Budget must address rural distress, high food inflation

Agricultural production, which grew steadily during 2021-23, has tapered to just 1.4 percent in 2023-24.
The last two quarters’ growth has slumped below 1 per cent due to unseasonal rains and damaged crops.
The last two quarters’ growth has slumped below 1 per cent due to unseasonal rains and damaged crops.File photo | PTI

As it nears the presentation of its first budget in about a month, the new Union government must lend an ear to the mounting rural distress and continuing high food prices plaguing the economy.

Rural voters have made it amply clear they are not happy with the state of the farm sector. The BJP-led NDA’s seat count in rural constituencies went down by 44, while the INDIA bloc gained 77 seats at the recent hustings. The distress is evident in the sluggish consumption figures and has been underlined by consumer goods companies. Rural consumption declined for six quarters from the beginning of 2021 before turning positive at the start of 2023, according to NielsenIQ data.

Higher fuel and food prices have driven up inflation in rural markets more than in urban areas over the last 18 months. Agricultural production, which grew steadily during 2021-23, has tapered to just 1.4 percent in 2023-24. The last two quarters’ growth has slumped below 1 percent due to unseasonal rains and damaged crops.

These trends show there is a sharp fall in rural earnings over the last two years and a consequent erosion in purchasing power. Among the first steps the government must take is easing food inflation, which is creating havoc among millions of families struggling on tight budgets. Basic vegetables and pulses, as well as onions and potatoes—the country’s staple diet—have gone out of reach for many.

The immediate form of intervention, via the budget and otherwise, would be to allocate more resources to build supply lines and beef up distribution so that optimal supplies cool prices. The longer and bigger battle, however, is against climate change that is causing unseasonal rains and long droughts, and is resulting in destroyed crops. This involves more scientific agricultural methods and a greater investment in R&D—some economists have suggested an outlay of 1 percent of the farm sector’s output—so that more resilient and diverse crops are sown.

Providing relief by raising the subsidy on costly inputs such as fertilisers would also be welcome. Above all, a lasting solution to the government’s narrow interpretation of minimum support prices needs to be found. The demand has stirred thousands of farmers in recent days in Punjab and the North. Suppressing these movements would not be the answer.

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