Budget 2019: Permanent solutions to revamp agriculture sector

There is a growing fervour on what the Budget 2019 holds for the agriculture sector, given its connection with the millions of lives and livelihoods of rural India and billions of rupees worth investments of India Inc.

New Delhi: As the Union Government gets ready to present its maiden budget in its second term, there is a growing fervour on what the Budget 2019 holds for the agriculture sector, given its connection with the millions of lives and livelihoods of rural India and billions of rupees worth investments of India Inc.

Complex Challenges:

As the allocations for agriculture are made, it is pertinent to understand the veracity and complexity of the challenges faced by this sector. On one hand there is a demand deflation and on the other hand, there is a falling export of agricultural commodities due to a dampening of international demand.

Moreover, the farm sector is ailing with the problems of falling real wage growth rates, rising input costs, volatile prices, lack of minimum support prices which are taking a toll on the farmer's profits and make agriculture an unviable option.

This is resulting in drifting away from the rural population, away from agriculture. For instance, 48 per cent of farming families does not want to pursue agriculture at this point, according to a survey, which is a serious matter of concern.

Permanent Solutions Needed:

While some of the challenges listed above are structural, some others are institutional. What is needed at this point in time is to address them with a new outlook towards the design and degree of policy interventions that the government makes to tackle these issues.

While the policies like direct income support provide temporary respite to the farmers, much more is due to actually sort out the issues plaguing the agriculture sector.

First and foremost it is pertinent to improve the farm productivity and allocate funds to encourage and subsidize the investments in agriculture technology. On the other hand, investments need to be made in agri infrastructure and food processing industries.

Another pertinent aspect to be considered at this point is that doubling of farmers income alone will not be sufficient to address their problems, with the input costs increasing at an exponential rate and in the absence of non-remunerative prices.

While investments aimed at productivity improvement would sort out the issues related to incomes, to a certain extent, it is pertinent to focus upon the efforts to address the demand side challenges and boosting exports.

While domestic demand is taken care of monetary and fiscal policy interventions, budgetary allocations need to be made to exclusively promote agricultural exports and encourage investments in this segment.

Cooperative Federalism is the Way:

As agriculture is a state subject it requires a cooperative federal spirit to make the policy initiatives of the Union Government work effectively in the State.

For instance, according to a survey conducted by the rural media platform, ‘Gaon Connection’ in rural areas of 18 states across the country, 59 per cent of farmers does not avail bank loans due to lack of information.

This finding points out the gap between the policy intentions and the outcomes. Issues like this could be addressed by running an effective awareness campaign, which needs funds and more importantly the cooperation from the State governments.

The same is needed to bring out reforms in agriculture markets and curbing price distortions and ensuring fair prices to the farmers. All these efforts need to be made simultaneously with time bound targets, in order to revamp the Indian agriculture sector.

(Written by Dr Mahendra Babu Kuruva, Assistant Professor, H.N.B. Garhwal Central University, Uttarakhand)