India’s agriculture has hardly grown since 2011. If we consider the gross value added in agriculture, annual growth rates were 1.5 per cent in 2012-13, 4.2 per cent in 2013-14, -0.2 per cent in 2014-15 and 1.2 per cent in 2015-16. Growth rates in agriculture were to revive in 2016-17, but there is deep uncertainty due to the disruptive consequences of demonetisation. Thus, the government was expected to significantly raise public spending in agriculture to achieve its curious goal of doubling farmers’ incomes by 2022.
But, this year’s is a contractionary budget. If the fiscal deficit is projected to fall from 3.5 per cent in 2016-17 to 3.2 per cent in 2017-18, the gross tax revenue is projected to remain stagnant at 11.3 per cent of the GDP in 2016-17 and 2017-18. In other words, expenditures would have to slow down. Thus, if total expenditure rose by 12.5 per cent between 2015-16 and 2016-17, it would rise only by 6.6 per cent between 2016-17 and 2017-18. Agriculture has been delivered a fiscal blow. Revenue expenditures on agriculture and allied activities fell by (-)2.7 per cent between 2015-16 and 2016-17. Between 2016-17 and 2017-18, the expenditure is to rise by 4.8 per cent.
In absolute and nominal terms, the expenditure on agriculture and allied activities in 2015-16 was `2.02 lakh crore; two years past, the budgeted amount for 2017-18 is ` 2.06 lakh crore. In real terms, this may even constitute a decline. How such a conservative fiscal stance would help doubling farmers’ incomes is a mystery. If we consider sub-sectors like crop husbandry, expenditures are to fall by 6.8 per cent between 2016-17 and 2017-18. That is, from `39,406 crore to `30,923 crore. For most other components, except irrigation and flood control, rise in expenditures is minimal. The budgeted rise in allocation for MGNREGS is just 1.1 per cent. While fertiliser prices are sharply rising, fertiliser subsidy stands still at `70,000 crore.
To sum up, the Budget is deeply disappointing for farmers. In these hard times of cash crunch, the government has provided them with no succour.
R Ramakumar
Dean, School of Development Studies, TISS