What do Union budgets mean for long-term agri development in India?

Union & state budgets want to position equal emphasis on sector-wide enchancment & particular person farmer-centric measures

In latest many years, the disaster within the agriculture and allied sectors (AAS) and the viability of smallholder farming have been on the centre of public and coverage discourse. In response, the Union Authorities has laid coverage give attention to doubling farmers’ earnings and pursuant to this, public expenditure on agriculture and allied sectors has been stepped up considerably since 2019-20

Together with this elevated outlay on this sector within the Union Funds, the extent of allocation in (all) state budgets has additionally been sustained at round 4 per cent throughout the identical interval. However this has been fairly uneven throughout states. 

Though a few of the poorer states resembling Assam, Jharkhand, Uttar Pradesh and Bihar are extremely depending on the agriculture sector, they haven’t been spending enough sources on it via their annual budgets. In such a situation when some states are unable to prioritise their spending on agriculture despite it being a state topic, the Union authorities’s outlay on this sector assumes extra significance. 

The latest enhance in allocations for agriculture within the Union Budgets and a few state budgets, subsequently, are much-needed stimuli for farmers dealing with climatic adversities, worth volatility and growing cultivation prices. 

Nevertheless, carefully analyzing the character and composition of allocations for agriculture is necessary to know their long-term implications for agricultural progress. 

Extra precedence to particular person farmer-centric assist 

Public expenditure in agriculture via budgets will be divided into two classes. The primary supplies particular person farmer-centric assist (direct earnings assist, subsidies, threat cowl). The second class delivers public items that improve the general capability via sector-wide enhancements in infrastructure and agricultural practices (analysis and extension, high quality inputs, mechanisation, post-harvest administration, institutional assist).

The Union Funds outlays on agriculture have signalled a excessive precedence to particular person farmer-centric assist. This has, primarily, been within the type of two schemes: Pradhan Mantri Kisan Samman Nidhi Yojana (PM-KISAN) and Pradhan Mantri Fasal Bima Yojana (PMFBY). 

These two schemes, together with Curiosity Subvention on Brief Time period Credit score scheme, which supplies direct financial transfers to farmers, represent round 73 per cent of the full allocations for agriculture and allied sectors in Union Funds 2023-24. 

Then again, sector-wide assist measures, via schemes resembling Rashtriya Krishi Vikas Yojana (RKVY), Krishionnati Yojana, amongst others, collectively account for round 27 per cent.

Composition of Centre’s budgetary expenditure on agriculture & allied sectors (%)

Observe: “Particular person farmer-centric direct assist measures” embody PM-KISAN, Curiosity Subvention Scheme and PMFBY. “Sector-wide assist measures” embody all different schematic and institutional expenditure on AAS. Supply: Strolling the Tightrope: Evaluation of Union Funds 2023-24, Centre for Funds and Governance Accountability (CBGA), New Delhi

The rise within the price range envelope for agriculture and allied sectors lately has accorded greater precedence to “particular person farmer-centric direct assist measures”. 

This sample of budgetary provisioning can also be mirrored in a few of the state budgets. In some states resembling Telangana, Chhattisgarh and Odisha, the full budgetary allocation for particular person farmer-centric direct assist measures surpasses the full budgetary allocation for sector-wide assist measures.

There may be clearly an pressing want to supply direct monetary assist to farmers to subsidise their rising enter prices and attend to the rising dangers of local weather vulnerability. 

Nevertheless, it will likely be a priority if each Union and state governments begin in accordance greater budgetary precedence solely to direct assist measures. Precedence to sector-wide assist measures is equally important to pursue long-term and sustained enhancements in agriculture and make sure the viability of farming as an occupation.

One of many elements which may be favouring the prioritisation of particular person farmer-centric measures over the sector-wide assist measures is the higher utilisation of allotted funds beneath the previous than the latter. Many states, notably the poorer ones, couldn’t contribute their share of matching grants beneath centrally sponsored schemes (CSS), which resulted in underutilisation of funds launched from the Centre. 

A lot of the CSSs, resembling RKVY, demand a grant of 40 per cent from states (as towards 100 per cent contribution by the Union authorities earlier than 2015-16). That is as a result of implementation of suggestions by the panel on the rationalisation of centrally sponsored schemes in 2015.

Restructuring of central schemes 

As well as, much like final yr’s Union Funds, a collection of modifications have been proposed in schematic allocations for sector-wide assist measures. After RKVY was restructured last year, Union Funds 2023-24 has merged 10 current schemes into the Krishionnati Yojana. 

Consolidation of those schemes will doubtless enhance the quantum of funds accessible to a basket of state-level, localised interventions fairly than having quite a few schemes with meagre outlays. However merging these interventions can also be prone to influence the present institutional framework for different agricultural practices. 

Schemes resembling Pradhan Mantri Krishi Sinchayee Yojana, Nationwide Meals Safety Mission, Rainfed Space Improvement and Local weather Change programme, Sub-Mission on Agricultural Mechanisation, amongst others which have been subsumed, particularly tackle the challenges of rainfed farming. Monetary outlays on these merged schemes have additionally not been specified by Outcome Budget 2023-24, which makes monitoring the progress of those schemes troublesome. 

Nevertheless, within the newest Union Funds, there appears to be some initiatives to boost sector-wide assist measures resembling introduction of a Nationwide Mission on Pure Farming and upgrading of Major Agricultural Credit score Societies. 

Shrinking base of beneficiaries in particular person farmer-centric assist

Within the newest Union Funds, allocations for each PM-KISAN and PMFBY have declined. It has been talked about throughout this yr’s price range speech that 114 million farmers benefited from the PM-KISAN scheme. If one assumes that the identical variety of farmers are to learn from the scheme in 2023-24, then a budgetary allocation of Rs 68,400 crore is required for the scheme. 

Outcome Budget 2023-24 mentions a focused switch of Rs 67,694 crore to the vacation spot banks. However the Budget at a Glance document attributes the downward revision within the price range for the scheme to diminished beneficiary base. This clearly signifies that protection of the scheme will probably be decrease in 2023-24. 

Untangling budgetary outlays on agriculture foregrounds the necessity for a redesign of each Union and state budgets that lays equal emphasis on each sector-wide enchancment and particular person farmer-centric measures. 

To this finish, an inclusive budgetary paradigm that caters to the marginalised sections of the farming neighborhood resembling girls, landless, tenant, small and marginal farmers and agricultural employees, is the necessity of the hour.

Views expressed are the authors’ personal and don’t essentially mirror these of Down To Earth.


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