The fact that a full 30-minute of Jaitley’s two-hour long speech was dedicated to the rural economy underlines existing rural distress and its electoral implications. In light of stagnant farmers’ wage growth, the Budget proposes to set minimum support prices (MSP) for kharif crops at 50% more than the production cost. Jaitley also said Niti Aayog will develop and implement fool-proof mechanism to ensure farmers get adequate prices.
To ensure farmers get accurate forecasts of prices, the government will create an institutional mechanism to develop appropriate policies and practices for price and demand forecast and use of futures and options market among others. Economist Vijay Sardana acknowledged the move as positive, but asserted that implementation was a key factor. “Increasing MSP is not adequate… It is more important that farmers should get full benefit.”
Tax breaks were extended to Farmer Producer Organisations, with those having annual revenues up to Rs 100 crore now eligible for a 100 per cent tax deduction.
The budget proposes to substantially strengthen agri-market infrastructure. For the benefit of over 86 per cent of small and marginal farmers, 22,000 rural haats are set to be upgraded into Gramin Agricultural Markets (GrAMs). These farmers will be able to make direct sales to consumers and bulk purchasers at the GrAMs, which will be electronically linked to e-NAM (National Agriculture Market).
An Agriculture Infrastructure Fund with a corpus of Rs 2,000 crore will be set up for establishing GrAMs and 585 Agricultural Produce Market Committees. “These measures to integrate rural haats to e-NAM and to increase the MSP purview mean farmers can look forward to better price realisations,” said Ajay Kakra, Leader - Food and Agriculture, PwC India. To ease financing crunches, the volume of institutional credit for the agriculture sector is to be raised from Rs 10 lakh crore to Rs 11 lakh crore. The corpus of funds available to women in self-help groups is to be raised to Rs 75,000 crore by March, 2019, from Rs 42k crore in 2016-17.
Two new funds — Fisheries and Aquaculture Infrastructure Development Fund (FAIDF) and Animal Husbandry Infrastructure Development Fund (AHIDF) — will be set up with a total allocation of Rs 10,000 crore