Finance Minister Nirmala Sitharaman began her budget speech with the importance of higher agricultural growth, productivity and achieving rural prosperity. While the middle classes, especially the richer deciles, got substantial relief through income tax exemptions and change of slab rates, the farmers got some good promises which may help them in earning higher incomes.
Ironically, there was no reference to doubling of farmers income which has been the dominant theme in discussions on agriculture ever since the same was announced in an election rally in 2015. The data presently available does not show that the incomes have doubled. In fact, the farmers of several major crops, which include pulses and oilseeds also, have not even been able to realise the MSP this year for their produce. Soybean, tur and chana are examples.
It would be unrealistic to think that the problems of the agriculture sector can be addressed in a Union budget. There are a lot of other important sectors of economy whose challenges and opportunities must be addressed while also maintaining fiscal discipline. It is not a mean achievement that in the revised estimate of FY 2025, the fiscal deficit has been kept to 4.8% of GDP. The finance minister needs to be complimented for this.
Remunerative prices for fruits and vegetables is a good idea
Taking cognizance of the findings of the Household Consumption Expenditure Survey, the finance minister has noted that consumption of vegetables, fruits and shree-anna (millet grains) has been increasing. In fact, it is the consumption of processed food which is rising faster than other food items.
In 2023-24, the share of expenditure on processed food and beverages was 11.09% in urban areas and 9.84% in rural areas. So, her announcement that efforts will be made to provide remunerative prices to farmers of fruits and vegetables is to be welcomed. In the last two years, vegetable inflation has remained high and it touched 42%. The Economic Survey has devoted a lot of space to tomato, potato and onion prices.
Higher allocation to Ministry of Food Processing industries
In a welcome move, the budget allocation of the Ministry of Food Processing has been increased from Rs 2,797 crore to Rs 4,364 crore. A campus of National Institute of Food Technology, Entrepreneurship and Management (NIFTEM) has been announced for Bihar. There is not much food processing in the state, and it is not an ideal location for an institute of national importance.
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NIFTEM Delhi is considered one of the top institutions for the food processing sector. For students, it would have been better if the institute was in a state where they can learn about food processing actually taking place in factories. The assembly elections in Bihar, scheduled for this October-November may have persuaded the government to locate NIFTEM there.
Makhana Board is welcome
The setting up of a (fox nut) Makhana Board in Bihar, however, will be a much-needed gift to small and marginal farmers engaged in its cultivation. Madhubani and Darbhanga are major producers of Makhana which has a low glycemic index. Bihar’s Mithila Makhana was awarded the Geographical Indication (GI) tag by the government in 2022.
Indian Council of Agricultural Research (ICAR) has a National Research Centre (NRC) for Makhana at Darbhanga but it has not really lived up to the expectation of growers. One hopes that NRC will have a regular, full time director and the Makhana Board will work in collaboration with the NRC. There is a need to attract private investment so that its supply chain can improve and the cultivators can realise remunerative prices.
Research needs more support
For a long time, it has been argued that allocation for research and development has to be enhanced. However, the Department of Agricultural Research and Development (DARE) has seen only a marginal increase in its allocation. For developing climate resilient varieties of seeds, ICAR needs handsome support.
Soybean prices in Madhya Pradesh
Tur prices in Karnataka
Aatmanirbharta (self-sufficiency)in pulses and oilseeds is a good aspiration
The aspiration to become Aatmanirbhar in pulses and oilseeds is appreciable. Over the last ten years, the government has announced handsome MSP of pulses and oilseeds. The farmers of Rajasthan and Madhya Pradesh responded to these calls and increased the area under mustard and tur etc. But, the MSPs have not been protected, and farmers have not been able to realise remunerative prices (graphs above).
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In fact, during the assembly elections in Madhya Pradesh, Chhatisgarh and Odisha, bonus of about Rs 900 per quintal was announced for paddy but no such incentive was announced for oilseeds and pulses.
One hopes that the budget announcement to procure pulses at MSP, through a contract with the farmers will become a reality and the import duties will be so fixed that the landed cost of pulses is not less than the MSP.
There are several welcome initiatives announced in the budget, and we should hope that agriculture will continue to grow at the rate of at least 4% per annum.
Siraj Hussain is a former Union agriculture secretary.
