Healing touch, no hard farm reforms yet

  • Zia Haq, Hindustan Times, New Delhi
  • Updated: Jul 11, 2014 02:44 IST

The NDA has opted for tailored plans over big reforms for the vital farm sector, promising to sharply raise public investments in the rural economy while tackling key challenges, such as inflation, climate change and poor food-marketing infrastructure.

The budget largely aims at healing old wounds and modernising the sector, but avoids any epochal reforms many expected of a government with a strongest majority in decades.

Presenting the budget, finance minister Arun Jaitley said there was an “urgent need to make farming competitive and profitable” and to “step up investment, both public and private”.

Jaitley spelt out a raft of planned spending proposals to ensure better credit flow to farmers and building longer-term infrastructure, including investments worth over Rs 15,000 crore in creating rural assets.


The signal about the government’s approach is clear: agriculture, which supports the poorest of Indians, will continue to be cared for by state-led initiatives. Reforms will have to be incremental, not sudden.

To cut reliance on a dodgy monsoon, the budget announced a flagship irrigation scheme — the Pradhan Mantri Krishi Sinchayee Yojana — worth Rs 1000 crore, apart from a climate adaptation fund of Rs 100 crore.

Although the finance minister did not refer to Food Security Act enacted by the previous UPA government, he said his government would continue to provide subsidised foodgrains to the poor, although it promised to better target subsidies.

Jaitley announced raising the corpus of the Rural Infrastructure Development Fund to Rs 25,000 crore with an additional Rs 5,000 crore. Another Rs 5000 crore has been allotted for building modern warehouses — a pressing need. The budget also proposes to set up an agri-infrastructure fund at a cost of Rs 100 crore.

Farming supports two-thirds of the population or about 800 million Indians. Yet, with creaky infrastructure, lack of storage and modern efficient markets has meant that self-sufficiency in foodgrains remains the sum of all achievements. “There is a long way to go in meeting the infrastructure gap in agricultural sector,” Ajay Kakra, associate director of PwC India, said.

Jaitley also set aside Rs 5,000 crore for a “Long Term Rural Credit Fund” to refinance rural banks. Two new agriculture universities have been planned in Andhra Pradesh and Rajasthan, apart from a horticulture university each in Haryana and Telangana.

To increase profitability of the overwhelming majority of India’s small and landless farmers, Jaitley set aside Rs 200 crore to create 2000 producer organisations, while financing 500,000 joint farmer groups. Other steps include 100 soil mobile testing labs and development of agri-biotechnology.

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