Agriculture needs a separate budget – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/opinion/agriculture-needs-a-separate-budget/article38116021.ece

WIDE

Farmers need a helping hand   –  REUTERS

Agriculture is too diverse a subject for it to be compressed into a sub-section of the regular budgets of the Centre and States

During the last five years, the Budget allocation to agriculture has seen positive shifts consistent with the Centre’s role in research, marketing, exports, and agricultural education. In the light of the farm reform Bills’ repeal, is it not the right time to formulate a separate Budget by each of the States for the sector? Each State should formulate a separate agriculture budget, with the Centre too bringing out a separate agriculture budget, akin to the Railway budget in the past.

A separate Budget for the sector at the Centre and State levels is pertinent because agriculture is not just crop culture – it has animal husbandry, bee culture, aquaculture, forestry and (podu) hill cultivation and horticulture. When India initiated wide-ranging reforms in 1991, unfortunately the farm sector was left out.

The government’s Farm Bills passed in Parliament last year were met with a year-long agitation by farmers.

Farmers produce food for the millions and bailed out India from the disaster of the pandemic. Most holdings are small and marginal and large farmers lease out their farms to marginal and tenant farmers. There are produce transfers and resource transfers among them with no law governing them.

Farmer left high and dry

Unfortunately, the farmer has been at the receiving end for long. There should be a separate Farm Contract Act that should specify the contracts between farmers, between farmers and traders and between farmers and industry. Farmer producer organisations would draw strength from such legal facilitation.

With tenant farming constituting a substantial portion of crop farming in India and contract farming becoming more a compulsion than option and given the critical role of farm credit, how should funds be allocated to the sub-sectors of agriculture during the year?

This exercise should start from the universities engaged in Agriculture, Animal Husbandry and Horticulture and Nabard to prepare a profile of the State in terms of soil, climate changes, emerging technologies and the pitfalls or inadequacies of the present system. At least a week in advance, the results should reach the Finance department of the State. And they should be circulated a day ahead of the presentation of agriculture budget to the Legislative Assembly.

Irrigated farming and rain-fed farming should be separate components as much as livestock, horticulture, apiculture, and aquaculture. The Budget should contain only those resources that flow from the governments and not from the credit institutions. Since the goal is to double the farmers’ incomes in the shortest time possible, how should income security be provided? How should the insurance mechanisms function?

The Telangana government has shown the way with an integrated approach. In the Rythu Bandhu, Rythu Vedika and Rythu Bima Yojana, the State pays the premium — irrigation and power being the key components. The State’s agriculture growth is the highest in the country at 17 per cent at the current prices in 2020-21.

Discussions around corporate agriculture, contract agriculture and organic agriculture or natural agriculture are gaining traction. While countries like Israel, Vietnam, China etc., have been spraying pesticides in a regulated manner through sprayers from the sky, Indian farmers to a large degree are spraying them manually.

In the high-income zones of the farm sector, we see the adoption of robots, artificial intelligence and machine learning. It is time to introduce agricultural income tax.

The perverse subsidies in farm sector, like for fertilisers, should also be scrapped. Balancing the food system with environment and renewable or alternate energy systems are essential to build resilient food production system.

Any transition in agriculture should be beneficial for the farmers and farm workers. It is imperative to give a helping hand to the farm sector, given the crucial role it performed during the pandemic. Also the farm sector continues to be the largest employer.

Budget for agriculture should not include the crop loan targets as it will be totally misleading. The money lent by the banks should have no place in the Budget as it is depositors and investors’ money.

Commodity Boards in India are not democratic, as one of the leading farmers’ association leaders has said. It is time to recast them, give them clear agenda to function in a manner that they deliver the right income to the farmer. Investors are searching for the food system transformers.

When States budget for agriculture, there is scope for the right balance between the resources and expenditures consistent with their respective agro-climatic zones.

The author is an economist and risk management specialist

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