Budget 2020 India: The allocation for urea has been slashed by Rs 5,800 crore.Budget 2020-21: The government has pinned its hope on a 16-point action plan covering diverse areas, from warehousing to milk production capacity, to deliver a fillip to the rural economy. The FY21 Budget allocation for agriculture & allied activities and rural development, at Rs 2.99 lakh crore, though, isn’t a big jump over FY20’s budget estimate (BE) of Rs 2.92 lakh crore.
FM Nirmala Sitharaman spoke of the Union government’s “encouragement” for states that implement its model laws on agricultural land leasing (2016), farm produce & livestock marketing (2017) and contract farming (2018) as part of the action plan in her Budget speech. But what “encouragement” means hasn’t been spelled out. Only one state, Tamil Nadu, has adopted the model law on contract farming and just four have adopted the contract farming law while 16 states are implementing the model agri-marketing law.
Balanced use of fertilisers, including organic fertilisers and manure, is a key part of the plan. Sitharaman termed this a “necessary step to change the prevailing incentive regime, which encourages excessive use of chemical fertilisers”. The Budget allocation for fertilisers, down from the FY20 BE of Rs 80,035 crore to Rs 71,345 crore, underscores this goal. The allocation for urea has been slashed by Rs 5,800 crore. However, the government, as experts have argued, needs to completely overhaul its fertiliser subsidy policy to curb urea abuse.
The action plan sets the agricultural credit target for FY21 at Rs 15 lakh crore — this stood at Rs 11.4 lakh crore in December 19, 2019. Given how the bulk of agriculture credit is for working capital and Icrier researchers have pointed out evidence of diversion of loans, the government needs to encourage credit for creation of capital in agriculture. The FM proposed expanding the PM-KISAN scheme, but the budgeted allocation has been kept at Rs 75,000 — the same as that for FY20.
Improving holding and warehousing capacity is a core focus. Nabard has been tasked with geo-tagging the 162 million metric tonnes (mmt) of warehousing, cold storage, etc, capacity which will help farmers with better market intelligence. Also, the government will provide viability gap funding to set up more WDRA norms-compliant warehouses. Interestingly, though, while the FM said Food Corporation of India will also undertake warehouse building, the allocation for food subsidy has been cut, from Rs 1.84 lakh crore (FY20 BE) to Rs 1.16 lakh crore, indicating there could be scaling down of FCI operations. The railways will set up, in the PPP mode, a Kisan Rail for a boosting cold-chain logistics while the civil aviation ministry will launch Krishi Udaan on national and international routes.
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While MGNREGS is to be dovetailed to develop farm fodder, its allocation has been slashed from Rs 71,000 crore in FY20 (RE) to Rs 61,500 crore. The government plans to facilitate doubling of milk processing capacity from 53.5 mmt to 108 mmt by 2025. Marine fishing and fish production/processing also receive special focus.
Jal Jeevan Mission, which aims to provide piped drinking water to every household, has been allocated Rs 11,500 crore.
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