BUDGET 2019-20: AGRICULTURE AND RURAL PROSPERITY

Relevance: mains: G.S paper III: Indian Economy:

Introduction

• The Union Budget 2019-20 was announced amidst wide expectations on removal of distress in rural areas and to step up Government’s focus on agriculture and rural economic reform measures.
• The annual average growth rate registered at 2.88 per cent during 2014-2018 in agriculture
  and allied sectors and was well below the prescribed target of 4 per cent per annum. The Gross Value Added (GVA) of agriculture and allied sector during 2018-19 was recorded at 2.9 per cent against 6.3 per cent in 2016-17.

Importance of Agriculture budget

• Agriculture remains the mainstay of the Indian economy despite its shrinking share in the
  country’s Gross Domestic Product [55.4 per cent in 1950-51 to 17.4 per cent in 2018-19].
• Similarly, rural non-farm sector coupled with farm sector have tremendous potential in ushering an overall positive economic scenario in the country.
• The Budget intends to re-orient government policy interventions in rural and agriculture sector and aims at re-establishing an enabling atmosphere for not only to achieve the objective of doubling farmers’ income by 2022, but also to expedite poverty reduction, job creation, skill up-gradation drives and to guarantee a long-term double-digit economic growth with social justice.

Allocation to Centrally Sponsored Schemes

• As per the recommendations of the SubGroup on Centrally Sponsored Schemes (CSS), the
  number of CSSs was restricted to 30 for ensuring optimum utilization of resources with better project outcomes through location-specific interventions.
• Such CSSs were categorised as ‘Core Schemes’, ‘Core of the Core Schemes’ and ‘Others’. While the focus under core schemes was to jointly implement schemes of national development by the Union Government and the State,
  the core of the core schemes are dedicated towards social protection and social inclusion.
• A glance at the Budget 2019-20 allocation on CSSs indicates that out of a total budget allocation of Rs. 3,31,609 crore for all schemes, Rs.2,49,508 crore and Rs. 81,862 crore have been allocated to Core Schemes and Core of the Core schemes, respectively.
• While Core Schemes witnessed an increase of 9.5 per cent in 2019-20 (BE) than that of 2018-19, Core of the Core Schemes registered 5.37 per cent hike in their allocation. 2019-20 Budget allocation reduced for National Social Assistance Programme, Green Revolution and Pradhan Mantri Awas Yojana and remained constant for Pradhan Mantri Gram Sadak Yojana (PMGSY). Allocation for National Rural Drinking Water Mission.
• National Livelihood Mission – Ajivika and Jobs and Skill Development initiatives witnessed 42.85 per cent, 61.28 per cent and 43.16 per cent enhancements in the BE 2019-20 vis-a-vis 18-19. MGNREGA has been allocated Rs. 60,000 crore in this year’s budget, which is 9 per cent more than that of 2018-19.

Rural Wage Employment

• The Budget continued to underscore the importance of MGNREGA in building quality and productive community assets considering its effective workability in a rural set up riddled with high incidence of poverty, low work participation, increased casualization of labour and heavy dependence on agriculture and non-farm sectors.
• The Budget allocation for the scheme has been pegged at Rs. 60,000 crore for 2019-20 against BE of Rs. 55,000 crore in 2018-19. The positive impacts of MGNREGA have prompted the government to remain committed to supporting this right-based rural wage employment programme with a view to broaden occupational choices and to assure generation of employment opportunities in the rural areas along with creation of productive quality community assets. Transparency and accountability provisions are in-built into the rights based MGNREGA.
• The real challenge is to effectively utilize the funds under MGNREGA by integrating activities of other Ministries/Departments like Ministry of Agriculture, Ministry of Jal Shakti and Ministry of Rural Development right at the worksite in consultation with the State Governments.

Rural Roads

• The Budget reposed its faith in Pradhan Mantri Gram Sadak Yojana (PMGSY) which had managed to successfully deliver on-road connectivity to underdeveloped and unconnected habitations. Rs.19,000 crore has been allocated to PMGSY which would allow the States to lay roads and improve existing roads in villages and hamlets.
• The target of connecting all eligible and feasible habitations has been advanced from 2022 to 2019 under PMGSY. The next phase of PMGSY would focus on construction and up-gradation of 1,25,000 kms of road length over the next five years with an estimated cost of Rs. 80,250 crore.
• The rural connectivity would ensure ease in travel of rural farmers who would find it easy to market their produce at a better price in more affluent markets than the existing local area markets and would bring in overall socio-economic gain in rural areas.

Zero Budget Farming

• Budget 2019-20 has tried to lay intense focus on the factors impinging on the overall GDP growth with special emphasis on rural and agriculture sector. This was a challenging task given the likely persistence of global slowdown and probable sluggish growth rate in the agri-exports.
• Each year, the Government focuses on productivity and yield growth in Indian Agriculture. The Union Budget 2019-20 emphasized on promotion of zero-budget farming. The intention is to promote this form of farming as a low-cost, natural alternative to the existing practices of heavy and unbalanced use of chemical fertilizer and pesticides.
• Though zero budget farming is believed to enable arrest of further degradation of the soil, a scientific study by the Government is the need of the hour to understand its exact impact on soil health, food production, livelihoods and sustainable agriculture before the same is replicated throughout the country.

Promotion of FPOs

• The Budget has a 5-year long-term target to form 10,000 Farmer Producer Organisations (FPOs) to ensure economies of scale for farmers. Farmer Producer Organizations (FPOs) are collectivization of producers, especially small and marginal farmers, to collectively address challenges of agriculture viz. improved access to investment, technology, inputs and markets.
• Peasant member driven Pos FPO are legal entities formed by primary producers, viz. farmers, milk producers, fishermen, weavers, rural artisans, craftsmen etc. An FPO, registered
  under the special provisions of the Companies Act, 1956, may take an institutional shape of a
  producer company, a cooperative society or any other legal formal form which could provide for sharing of profits/benefits among the members.
  Around 3,100 FPOs are currently promoted in the country through schemes of Govt of India, State Government and National Bank for Agriculture and Rural Development (NABARD).

Challenges faced by FPOs

• The FPOs already in the country are facing a lot of challenges which, inter alia, include access to finance by FPOs at the initial stage, provision of basic facilities like water and power, lack of sufficient storage place, lack of knowledge about use of modern technology and practices and capacity building for managing a company.
• In order to promote quality collective action in the agriculture sector, Small Farmers’ Agribusiness Consortium (SFAC) and NABARD should promote Indian farmers and primary producers to undergo a process of social and economic mobilization for up scaling their capacity to collectively leverage farm productivity and strengthen agri-marketing for quick and appropriate price realization for their products.

Investment in Irrigation

• Considering irrigation coverage of only 46% of net cultivated area of 141 million hectares
  in the country and significance of irrigation in enhancing agriculture production and ensuring
  food security, the Budget continued its stress on strengthening Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) which targeted to irrigate the field of every farmer and to improve water use efficiency. PMKSY envisages providing end-to-end solutions inirrigation supply chain, viz. water sources, distribution network and farm level application.

Rural Drinking Water Security

• The Budget has indicated Government’s priority for ensuring country’s water security and
  providing access to safe and adequate drinking water to all citizens.

e-NAM & Agri-marketing

• Access to both domestic and international markets for realizing appropriate income level
  is critical for our farmers. The positive and improved agriculture terms of trade which was
  a major reason of cheer for the exporting farmers started deteriorating since 2010-11 and continued up till now. Keeping in view the criticality of the easy spread of transparent and effective agri-markets, the Government has supported in 2016-17 the rolling out of a unified agricultural marketing electronic platform [e-NAM] under which selected 585 regulated wholesale market points got integrated.
• Though e-NAM was a great innovative move made by the Government, the intervention could not produce desired results in the selected Mandis of various states due to implementation logjams. Budget 2019-20 too has reposed its faith in e-NAM and vows to
  actively work with the State Governments, to allow the farmers to actualise the real price discovery benefits from e-NAM in a transparent manner.

Value Chain Finance

• The Government has understood that appropriate agri-business culture in the country can give rise to an all-inclusive economic growth.
• To boost agri-business, the government has been attempting to ensure robust modern infrastructure in the food processing sector along the entire value/supply chain of food processing through its scheme Pradhan Mantri Kisan Sampada Yojana (PMKSY).
• Budget 2019-20 expressed its will to invest widely in agri-infrastructure by supporting private entrepreneurships in driving value-addition to farmers’ produce from the field and for those in the allied activities as well.
• Dairying through cooperatives are proposed to be encouraged by creating infrastructure for cattle feed manufacturing, milk processing, procurement and marketing. The real challenge is to expand credit flow for meeting the agri-value chain credit demand-supply gap.
• Credit needs to flow to all sub-sectors of agriculture and value-chain infrastructure to realise the dream of doubling farmers’ income by 2022.

Conclusion

• The Budget exemplifies a statement of positive economic intent and growth oriented policy
  directions. This is evident from the budget allocation to agriculture and irrigation and rural development and drinking water.
• The 2019-20 Budget announcements have attempted to match the need of the occasion for restoring the rural growth engine. Undoubtedly, the Budget has diagnosed the problem areas on the country’s development sphere and the utilization of public resources on such development intervention.
• The Budget though has laid down the broad contours of rural and agricultural economic policies and prepared a road-map for a journey towards a positive and sustained farm and non-farm sector growth, a lot of coordination is required between the States and the Centre.