A lot of focus has been put on growing farmer income in order to improve the country’s agricultural sector. Several agricultural reforms were announced as part of the budget presentation, and the government reiterated its commitment to the welfare of farmers as well as the growth of agriculture and related sectors. Agriculture and its subsidiaries have shown exceptional resiliency. Despite the covid-19 pandemic, the economy expanded at a rate of 3.3%, while other economic sectors suffered.
Despite various advertisements due to Covid-19, which included a lockdown, the country’s total food production is expected to be 296.45 million tonnes in 2019-20. Excellent agricultural outputs and a nearly 20% share of GDP for the first time in the last 17 years, according to the economic survey 2020-21. Much of the credit for such achievements goes to crucial intervention launched during the district era under the Aatmanirbhar Bharat package. With a renewed emphasis on allied industries, the union budget accelerates, improves, and farms agricultural reforms.
What is The Minimum Support Price (MSP) For Farmers?
Every year at the start of the farming season, the Government of India announces the Minimum Support Price (MSP) for certain crops, which directs interference by the Government of India to ensure farm products against any sharp drop in agro prices based on recommendations provided by the board for agricultural costs and prices aka CACP.
In India, the MSP regime was implemented in 1966-67, with the MSP for wheat being set for the first time at Rs. 54 per quintal, as the world celebrated the Green Revolution in 1960. The Indian government realised that farmers needed incentives to develop food grains.Otherwise, they would not operate cultivation for wheat and paddy, which were labour-intensive and did not fetch lucrative prices.
The introduction of MSP was a successful move that made India self-reliant in food grain production. The Government of India notified 6423 Kharif and Rabi crops and start for each cropping seasons that include selected commercial crops as well as the group comprising seven cereals, paddy, sweet, sorghum, pearl, barley, and ragi, seven oilseeds (groundnut, rapeseed, mustard, soybean, sunflower and nigar seed) and four commercial crops under Indian conditions crop production, affecting market prices prospect of the particular crop in the next sowing season.
For example, in case of the crash of prices due to overproduction, farmers become reluctant to sow the crop in the next year. It may affect the supply with many consequences. MSP is fixed by the government which infuses confidence in farmers despite turnarounds in prices. The union government considers the report text view of the States government and also operates on the overall demand of supply situations in the country to take the final call on fixing MSP. Post harvest, the government procures crops from farmers at MSP prevalent across APMC Mandi and procurement centers.
Professor MS Swaminathan’s national commission on farmers had proposed in 2006 that MSP be at least 50% higher than the cost of production.
The commission introduced three principles for estimating production costs:
A2- It takes into account the costs of various inputs such as crops, fertilisers, labour, fuel, and irrigation.
A2 + FL- It has two parameters that include the cost of unpaid family labour.
Above and beyond A2 + FL, C2- contains the implied rent on land and interest on capital assets.
During the 2018-19 market season, the government adopted the recommendation by setting MSP at or above 50% of the cost of production. Currently, the CA CPT only accounts for A2 + FL costs when calculating MSP; however, in some of the major generating states, C2 costs are used as a benchmark reference point to see if the suggested MSP covers these costs.
The 3 M’s – Mandis, Markets, and MSP
A total of Rs 1,31,531.19 crore has been allocated to the two main departments under the ministry of agriculture and farmers welfare—the department of agricultural research and education—to operate and finance centrally funded schemes.
“The MSP regime has experienced a sea shift to the price that is atleast 1.5 times the cost of production for all goods,”said the Finance Minister of India Nirmala Sitharaman, expressing her reservations about MSP.
For the marketing seasons 2020-21, the government declared an increase in MSP for all mandated Kharif and Rabi crops. The benefit to farmers over their cost of production was assumed to be at least 50%, but wheat had the highest return (106%), followed by rapeseed and mustard (93%) and lantern (78%). Measures were taken to drive acquisition to the next stage by increasing the amount of requirements as due facilitation to farmers. As a result, the number of wheat-growing farmers who benefited increased from 35.57 lacs in 2019–20 to 40.36 lakh in 2020–21. For paddy, the number of farmers who benefited grew from 1.24 crore in 2019–20 to 1.54 crore in 2020-21.
In the midst of many speculations about the future of the agriculture produce market committee, the government signalled its goal by announcing that the agriculture infrastructure fund will be made available to supplement their infrastructure. In addition, the allocation to the Rural Infrastructure Development Fund was increased from 30,000 crore to 40,000 crores. This fund will support the development of agricultural infrastructure, primarily farmgate processing and post-harvest facilities, in order to minimise farm-to-farm waste. To meet growth goals and expand the advantages of online trading to farmers, a 2.5 per litre agricultural infrastructure development cess on petrol and 4.0 per litre on diesel will be added to the kitty.
It is suggested that 1,000 more Mandis be linked to E–Nam, India’s electric national agricultural sector. It’s a pan-India electronic trading portal that connects the APMC’s existing trading platforms. Around 1.68 Jarod’s farmers have registered on Mandi, and 1.14 lakh crore of trade values have been carried out through nearly 175 agricultural commodities are being exchanged on the platform with better prices and high gains.
To help farmers when market prices for agricultural products are poor, the FM suggested expanding the scope of activity of greens schemes. Currently, the schemes only apply to tomatoes, onions, and potatoes, but now 22 perishable goods will be included in the scheme. During a glut situation, a 50% subsidy on the cost of transportation and storage for the evacuation of surplus output from producing areas to conception centres is given under the scheme as a short-term price stabilisation measure.
Any fruit or vegetable that is transported through Indian railways is eligible for a transportation subsidy.
The 3 C’s – Credits, Corpus, and Caring
Timely and dedicated credit to resource-constrained small and marginal farmers is vital for the advancement of farming activities and the welfare of farmers. The agricultural credit flow for 2020-21 was set at Rs 15 lakh crore, with a cumulative disbursement of Rs 70.97 lakh crore until November 3, 2020.
The government raised the agricultural credit target to Rs 16.5 lakh crore in the budget proposal. The credit flows to animal husbandry, dairying, and fisheries will be the focus. The government introduced a provision in the previous budget to include the agricultural sector in Kisan credit, with 1.5 crore dairy farmers set as targets. As of mid-January 2021, roughly 44,000 KCC had been issued to fish and fish producers, with over 4,00,000 applications in various stages of issuance. Because of its benefits, micro-irrigation is being encouraged in farms with subsidies, for which NABARD has set aside Rs. 5000 crores. A proposal has been put forward by the government to help meet rising demand. By adding another 5000 crores of rupees, it will be doubled.
Previously this year, the Prime Minister unveiled a one-of-a-kind initiative to survey villages and map them using innovative technology in order to establish a database of people who have the right to poverty. Under the programme, sledders can use their property as a financial asset to secure institutional loans and other economic benefits. On a ship card, 1.80 lakh properties have been registered so far. The system was originally limited to six states, but the new budget recommends extending it to all states and union territories.
Financial Aid to Fisheries and Allied Sectors
Animal husbandry and the daring sector have been allocated a total of Rs 3000 to 89 crore in the current budget, an increase of 18% over the revised budget estimate for 2019-20. With this higher education initiative, the government has reaffirmed its commitment to higher education as a critical component of the economy, especially in rural areas, and in achieving the target of doubling farmers’ income.
India is the world’s second-largest fish producer, accounting for 7.58% of total production. In its efforts to modernise and make the fishing industry more productive, the government has proposed significant investment in the construction of fishing harbours and fish lending centres.
With an all-time high fish production of 14.1 6 million metric tonnes in 2019-20, the sector employs over 28 million people, the majority of whom are from marginalised and disadvantaged communities. In the first phase, five major fishing harbours in Kochi, Chennai, Visakhapatnam, and Paradip will be constructed and retaught as economic hubs. In addition to coastal fisheries, inland fishing harbours and fish landing centres will be built along the coasts of major rivers and streams.
Seaweed farming is a burgeoning industry with the ability to change coastal communities’ lives. Previously, India was not interested in cultivating seaweeds, despite the fact that it has a coastline of over 7500 kilometres and over 800 species of seaweed. Given the increasing global supply for CV-derived products, the government plans to support seaweed production by proposing the establishment of a multifunctional seaweed park in Tamil Nadu.
Overall, the budget provisions for agriculture and related industries are expected to energize the sector by investing heavily in agriculture infrastructure. Furthermore, money in the hands of farmers via the MSP region will maintain the momentum seen during the Covid-19 in agriculture, covering allied sectors and significant theme attic areas, and will undoubtedly contribute to the government’s motivational agenda. The government is also aiming for a paradigm shift in agriculture, from a rural livelihood field to a modern business enterprise, with this budget.
Surya Pratap Singh – Department of Agronomy, J. S. University Shikohabad (U. P.)
S. Sengar and Varsha Rani- Department of Agriculture Biotechnology, S. V. B. P. U. A. & T., Meerut