The Union Budget 2021-22 as mentioned by the Finance Minister seems to be an extension of previous year’s mini and major budgets. While keeping the allocation relatively consistent, focussed more on infrastructural reforms. It goes in line with the proposal resting on 6 pillars of health and well-being, physical, financial capital and infrastructure, inclusive development for aspirational India, reinvigorating human capital, innovation and R&D and minimum government and maximum governance.
It is worth noting that the allocation to agriculture under DAC&FW decreased in this budget with respect to last year. Finance Minister Nirmala Sitharaman allocated Rs 1,23,017 crore to the Department of Agriculture, Cooperation and Farmers Welfare. This is 8.5 per cent lesser allocation as compared to last year. According to revised estimates the Union Government may be able to spend only Rs 1,16,757 crore out of the allocated Rs 1,34,399 crore in 2020-21. The low utilisation is a big obstacle for most of the agriculture-based schemes.
Per Drop More Crop utilisation requires a significant uptick measure
While the Per Drop More Crop scheme for micro-irrigation coverage has benefitted millions of farmers, the scheme implementation leaves a lot to be desired at the execution level. This year’s economic survey also points out micro-irrigation as a key component that helped the robustness of agriculture in the pandemic era. The consistent fund allocation like last year shows the government's intent and focus to boost micro-irrigation coverage. While a fund allocation is similar to last year’s allocation of Rs 4,000 crore, an estimated utilisation of Rs 2,563 crore for FY19-20 reveals that the scheme is actually working at only 65% potential. Given the acute nature of water stress and immense benefits that micro-irrigation provides, this needs a proper implementation at Central and State level to reach sustainable utilisation levels. Consistent online monitoring and review with full 12-month availability of schemes at State level can boost the utilisation to desired levels.
Doubling of Micro Irrigation Fund (MIF) under NABARD is a welcome step
It is good to see the announcement of the increase of Micro Irrigation Fund (MIF) under NABARD from earlier Rs 5,000 crore to now Rs 10,000 crore. This is an excellent step in line with the Government’s ‘Per Drop More Crop’ initiative and will help increase micro irrigation coverage in all states and achieve the Government's target of 1 crore ha in 5 years. This translates to covering 20 lakh Ha. annually. In order to improve MIF utilisation, we request removing the condition of fund disbursement only against additional subsidy and request that it should be available for mandatory state share as well.
The additional fund could keep the momentum up in states like Tamil Nadu, Maharashtra, Gujarat and Karnataka which are already in favour of the scheme, help restart in states like Andhra Pradesh and Telangana and bring newer states like Uttar Pradesh, Bihar, Jharkhand, etc. under its gamut. Till date, approximately 12.3- 12.4 million ha area has been covered under MIF scheme.
“Access” to credit alignment with the volume of credit remains a critical area to focus
In Budget 2021, FM Sitharaman also proposed to increase agriculture credit target to Rs 16.5 lakh crores. To keep the growth on an upward curve, volume and access to credit remain the critical elements in a sustainable and more importantly a growing ecosystem. Easy credit access for the adoption of modern technology in farms, purchasing micro-irrigation equipment, or infrastructure creation related to farming can go a long way in building a sustainable development model in agriculture.
Other measure requires more on-ground approach to success
The movement of ‘Operation Green’ from TOP (Tomatoes, Onions, Potato) to TOTAL (covering 22 perishable commodities) can really boost both - the price realization to farmers as well as improving agriculture market access and infrastructure. We have seen how ‘Operation Flood’ with efficient execution impacted the dairy industry, and it is high time that fruits and vegetables get in the value-added focus. The sector now requires value improvement in the chain through better technology like micro-irrigation, farm inputs access, better cold storage facilities and right market access. Development of produce clusters, vegetable colonies etc. will significantly transform the sector.
Similarly, the proposal for Agri cess and its impact on consumers and production cost needs to be addressed immediately. The right mechanism to access the Agri Infra Fund and its monitoring through a dedicated agency can boost the infrastructure growth.
The agriculture sector will grow on the pillars of productivity, efficiency and value realization leading to the income augmentation for farmers. The increase in rural infrastructure development fund to Rs 40,000 crore and vision of adding 1,000 more mandis to be integrated with the electronic national market can disrupt the current digital stagnancy.
While on paper, the budget points out to significant development in rural and agriculture infrastructure with focus on value generation and market realisation, the real success will depend on the efficient implementation of the current and proposed plans.
The author of the article is Managing Director of Netafim India
