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How agriculture industry sees Budget 2018-19

During his Budget speech, Finance Minister Arun Jaitley made two big announcements on MSP and upgrading market access to farmers. MOHD MUSTAQUIM reports on how the industry sees the allocations to agriculture sector

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Presenting the Union Budget 2018-19, Finance Minister Arun Jaitley today announced the development and upgradation of existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs) and connecting them with 585 e-mandis, connected with e-National Agriculture Market (e-NAM). The Finance Minister said, “More than 86 per cent of farmers in India are small and marginal who are not always in a position to directly transact at APMCs and other wholesale markets. This would provide farmers facility to make direct sale to consumers and bulk purchasers.”

Another big move was the announcement of Minimum Support Prices (MSPs) of agricultural commodities, increasing it to 1.5 times higher than the cost of cultivation. It was a long standing demand from the farmers since the architect of India’s Green Revolution, Prof. MS Swaminathan in his Farmers’ Commission Report had made his recommendations on this direction in October 2006. These big announcements have received appreciations from the experts, industry and academicians from agriculture and agribusiness sectors.

Commenting on the Finance Minister’s emphasis on agriculture and rural economy, Shilpa Divekar Nirula, CEO, Monsanto India said, “The Union Budget 2018 has reiterated the government’s rural focus and its commitment towards India’s agriculture sector. Announcements through measures regarding farm output seem to be the key highlight. These include MSPs, improved market linkages and increased allocation towards the food processing sector.”

Speaking on the Budget announcement on MSP, Sandeep Sabharwal, CEO, Sohan Lal Commodity Management (SLCM Group) said, “As far as the agriculture sector and the farmers are concerned, the increase of MSP of all crops is a move towards Prime Minister’s vision of doubling farmers' income by 2022 and this augurs well for the agriculture value chain.”

Commenting on the impact of reforming MSP regime, Anil Khaitan, President, PHD Chamber of Commerce and Industry said,”For kharif crops at 1.5 times cost of produce along with cluster-model approach for agricultural production would increase farm productivity and enhance farmers’ incomes in the coming times.

MSP and its implementation play crucial role in farmers’ income. There have been reports of distress sell of agricultural commodities by farmers, fetching lower prices than MSP. Its implementation has been a major challenge for the governments.

On the implementation challenges, Sandeep Jajodia, President, Associated Chambers of Commerce of India (ASSOCHAM) said, “One of the major problems associated with the MSP was its implementation. Now, the Finance Minister has committed that the NITI Aayog would coordinate with the State governments to ensure that the farmers get price of their produce which is one and half times of the cost.”

On the continued focus on creating irrigation infrastructure, Nirula said, “The continued emphasis on irrigation and farm insurance will provide further impetus to help farmers manage risks associated with cultivation. An unbridled focus on agriculture coupled with enabling policies will go a long way in benefitting the larger farming community. These initiatives, if complemented with enabling policies would go a long way in achieving the government’s target of doubling farmers’ incomes by 2022.”

Educationist and Vice Chancellor of TERI School of Advanced Studies, Dr. Leena Srivastava said, “The Budget has identified several positive measures for the agricultural supply chain which should be beneficial for agri-businesses. The key focus is on farmers producing more from the same parcel of land at a lower cost and with higher incomes. For this latter category, the MSP will have to support the higher income whereas the lower costs of production and higher productivity may have to come from input subsidies of various kinds. This could lead to more stress on soils, water, energy and other resources.”

On the impact of Budget’s impetus on agriculture and rural economy on related sectors, Rashesh Shah, President, Federation of Indian Chambers of Commerce & Industry (FICCI) said, “The Budget is very much in line with the expectations of FICCI. It will drive consumption in a big way, thus helping growth in other related sectors."

“The impetus to the rural economy and the overall agriculture sector in the Union Budget presented by Finance Minister Arun Jaitley in the Lok Sabha today would be a force multiplier for overall growth in the coming years,” Shah added.

The Budget has focused majorly on strengthening MSME and agriculture sector along with a higher spend on infrastructure. These steps will cover the entire ecosystem of economy.

On providing better market access to small and marginal farmers, Sabharwal said, “Other laudable steps that will help the farming universe is connecting APMC’s to eNAM network, setting up Agri-Market Development Fund and adoption of cluster model approach.”

“Also, the announcements made in the budget provide impetus to the food processing industry with allocation of Rs. 500 crore for ‘Operation Green’ to provide logistics, storage and other infrastructure support. All these indicate creation of a newer Bharat, where the development is more inclusive,” the SLCM Group CEO added.
 
The Finance Minister, announced the doubling of allocation for Ministry of Food Processing from Rs. 715 crore in RE 2017-18 to Rs.1,400 crore in BE 2018-19. PHD Chamber President, on this development, said, “Doubling the allocation in food processing would boost food processing; specialised agro-processing and financial institutions.”

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