The Union government is likely to significantly enhance allocation for major schemes in the agriculture and related sectors in the interim budget for the financial year 2024-25 ahead of the Lok Sabha elections.
Agriculture is the primary source of income for 55 per cent of India's population and farmers constitute a crucial section of the vote bank. The sector, which contributes 18 per cent to Gross Value Added (GVA), plays a pivotal role in India's economic recovery and development.
The interim economic review released by the department of economic affairs on January 29 has claimed that the agriculture sector of the country has performed consistently under the Narendra Modi government. The agriculture showed an average growth rate of 3.7 per cent from FY 15 to FY 23 as compared to 3.4 per cent from FY 05 to FY14. Farm sector grew at a rate of 4 per cent during FY 23. However, in the FY 24, it is estimated that the growth of the farm sector may decelerate to a seven-year-low of 1.8 per cent.
Prolonged dry spell and erratic weather patterns in major agricultural tracts of the country have reduced the agricultural growth rate in FY 24. To ensure income support for farmers, the finance minister is likely to announce higher allocation for the agriculture and allied sectors in the interim budget for the financial year 2024-25.
PM KISAN allocation
In the interim budget 2019, ahead of the general elections, the government announced the PM Kisan Samman Nidhi (PM-KISAN ). The scheme is for supplementing the financial needs of the land holding farmers by transferring Rs 6,000 per year in three equal four monthly instalments. As of December 12, 2023, over Rs 2..8 lakh crore has been transferred to the accounts of more than 11 crore farmer beneficiaries. As a populist measure, the government is likely to enhance the quantum of assistance in the PM-KISAN instalment this budget. Considering the immediate impact on voters in rural households, finance minister may propose to increase the amount of money transferred under PM-KISAN by about 50 per cent to Rs 9,000 per year from the current Rs 6,000.
According to a Reuters report, the government is considering doubling annual financial assistance under PM-KISAN to landowning women farmers to Rs 12,000 from Rs 6,000 to woo women voters. Women account for nearly 60 per cent of farmers in the country, but less than 13 per cent own the land. As the number of beneficiaries will be less, doubling the assistance for women farmers under PM-KISAN will not be a financial burden for the government.
Agricultural credit
The agricultural credit target for 2023-24 was Rs 20 lakh crore. In the interim budget, the government is likely to increase the agricultural credit target to at least Rs 25 lakh crore and ensure that every eligible farmer has easy access to institutional credit. In the current financial year, about 82 per cent of the farm credit target of Rs 20 lakh crore has been achieved till December 2023. During 2022-23, against a target of Rs 18.5 lakh crore, the disbursal exceeded Rs 21.55 lakh crore.
MSP
The interim economic review 2024 said that consistent increase in minimum support price (MSP) for 22 kharif and rabi crops was one of the major policy interventions of the government in the farm sector. In the budget 2023-24, Rs 2.37 lakh crore was allocated for providing MSP to wheat and paddy farmers. The government has decided to continue with the physical distribution of wheat and paddy under the PM Garib Kalyan Anna Yojana till December 2028.The current system of procuring at least 60 million tonnes of food grains from farmers at MSP rate will continue. The finance minister is likely to announce a hike in MSP for paddy and wheat this budget.
Net zero emissions
India has a target of achieving net zero emissions by 2070. Currently, agriculture and allied sectors contribute a little more than 13 per cent of greenhouse gas emissions in the country.
In the 2023-24 budget, government focused on green growth within the comprehensive 'Saptarshi' framework. Green growth programmes in agriculture included promotion of natural farming, use of alternate fertilizers and balanced use of chemical fertilizers. To continue sustained growth in the agriculture sector, the finance minister is expected to announce more programmes in climate resilient agriculture.
Agritech
The term 'agritech' was mentioned for the first time by the finance minister in the budget 2023-24 with provisions for digital infrastructure for agriculture and Agriculture Accelerator Fund for development of agri-start ups. Agritech industry players expect a significant increase in allocation for infrastructure development in the sector with tax incentives for investments. The interim budget may also focus on modernising post harvest practices and development of warehousing and agri value chain to boost country's agri ecosystem.
In the budget 2023-24, the Centre allocated Rs 1.75 lakh crore for providing fertlizer subsidy to farmers. There may not be significant increase in fertilizer subsidy in the interim budget 2024. The allocation for agriculture increased manifold under the Narendra Modi regime. In the budget 2023-24, finance minister allocated Rs1.25 lakh crore to the Ministry of Agriculture and Farmers' Welfare as opposed to Rs 27,662.67 crore in 2013-14.