Budget 2021: Agriculture sector grew during pandemic & further interventions needed to continue growth momentum
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
Agricultural sector has always found a prominent place and I see no reason for this year’s budget to be different. In fact, we can look forward to significant reforms across the board in order to bring back growth in the economy.
In the last few years, the finance minister’s budget speech in Parliament is as much about policy announcement as it about the central government’s financial position.
Agricultural sector has always found a prominent place and I see no reason for this year’s budget to be different. In fact, we can look forward to significant reforms across the board in order to bring back growth in the economy. Bear in mind that agriculture was the only sector to grow at 4 percent plus in the first two quarters of FY 2020-21, after the distress caused by the coronavirus.
Policy making is an ongoing process and certainly many initiatives are in the pipeline undergoing a rigour test. It would be unrealistic to expect all to be rolled out at one go. Nevertheless I would like list 10 areas which should be on the governments’ radar.
1. Agriculture is too important a sector to be left to the states or the Centre for policy making. Create a statutory “Agriculture Council” on the lines of the GST Council having representatives of all State Governments. It will facilitate in bringing about better coordination, uniform regulations and help resolve differences.
2. Innovation and breakthroughs that benefit farmers has been disappointing in the recent past. Like all R&D, the vast network of facilities under the Indian Council of Agricultural Research and Agricultural Universities should be nudged to work in tandem with farmers and industry. It can be achieved by establishing a formal interface mechanism between technology innovators and its end users. Linked to technology, we must desist from ideological resistance to modern technologies such as GM crops; otherwise we will be left behind by other leading agricultural nations. It will also make us vulnerable, should there be an urgent need for such technology.
3. Just like for industry, “Ease of Doing Agriculture” should now be the catchphrase. A quantifiable index should be created and improvements measured, moving India closer to a new era in farming. Unfortunately in recent years we have seen several state governments impose price controls, arbitrary bans on products and added complexity to new product registration. The Agri Council will be a wonderful platform to iron out these issues.
4. The food processing industry has played an important role in better price realization for farmers, lowering cost of intermediaries and reducing transit wastages. Accordingly, the Budget must provide special incentives to food processing such as interest subvention, lower taxes, access to technology and other measures.
5. The direct benefit transfer (DBT) mechanism can be fine-tuned and gradually utilized to support farmers in place of other subsidies. Let farmers decide how to use the money judiciously. Backed by the benefit of DBT, farmers will be well placed to buy better seeds, use new-age fertilizers and optimize water usage.
6. Globally, there is shift away from bulk commoditized fertilizers to new age nutrients that are targeted towards specific crop and soil needs. These also more eco friendly, as the volume is much lower. However they have to have to compete with highly subsidized bulk fertilizers. In such a situation these products are not likely to be adopted by farmers while subsidy bill continues to increase. The government in consultation with industry should work on a strategy to promote adoption of new age fertilizers that are less damaging to soil health.
7. With adequate food security through grains, crop diversification is vital for meeting the emerging consumption need, optimum use of resources, minimize risk of crop failure and leverage agro-climatic variability of the country. Have a mechanism to earmark and develop crop zones considering its soil, climate, natural resources, etc. Agri inputs, mechanization, logistic needs, processing and other requirements will automatically fall in place.
8. Diversification is closely linked to Nutrition security, which has recently been in the news as a concern area for the children of India. Human health can be augment by encouraging more nutritious crops which are rich in minerals especially iron and zinc. This in turn will require appropriate soil enrichment measures and lower dosing of just traditional NPK fertilizers. It can be seen that human health, crop diversification, soil health, new age fertilizers are all closely linked.
9. Globally new age Ag-Tech is fast gaining acceptability and attracting both money and talent. It ranges from satellite imagery, use of drones, deployment of soil remote sensors, computer controlled irrigations systems, and so on. Many Indian start ups have invested in this space. A policy that encourages growth of these companies and adoption of latest techniques is essential. A unique advantage of some these technologies is that it helps overcome the traditional drawback that the predominant small holding farmer faces.
10. Agriculture exports is no longer just about earning foreign exchange. It is also about being globally competitive, it’s about quality, it’s about adopting GAP norms, and it’s about safe food. India has achieved that capability in just a few segments areas such as Basmati rice and bananas. The opportunity is much more and a concerted joint effort by industry and government can help build brands for the country in the area food exports. This will however require seed money from public funding.
As an example, Telangana government is encouraging the cultivation of “diabetic-friendly” rice called Telangana Sona. So if IT and pharma industry can be brand ambassadors for Indian entrepreneurship, why not replicate it for specific crops.
In conclusion, it is evident that opportunities for growth in agriculture and its affiliated industries is huge and should be fully tapped. Virtually all the above proposals will generate additional jobs, which is a crying need in India. Traditional agriculture cannot absorb any additional young people joining the workforce, so why not deploy them in higher value occupation and raise the bar for both people and the sector.
Ajay S Shriram is chairman and senior managing director of DCM Shriram Ltd. Views expressed are personal.
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