It is not about farmers

Budget 2013 pushed up allocations for agriculture, but it will not help farmers

By Latha Jishnu
Published: Thursday 28 February 2013

Finance Minister Palaniappan Chidambaram’s view of agriculture does not appear to differ very much from that of his predecessor Pranab Mukherjee who presented the budgets for the previous four years. There are incremental allocations for the same schemes that have become the hallmark of the second term of the UPA government: a focus on taking the Green Revolution to the eastern states and offering higher credit to farmers at hugely subsidised interest rates but no initiatives that will lift farmers from the debt-ridden operations or offer a vision of agriculture that is sustainable. Shockingly, irrigation finds no mention at all in the 2013 speech.

For the rest, Chidambaram’s budget is on predictable lines although he has pushed up allocations and offered a couple of sops that are promising. He has allocated Rs 27,049 crore to the Ministry of Agriculture, a sharp increase of 22 per cent over the revised estimate for 2012-13. Of this, research gets Rs 3,415 crore. Whether this is substantially higher than in previous years is difficult to tell since Krishi Bhavan does not have an aggregated figure for the research budgets provided to different agriculture institutions and programmes for previous years. There is no clarity if Indian Council of Agricultural Research (ICAR) will be the sole beneficiary of this allocation. It is also not clear what the R&D priorities are since one of two new institutions announced by the minister is one for agricultural biotechnology although there are several such laboratories in the ICAR stable apart from those set up by the Department of Biotechnology.

One interesting initiative is the provision to allow the National Bank for Agriculture and Rural Development (NABARD) to finance the construction of grain storage godowns by panchayats to enable farmers to store their produce. This will have a double benefit since it will cut down the loss of grains, estimated at 30-40 per cent of our total production, and also enable farmers to hold on to their produce till they get a better price. This is to be done through state governments through the Rs 5,000 crore facility of NABARD for financing construction of warehouses, godowns, silos and cold storage units. The other promising initiative is support for Farmer Producer Companies which will get a maximum of Rs 10 lakh per farmer producer organisations (FPO) to enable them to leverage working capital from financial institutions. However, just Rs 50 crore is earmarked for this.

The big project continues to be the spread of the Green Revolution to the eastern states with an allocation of Rs 1,000 crore as in last year’s budget. However, the outlay for rescuing farmers in the original Green Revolution states through crop diversification is just Rs 500 crore. The big bang figure is the target of Rs 700,000 crore for providing agriculture credit to farmers. The figure has been hiked from the previous year’s Rs 575,000 crore which itself was an increase of Rs 100,000 crore.

Unfortunately, much of this credit, according to studies by the RBI itself, is going not to farmers but to agri-businesses such as input dealers, irrigation equipment suppliers and non-banking financial companies. The farmer, specially the small farmer, is missing in this view of agriculture.


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