The Economic Survey 2023-24 presented in Parliament painted a promising picture of the agriculture sector and raised high expectations from Union Budget 2024-25. In her Budget speech, Finance Minister Nirmala Sitharaman prioritised agriculture and allied sector, placing it at the forefront of her nine key priorities for a developed India. She emphasised higher productivity, research, and climate-resilient crop varieties, along with involving both the public and private sectors in these efforts.

  As this is the first Budget of Prime Minister Narendra Modi's third term, it sets the tone for the government's agenda for the next five years. However, the specific policy measures and resource allocations outlined in the Budget appear insufficient to achieve these ambitious goals. It’s possible the government plans to take additional steps outside the Budget, which we may see in the coming days.

  The Finance Minister has allocated `1.52 lakh crore for agriculture and allied sectors in the 2024-25 Budget, a slight increase from the previous year. She announced plans to review the agricultural research system, prioritising productivity enhancement and climate-resilient varieties, and involving the private sector in research funding. However, the Budget lacks clarity on how this funding will be managed. The Department of Agricultural Research and Education (DARE) has been allocated `9,941.09 crore, a marginal increase from last year’s `9,876 crore. The question remains: how will agricultural research be revitalised without significant new funding? Alongside improving the research system, substantial resources are essential.

Waiting for new varieties

The Budget mentioned the release of 109 climate-friendly and high-yielding crop varieties. The fact that these varieties were released by the Prime Minister shortly after the Budget suggests they were ready beforehand. If that’s the case, why weren’t they released earlier? Due to the lack of high-yielding varieties, India’s average productivity in most crops remains less than half of the global best.

  The Budget also aims to connect one crore farmers with natural farming within the next two years, but only `365 crore has been allocated for this initiative, down from last year’s `459 crore, of which only `100 crore was actually spent. There is no consensus among India’s scientific community regarding natural farming and its impact on food security. The Budget provides no information on the outcomes of the government's previous efforts to promote natural farming, nor has the Ministry of Agriculture provided any data on its impact on production and farmers' incomes. In the 2022-23 Budget, promoting natural farming on the banks of river Ganga was mentioned.

  The technological steps announced in the Budget are noteworthy. Promoting digitisation in agriculture through Digital Public Infrastructure (DPI) could have some benefits. However, the purpose of this digitisation must be clearly defined to ensure it serves farmers' interests. Currently, farmers must register online for various crops and schemes each season, and many are left out of the benefits due to the complex process. It is crucial to ensure that the data is not misused and that the digital divide does not widen.

  To promote Kisan Credit Cards (KCCs) for agricultural loans, the process will be simplified in some areas, but there have been no changes in interest rates. A mission for self-sufficiency in edible oils and pulses has been announced. However, one needs to remember that previous steps like increasing the Minimum Support Price (MSP) and creating buffer stocks have not been effective. Perhaps working in mission mode might yield better results. We remain heavily dependent on imports for pulses and edible oils, with 62% of edible oil demand met through imports. This dependence affects both supply and pricing, diverting money from Indian farmers to foreign producers.

  Fluctuations in vegetable prices have prevented the Reserve Bank of India (RBI) and the government from meeting their inflation targets. Schemes like 'TOP' (Tomato, Onion, Potato) have not been successful. The Budget's focus on increasing vegetable production, marketing and storage is a positive step, but it lacks specifics on funding.

  In supporting allied sectors like dairy and fisheries, the Budget primarily focuses on promoting shrimp production and export, which has already reached `60,000 crore. Despite the growing value of milk production, surpassing that of food grains, no new initiatives have been introduced for the dairy sector. Food processing is crucial for increasing farmers' incomes, but the Budget has seen only a slight increase for this sector and no new scheme has been announced.

Need for a Research-Driven Approach

That the government has placed agriculture at the top of its nine priorities makes it clear how much value it accords to the sector. However, prioritisation alone is not sufficient. Despite the emphasis on research, there has been no significant increase in funding for the Indian Council of Agricultural Research (ICAR). Of course, the government has the option to increase it later.

  The government could consider establishing a research fund of at least `1,000 crore to address the challenges mentioned in the Budget. Apart from ICAR, other public sector institutions can also be given a chance in this. It is not necessary that all kinds of research should be done only by the institutions under the ICAR and the National Agricultural Research System (NARS). Agricultural research is no longer limited to developing crop varieties and prevention of diseases. There is need for research in various fields like IT, climate change, artificial intelligence, local climate information and impact, nutrition and marketing technology, space technology. This can also come from institutions other than ICAR.

  The inclusion of the private sector in agricultural research, which the Budget talks about, can be done through this fund. Private sector technology companies, companies working on research in agriculture, agri start-ups and aggregators can be included in it. Private companies engaged in agricultural research have long complained about the lack of income-tax exemptions for research expenses. The exemption limit was reduced from 200% of total expenses to 100%. A new system could offer matching funds to these companies, encouraging innovation and growth.

  There is also the need for a separate plan for rain-fed areas, which have the potential for higher productivity and where poverty is more prevalent. Economists, scientists, and policy experts agree that a 4% growth rate in agriculture is necessary for the country's progress, but this cannot be achieved without effective policy changes.

  It’s not just about increasing productivity; increasing farmers' incomes is equally important. Significant changes are needed to achieve this, and these changes should align with the federal structure of the country. An Agriculture Development Council could be established, with all state Chief Ministers as members. It need not be permanent like the GST Council. This council could identify policy issues and reforms requiring both central and state participation and consent. Similar to the Rashtriya Krishi Vikash Yojana (RKVY), which allowed states to use their agriculture Budgets at their discretion, states should be given flexibility in resource utilisation, provided they keep on increasing their Budgets.

A New Cooperative Policy

The Finance Minister also announced that a national cooperative policy to benefit farmers is in the offing. The committee formed by the Ministry of Cooperation has submitted its report, and the government may establish institutions for farmers under cooperatives. However, with most agricultural credit now managed by public sector and private banking systems, cooperative institutions should focus on marketing and input supply.

  In recent years, the government has promoted Farmer Producer Organizations (FPOs), but small institutions have not been very effective. Larger institutions are necessary for marketing and brand-building, which could be established through cooperative institutions and FPOs. This also requires coordination between the Centre and the states. These institutions could also be private sector entities, such as agri start-ups. There are some successful examples in the dairy sector in the country where the private sector has linked farmers on the lines of cooperatives and procuring their milk at better prices.

  Given the current Budget provisions and allocations for agriculture and allied sectors, it is clear that achieving an average annual growth rate of 4% in agriculture will require fresh ideas. Increasing farmers' incomes should be the focus of all schemes, whether included in the Budget or implemented independently. Schemes that do not contribute to this goal should be discontinued, and their resources reallocated to more effective, results-oriented initiatives. Agriculture and farmers can not benefit from maintaining the status quo; change is imperative. This change can only happen when the Centre and states are aligned in their thinking and actions.

Major announcements

New varieties: 109 new varieties of 32 crops will be released, which will give higher yield and tolerate weather changes.

Natural farming: One crore farmers will be helped through institutions and Gram Panchayats in two years.

Pulses and oilseeds: A mission will be started for self-reliance in these.

Vegetable clusters: Will be formed near major cities. Help of FPOs, cooperatives, start-ups will be taken.

DPI: Promotion of agricultural digital public infrastructure with the states. Records of 6 crore farmers and their land will be registered in 400 districts in three years.

Land reforms: Land reforms and works to be completed within three years.

Bhoomi Aadhaar: Allocation of unique land parcel identification number or Bhoomi Aadhaar for land. Land registry will be established.

National Cooperative Policy: Will be brought for the development of the cooperative sector.

Janjatiya Unnat Gram Abhiyan: Will start in tribal-dominated villages and aspiring districts.