It’s pouring money and schemes in agriculture

No dearth of funds for agri credit and new institutions

 
By Latha Jishnu
Last Updated: Sunday 28 June 2015

No dearth of funds for agri credit and new institutions

Union Finance Minister Arun Jaitley cannot be accused of unveiling a populist budget except perhaps with agriculture. In a budget speech which went on for 140 minutes, proposals on agriculture speckled it from the middle to almost the very end. There were huge funding announcements and a rash of new research institutes to be set up in various parts of the country but overall it gave no clue as to what the Narendra Modi government’s vision is to revive and revitalise the primary sector.

Overall, it was more—and more—of the same that the UPA government has been doling out in the past decade. There was a steep increase in farm credit, more warehousing and more research institutions, all of which do little to address the fundamental problems of India’s farm sector.

“We are committed to sustaining a growth of 4 per cent in agriculture and for this we will bring technology-driven second green revolution with focus on higher productivity and include ‘protein revolution’ as an area of major focus,” said Jaitley in a pronouncement that has left listeners bemused, especially since Union Agriculture Minister Radha Mohan Singh has steadfastly refrained from speaking on the farm priorities of the Modi government.

What the 2014-15 budget has opened are the sluice gates for agriculture credit, a figure that has been going up by leaps and bounds in the past five years. In the interim budget in February this year, Congress Finance Minister P Chidambaram had set Rs 8,00,000 crore as the target for lending for the current financial year, and Jaitley says he will stick by this figure. It is another matter that such credit has benefitted small and medium farmers very little. Much of this bonanza is boosting the fortunes of companies that are in the business of agriculture, from warehousing corporations to those running reefer trucks and even state electricity boards in the name of helping the priority sector.

Jaitley’s other big ticket item was NABARD’s Rural Infrastructure Development Fund (RIDF) which gets Rs 25,000 crores in 2014-15, up from Rs 5,000 crore allocated in the interim in the Interim budget. In addition, the Short Term Cooperative Rural Credit (STCRC)–Refinance Fund gets a whopping Rs 50,000 crore allocation for 2014-15 to “ensure increased and uninterrupted credit flow to farmers and to avoid high cost market borrowings by NABARD”.

Clearly, the Modi government sees no problem in widening the credit pipeline although there is little explanation as to how all this will flow to the millions of small and marginal cultivators who comprise the bulk of Indian farmers. Analysis by RBI economists has shown that small farmers got a mere 3.77 per cent of the credit in 2007, with the lion’s share going to large farmers or agribusiness ventures. It was the same in 2011-12, too, when then finance minister Pranab Mukherjee announced a huge boost in total farm credit. DTE had pointed out (In the name of the farmer) that small and marginal farmers got only 5.71 per cent of the credit.

Of the many schemes announced by Jaitley what could prove beneficial is the Warehouse Infrastructure Fund for increasing the warehousing capacity to increase the shelf life of farm produce. For this, he earmarked another Rs 5,000 crore for the current year to meet what he called the “urgent need for availability of scientific warehousing”.

In a speech riddled with perplexing observations on agriculture, the finance minister said that in order to make farming competitive and profitable, “there is an urgent need to step up investment, both public and private, in agro-technology development and creation and modernisation of existing agri-business infrastructure”. According to him, Indian Agricultural Research Institute (IARI), Pusa, has been at the forefront of research in this area and as such two more institutions of this kind would be set up in Assam and Jharkhand with an initial sum of Rs 100 crore in the current financial year.
 
IARI is the premier research institution of the Indian Council of Agricultural Research (ICAR) focused on crop research and its work is relevant to the entire country. There is no rationale for replicating IARI in other parts of the country, specially since different kinds of research institutes already function in the east and northeast. In any case, the Rs 100 crore set aside for the two new IARIs is peanuts, says an ICAR old-timer. “The focus should be on toning up the work of IARI and not in setting up new labs with pitiful funding,” according to the crop scientist who says governments over the decades have not understood how to tone up agriculture research in the country.

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