Union budget: It was slim pickings for the farmer | analysis | Hindustan Times
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Union budget: It was slim pickings for the farmer

The government has chosen to focus on the farming community only because important states are headed for polls

analysis Updated: Feb 08, 2018 12:22 IST
Non-farm incomes in rural areas are also not growing fast enough to make the desired impact on poverty and income distribution
Non-farm incomes in rural areas are also not growing fast enough to make the desired impact on poverty and income distribution(HT)

The role of agriculture in India is fundamental because it employs half of India’s work force, and as per the Central Statistics Office, the sector generated 17.3% of the gross value added (the measure of the value of goods and services produced in an area, industry or sector of an economy) between 2016 and 2017.

The last agriculture census (2010-2011) pointed to some major areas of concern. First, the continuing decline in the average size of rural land holdings. Today, more than two-thirds of land holdings are small and marginal. If we look at the net irrigated area, the share of small and marginal holdings is about 80%.

Second, the proportion of net irrigated area to net sown area (the area sown with crops but is counted only once) is less than half. This translates into low crop yields. Productivity growth has been sluggish too. In late 2016, Union agriculture minister Radha Mohan Singh effectively distanced the NDA government from this vital sector when he informed Parliament: “Low crop yields cannot be attributed to non-availability of improved technologies but several factors, including short growing season, varied agro-climatic conditions and weather extremities”.

Third, studies indicate that in certain states, levels of indebtedness are over 80%. The dependence of farmers on usurious non-institutional sources of credit remains strong. Although farm mechanisation is improving (sale of tractors have increased), this may be adding to the debt levels without a corresponding increase in yields on account of falling farm size.

These numbers are alarming for a sector responsible for providing food security to over 1.3 billion people, and the performance of which is a crucial determinant of hunger and malnutrition, gender and income inequality, and the impact of human activities on the environment.

To add to these problems, non-farm incomes in rural areas are also not growing fast enough to make the desired impact on poverty and income distribution. Yet there was no new imaginative product or service offerings in the 2018 budget for farmers, save an expansion of the Kisan Credit Card scheme to include allied agricultural activities such as fisheries. Rural literacy, an important lever to increase agricultural income, has been consistently low, and this budget has not addressed even this problem.

Low rural incomes have been attributed partly to the minimum support prices (MSP) falling below the cost of production, as well as to their non-indexation to inflation. The announcement to increase the MSP by 50% employs a Machiavellian use of a partial cost indicator to project the benefit as much larger than it is. No steps have been defined to reduce disintermediation (reduction in the use of intermediaries between producers and consumers) to prevent the flow from any increases in the MSP, which in itself is an illusory promise, to the farmers.

Nothing has been done to shift the focus from mechanical farm equipment to incentivising agro-climatically-appropriate cultivation. Massive schemes to nudge agricultural practices towards greater efficiency, micro-targeting of crop insurance, and moving agriculture up the value chain would have had a greater impact. Outlays are also inadequate to fund irrigation infrastructure and water markets.

Agricultural clusters may indeed bring economies of scale, but merely announcing clusters of 1,000 hectares or more will not bring them about. Soil health cards have not measured up to the hype created because they were not linked with the larger ecosystem.

The greater target for agricultural credit will push up indebtedness and ineffective mechanisation. No incentives have been offered to agricultural start-ups.

The budget promises for farmers come too little, too late.

The government has chosen to focus on the farming community in a year when important states go to elections and in the last full budget ahead of the parliamentary polls next year. Though this was expected of a government that picks up and drops issues depending on political expediency, it is cruel to farmers because the budget does not address any of their concerns.

The government has merely tried to print the word agriculture in bold across a budget, which is anything but agriculture-driven.

Sachin Pilot is former Union minister and president, Rajasthan Pradesh Congress Committee

The views expressed are personal