Finance Minister Arun Jaitley spent 22 minutes of his 110-minute long Budget speech on the measures for farmers. For a long time, the government’s agriculture policy has focussed on production. Jaitley in his second Budget tried to shift this focus towards farmers’ income. Increasing their income has become important because of the distress in the farm sector. A slew of measures were announced by the FM but will they add money to farmers’ pocket is the question.
Jaitley said, “The government has declared minimum support price (MSP) for majority of Rabi crops at least at one-and-a-half times the cost involved. Now, we have decided to implement this resolution as a principle for the rest of crops. I am pleased to announce that as per pre-determined principle, the government has decided to keep MSP for all unannounced crops of kharif at least at one and half times of their production cost.”
There are three points worth noting here. First, 1.5 times the cost is for Kharif crops where MSP has not been announced. Secondly, what is the exact production cost for a farmer is a contentious issue and much more clarity is needed on it. Thirdly, the government has been following this principle for Rabi crop but farmers’ income has not really grown. Kharif crops include rice, maize, sorghum, pearl millet/bajra, finger millet/ragi (cereals), arhar (pulses), soyabean, groundnut (oilseeds), cotton and even sugarcane.
Kharif crops for which the government already gives MSP are paddy, bajra; maize; ragi, toor; moong; urad, groundnut and soyabean. There is also MSP for cotton as per its different grades. Maize, sorghum and sugarcane are the three Kharif crops where the new principle of 1.5 times the production cost will be applied. Sugarcane is a contentious crop with a strong industry and farmer lobby and it remains to be seen how it will react to any attempts to impose a new pricing norm.
The FM also said the Niti Aayog, in consultation with central and state governments, will put in place a fool-proof mechanism so that farmers will get adequate price for their produce. This is a new role for the Aayog to mediate between the Centre and states and give more to the farmer. Madhya Pradesh’s Bhavantar scheme is likely to be developed by the Aayog for implementation across the country.
Jaitley also announced the government’s decision to develop and upgrade existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs). In the GrAMs, physical infrastructure will be strengthened using MGNREGA scheme. It will be electronically linked to e-NAM and exempt from regulations of APMCs.
They will provide farmers the facility to make direct sale to consumers and bulk purchasers. An Agri-Market Infrastructure Fund with a corpus of Rs 2,000 crore will be set up for developing and upgrading agricultural marketing infrastructure in the 22,000 GrAMs and 585 APMCs. This is an interesting step and will create alternative mandis closer to the villages. It needs to be seen if the new mandis will lead to higher prices for the farmers.
The FM also announced a cluster approach for agriculture — an institutional mechanism for developing policies for exports and imports of agri-produce, etc. Lastly and importantly, farmer-producer organisations will get tax benefits and promotion, helping farmer-owned companies to get all the benefits that MSME companies enjoy.
India will target agri-exports of $100 billion against current exports of $30 billion. To realise the potential, export of agri-commodities will be liberalised. This is the incumbent government’s last full Budget. Hence, the need to do more for its largest voter base -- the farmer.
K Yatish Rajawat