Budget 2021: The FM incentivise farmers
February 10, 2021
Sitharaman extended the Tomato-Onion-Potato scheme to another 22 perishable crops and renamed the plan Operation Green. This scheme provides funds to strengthen production clusters of these perishables and connect them to the markets. — Anilesh S Mahajan
Not that finance minister Nirmala Sitharaman thought that farmers' protests would melt after hearing her budget proposals, but she did try to allay their chief concerns. Through her budget, she tried to reassure the nation's agriculturists that the government was not walking away from the assured procurement mechanism for various crops at MSP (minimum support price) or disbanding the Agricultural Produce Marketing Committee (APMC) network.
These are two of the biggest apprehensions that farmers in Punjab and parts of Haryana and Uttar Pradesh have, for which they are adamant that the government repeal its new farm laws which clear the path for an alternative marketing mechanism. In her budget speech, the finance minister picked up the two crops primarily procured from these states, namely wheat and rice, and highlighted how the NDA (National Democratic Alliance) government has a better procurement record than the United Progressive Alliance government. It disbursed Rs 75,050 crore in the 2020-21 season to buy wheat, in comparison to the Rs 33,874 crore paid in 2013-14. Similarly, the value of rice procurement has gone up from Rs 63,928 crore to an estimated Rs 1.72 lakh crore in the same period. She said that government agencies procured wheat from 4.34 million farmers compared to the 3.56 million the previous year. And not just these two crops, farmers growing pulses and cotton also benefitted in this time. The Centre lifted 40 times more pulses (worth Rs 10,532 crore) from the market and paid Rs 25,975 crore to cotton farmers (from Rs 90 crore in 2013-14).
With the global sentiment turned against China, this an opportune time for India to give a big boost to its textile sector
With regard to APMCs, the finance minister announced allowing them access to the Rs 1 lakh crore Agriculture Infrastructure Fund set up last year and integrating an additional 1,000 APMC mandis with the electronic national market, or eNAM. Already, some 1,000 out of the overall 7,000 APMC mandis in the country are linked to the digital platform. Punjab has just 37 integrated markets while Haryana and western UP have 81 and 125 respectively. The finance minister also reiterated her commitment to develop 22,000 APMCs.
As per the devolution formula, the Centre has to share 42 per cent of tax revenues with the states, but can retain cess collections. This budget, Sitharaman announced an Agriculture Infrastructure Development Cess by reworking the basic customs and excise duties. The new cess will be levied on petroleum products, imported alcoholic beverages (scotch, whiskey, wine), gold, silver, crude palm oil, crude sunflower oil, crude edible oil, heating agents like coal, lignite, peat, specified fertilisers, peas, pulses, cotton.
Yet the announcements are unlikely to appease the agitating farmers or encourage private capital to invest in agriculture infrastructure. The Supreme Court has already stayed the implementation of the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 and the Farmers' (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020. Agriculture minister Narendra Tomar has also offered to extend the moratorium to 18 months. However, the uncertainty will deter private capital from investing.
Meanwhile, Sitharaman extended the Tomato-Onion-Potato scheme to another 22 perishable crops and renamed the plan Operation Green. This scheme provides funds to strengthen production clusters of these perishables and connect them to the markets. In the past 20 months, several states have allowed the trading of these perishables outside the APMC markets.
Alongside, the finance minister enhanced the allocation for rural infrastructure development by Rs 10,000 crore and doubled the micro irrigation corpus to Rs 10,000 crore.