Impact of Interim Budget Agriculture Sector

Indian Budget The interim budget was tabled in parliament on Feb 01, 2019 by the Interim Finance Minister Piyush Goyal. As the nation is gearing up for general elections in coming months, the interim budget was keenly watched and analysed. This interim budget was presented in the backdrop of the raging political debate around farm distress, farmer suicide and the loan waiver. Agriculture in the country is dominated by marginal and small farmers. About 86 percent of the farmers are categorised as small and marginal having less than two hectares of land. The ‘Prime Minister Kissan Samman Nidhi’ (PMKSN) effective retrospectively from December 01, 2018 is targeting 12 crore, such farmers. Under this 75,000 crore scheme, farmers will get rupees 6000 per year which will be directly transferred to their bank in three instalments aligned with sowing seasons of Kharif, Rabi and Zaid. Experts are divided about the overall effectiveness of the measure, but there is general agreement that this income augmentation may help the poor farmers who have been historically excluded from modern credit institutions. This, in turn, shall increase food production.

The government has also earlier revised the Minimum Support Price (MSP) for different crops and made it 1.5 of their cost of production, but due to lack of awareness and lack of institutional support farmers are forced to sell their produce at below the MSP rates.

The government has also proposed a fund of 750 crores for National Gokul Mission and also set up a National Kamdhenu Aayog for cows with a stated goal to upscale sustainable genetic up-gradation of cow resources and to enhance production and productivity of cows. Union government has set up a separate department for fisheries in addition to existing fisheries departments at the state levels.

The ongoing debate on farm loan waiver has highlighted the bad credit culture in the rural segment. Economists have repeatedly warned that frequent loan waivers will further discourage those who repay the loan on time while incentivising loan defaulters. To develop and encourage a healthy credit culture, budget proposals talk about 3 percent interest subvention for timely payments, over and above 2 percent subvention for farmers affected by natural calamities. Two percent interest subvention is also proposed for farmers pursuing animal husbandry and fisheries.

By BOA Bureau *