Union Budget 2022-23: An opportunity for decisive transformation and win back India’s farmer

Despite the success in terms of production that has ensured food security in the country, food inflation and volatility in prices continue to remain high causing inconvenience to consumers and uneven income for farmers

Agriculture continues to be a dominating employment generating sector and contributes a significant proportion to the country’s GDP. Even in the unfortunate pandemic, the sector climbed new heights with record production of various food grains, exhibiting resilience and ensuring food security. Despite the success in terms of production that has ensured food security in the country, food inflation and volatility in prices continue to remain high causing inconvenience to consumers and uneven income for farmers. Besides pandemic wrecking substantial physical, social, economic and emotional havoc on all the stakeholders of the Indian agricultural system, locust infestation from East Africa to India, Natural calamities, and depleting natural resources only added to the sector’s woes. 

Even though the policymakers accelerated a raft of measures and announced reforms to give thrust to the sector, it has reached an inflection point that needs immediate attention. Thus, the forthcoming budget offers an opportunity to fix an array of ancillary problems and fast run the wheels of reforms to accelerate the growth engine of the Indian agriculture sector.

Alignment of Micro-irrigation coverage with ambitious Vision India@2047

While the government is working on the blueprint for India@2047 to be ‘future ready’, it is important to accelerate India’s growth and adoption towards new-age agriculture practices with optimum utilisation of resources. The average penetration of micro-irrigation in the irrigated area (drip and sprinkler) is estimated at 17 per cent which is much lesser compared to countries like Israel (90 per cent), Russia (78 per cent), Spain (75 per cent), the US (55 per cent) and Brazil (52 per cent). We need to have an ambitious target and align the execution process to take micro-irrigation coverage to 60-70 per cent in the next 25 years. 

Identifying areas and crops to integrate the benefit of micro-irrigation with structured governance and execution strategy will help the country climb a newer height of fiscal growth. To do so, the government may create five years bucket of appropriate execution and monitoring roadmap for the next 25 years backed by adequate budgetary support consistently.

Process streamlining measures in irrigation subsidy 

While the micro-irrigation coverage has benefitted millions of farmers, the scheme implementation leaves a lot to desire at the execution level. The delays in the disbursal of micro-irrigation subsidies under the PMKSY program are hampering its progress. Online portal for an end-to-end process execution and visibility, transparency in the process for fund disbursement, ensuring checkpoints at various stages and adherence to timelines would bring the efficiency in subsidy disbursal and support farmers to be debt-free much conveniently.

Providing infrastructure status to the micro-irrigation industry

Infrastructure status would help the micro-irrigation manufacturer (95 per cent of which comes under MSME) in reduced operating costs, thereby accelerating the industry growth as well as bringing the equipment cost down for the farmer community.

Aligning different schemes together for exponential benefit – Solar and Micro-irrigation, Agriculture alongside Solar installations, and others

Focus on renewable energy like solar would ensure energy security in the agriculture sector as well as in the rural landscape and address environmental concerns. Making farmers energy-sufficient would also reduce the burden on government energy subsidy bills. Solar installation-friendly agriculture would help farmers with reduced operational costs, boost land utilization and improve overall income.

Diversification programs to increase crop productivity 

12 per cent of the cropped area under fruits and vegetables (F&V) leads to 24 per cent in value terms, in contrast to 13 per cent area under oilseeds which gives only 6 per cent in value terms because of lack of scalability. Policymakers may consider promoting domestic oilseeds and oil palm cultivation with higher productivity measures to address the demand cycle. Similarly, disrupting rice cultivation that covers more area and water utilization through drip technology would improve yield, save water and reduce carbon emissions. Drip irrigation adoption also has the potential to facilitate crop diversification thus, making a direct impact on farmer incomes.

Policy & budget outlay for integrated climate smart agriculture practices

Climate change has led to reduced crop yields and farm productivity. Besides, the increased occurrence of invasive pests, weather variability, poor agriculture practices has also added to the deteriorating situation of climate change. The agriculture sector is one of the main contributors to the climate problem. It currently generates 19–29 per cent of total greenhouse gas (GHG) emissions. A shift towards climate-smart agriculture practices through proper policy and financial outlay can go a long way in achieving sustainable growth.

Focus on creating infrastructures to support innovation and digitalisation in Agriculture

Special focus and fund allocation in the upcoming budget for infrastructure in rural areas would support the digitalisation of agriculture and put the sector on the fast track. Currently, India is spending less than 1 per cent of Agri GDP in R&D. An Agri innovation fund, which supports ag-tech solutions, start-ups, and digitalisation at different levels of the Agri value chain can transform agriculture economy in the future.

Interest subsidy on agriculture for long term loans

Access to credit remains one of the critical elements in a sustainable and more importantly a growing ecosystem. Interest subsidy on agriculture for long-term loans to help farmers with continual investment in farm mechanisation and building state-of-the-art infrastructure would go a long way to develop a sustainable model in agriculture. Credit Guarantee Fund Scheme for adopting micro-irrigation similar to CGTMSE for MSMEs will be helpful where initial support can be provided by the government.

Special budgetary assistance for micro-irrigation to state government to overcome covid impact

The financial strain caused by the COVID-19 pandemic has left many states across the country to slash the budget for micro-irrigation. The policymakers should consider supporting the states through an additional corpus of funds either by direct special assistance programme or increasing the existing Micro Irrigation Fund (MIF) set up under NABARD to facilitate the states in mobilising resources for expanding coverage of micro-irrigation.

Despite the success in terms of production