Amid robust crop production and a pickup in farm growth in a normal monsoon year, the 2017 budget gave a strong push to agriculture marketing reform while pitching for a new law on contract farming. Alongside, it increased funds forirrigationandcropinsurance to help farmers deal with weather-related risks.
The government wishes “to integrate farmers... with agroprocessing units for better price realisation and reduction of post-harvest losses,” finance minister Arun Jaitley said in his budget speech on Wednesday, adding, “A model law on contract farming would therefore be prepared and circulated among the states for adoption”.
Jaitley reiterated the Centre’s push to bring more regulated mandis (wholesale markets) on the electronic national agriculture market (eNAM) platform launched last year.
States,hesaid,wouldbeurged to delist perishables from the mandis, allowing farmers to sell to any buyer and “get better prices”. In addition, the minister also proposedtosetupacommitteeto suggest commodity market reforms to benefit farmers.
“An expert committee will be constitutedtostudyandpromote creation of an operational and legal framework to integrate spot market and derivatives market for commodities trading,” Jaitley said, adding that e-NAM would be integral to it. The move is aimed at connecting more farmers to the market.
The Centre has been pushing to reform agriculture marketing for more than 15 years without much success due to lack of interest from states, said Himanshu, associate professor atJawaharlalNehruUniversity, New Delhi, and a columnist with Mint.
“Instead of pushing for reforms, the budget could have actuallyallocatedmorefundsfor creating infrastructure like warehousing and physical markets,” Himanshu said.
The budget continued its thrust on risk mitigation via flagship crop insurance and irrigation schemes.
Funding for crop insurance was raised from .5,500 crore in 2016-17 (budgeted estimate or BE)to.9,000crorein2017-18with a target to bring 40% of cropped area under insurance cover. However, the allocation for the new financial year is less than what was already spent in 2016-17, a staggering .13,240 crore.
The government plans to expand the insurance cover to 50% of cropped area in 2018-19.
For irrigation, the budget envisaged a larger role for the apex rural bank, National Bank for Agriculture and Rural Development (Nabard), which was provided an additional .20,000 crore for the long-term irrigation fund set up last year with a similar amount.
It also announced a dedicated micro-irrigation fund with a corpus of .5,000 crore under Nabard.
Jaitley also proposed a dairy developmentfundunderNabard with a corpus of .8,000 crore to diversify farm incomes, and a special scheme to bring cooperative banks under the core banking system (.1,900 crore) to “ensure seamless flow of credit to small and marginal farmers”.
To provide farmers with adequate and timely credit, the budget raised the target of agricultural loans to .10 trillion in 2017-18,upfromatargeted.9trillion in the previous year.
Overall, the budget allocated.51,026 crore in 2017-18 for the agriculture ministry, a rise of 6% comparedtotherevisedestimate of .48,072 crore in 2016-17.
This includes an interest subsidy of .15,000 crore (for shortterm crop loans) that was transferred from the finance to farm ministry in last year’s budget.
However, despite highlightingthegovernment’s goalofdoubling farm incomes within five years in his budget speech, the finance minister did not give a blueprint for achieving the target.
Farm incomes have plunged due to lower crop prices following a record kharif harvest.
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