to 4 per cent by 2011-12.
The Budget has raised allocations substantially for several flagship programmes. The biggest of them, Bharat Nirman is to get `58,000 crore. It has increased by about 23 per cent. The focus on agriculture has two dimensions. First is political — the forthcoming elections in five states. TheCongress party has to be seen as doing enough to raise the living standards of the poor to ensure future electoral success. Secondly, the government’s aim to raise annual economic growth to 9 per cent by 2011-12 crucially depends on higher growth in the farm sector. Agriculture accounts for 16 per cent of Indian output, but its role in the economy is higher because of its impact on rural incomes and consumption.
It is good that the monopoly of the FCI has been broken. But the distress sale of agri products continues. The gap between minimum support price for farmers and competitive price for customers has been increasing. The ratio of plan and non-plan expenditure has been decreasing over the years. Therefore, the Budget seems to be very long on rhetoric and short on delivery. It lacks thrust on rural development.
(Kumar Das is Professor of Applied Economics at Utkal University)