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Reviving agriculture: What the FM missed

By Business Standard
March 02, 2010 12:16 IST
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The agricultural growth package mooted in the Union Budget for 2010-11 seems well conceived but not adequately supported by funding for its key elements. This, surprisingly, is despite the 21.6 per cent increase in the overall Central plan outlay for agriculture and allied sectors, the highest hike in recent years.

The underlying objective of the four-pronged strategy outlined in the Budget speech for spurring agricultural growth is, obviously, to address the supply side constraints that have sent food prices soaring in recent months.

The plan has measures to boost agricultural production; reduce wastages in the food supply chains right from the field to the market and further on to the dining table; lend adequate credit support to the farmers for investing in raising farm output; and to promote the food processing sector to facilitate both waste reduction and value addition of the farm produce.

As a major initiative to tame food inflation, Finance Minister Pranab Mukherjee has indicated opening up of the retail chain to introduce greater competition with the ultimate goal of decreasing the considerable difference between the farm gate prices, wholesale prices and retail prices.

But he failed to list concrete measures that the government proposes to take to bring about this much-needed reform.

However, it does propose a measured step in this direction by offering concessions on import tariff for mechanised farm produce handling systems at mandi levels; construction of cold storages and facilities for chilling, and refrigerated transportation of perishable farm produce from farms to the mandis and retail outlets.

To boost farm production, the strategy envisages extending the green revolution to the eastern states which have till now been lagging behind the north-western and some southern states in this respect.

But only Rs 400 crore have been set apart for this initiative which seems too little for a task of such magnitude, involving as many as six states. Besides, the strategy also envisages organising 60,000 "pulses and oilseed villages", mainly in the predominantly rainfed areas, for concentrated attention on boosting the production of pulses and oilseeds to narrow the wide gulf in their indigenous availability and demand.

However, here again, the finance minister seems to have erred by not adequately meeting the financial requirement of this well-intended and much-desired move. Merely Rs 300 crore (Rs 3 billion) have been earmarked in the Budget for this purpose.

What needs to be realised is that most of the interventions needed for stepping up the productivity of pulses and oilseeds in non-irrigated areas - such as water harvesting, watershed management and soil health improvement - are cost-intensive and need to be taken up on a large scale.

Fortunately, the Budget has not wholly overlooked the green revolution areas which are now displaying signs of fatigue, as reflected in the exhaustion of soil fertility and, therefore, need rejuvenation for carrying the green revolution forward.

The Budget proposes restoration of soil health through conservation farming involving minimum tillage and ecological balance through biodiversity preservation. But, when it comes to fund allocation, it has clubbed these tasks with another even more ambitious mission of imparting climate resilience to agriculture and has provided a meagre Rs 200 crore (Rs 2 billion) for all of these.

Thus, while the finance minister has succeeded in correctly diagnosing the ills of the farm sector, as well as the cures, the homeopathic fiscal dose provided for administering the remedies may not serve the purpose.

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