Budget 2023: FM announces Agriculture Accelerator Fund to boost agri start-ups

An Agriculture Accelerator Fund (AAF) will be set up to encourage agri start-ups by young entrepreneurs, the Finance Minister said in the Budget 2023 she tabled in the Parliament on Wednesday.

New Delhi: Union Finance Minister Nirmala Sitharaman on Wednesday in her Budget speech announced setting up an Agriculture Accelerator Fund to promote agri start-ups by entrepreneurs. Sitharaman also increased the agri credit target to 20 lakh crore. "The agricultural credit target will be increased to Rs 20 lakh crores with a focus on animal husbandry, dairy and fisheries," Sitharaman said in the Parliament.

The finance minister also said that a digital public infrastructure for agriculture will be built as an open source, open standard and interoperable public platform that will help develop farmer-centric solutions for crop planning. The announcement comes a day after the Economic Survey stated that agriculture has performed well but the sector needs "re-orientation" to overcome challenges like adverse impacts of climate change, rising input cost, etc.

In India, the agriculture sector has witnessed a common annual growth rate (CAGR) of 4.6 per cent in the last six years. During 2013 to 2023, the overall Budget has grown at 11 per cent with allocations to agriculture sector and rural development increasing at a CAGR of 12 per cent.

Although a large section of the population is dependent on the agriculture sector for livelihood, the sector remains unviable due to low incomes and increasing costs. In the previous budget, the total allocation for the Ministry of Agriculture and Farmers’ Welfare was Rs 1.32 lakh crore, which was 0.7 per cent higher than its previous Budget. Experts say there is a need to undertake better farm reforms and move towards commercialisation and diversification in order to ensure a better deal to retain cultivators in the sector.

According to the Economic Survey 2022-23 tabled in Parliament on Tuesday, agritech startups have raised around Rs 6,600 crore over the last four years from private equity investors, witnessing a growth of over 50 per cent per annum. There are over 1,000 such agri startups that are assisting farmers in improving farming techniques, the Survey said.

The Survey added that the there are more than 500 startups in the country “working in the millet value chains, while the Indian Institute of Millets Research has incubated 250 startups under Rashtriya Krishi Vikas Yojana – Remunerative Approaches for Agriculture and Allied Sectors Rejuvenation (RKVYRAFTAAR).”

“This (climate-smart farming) is slowly gaining acceptance with farmers using clean energy sources like solar for irrigation. The farmers have been incentivised to transfer electricity generated through solar to the local grid. Crop yield prediction models using artificial intelligence and drones for monitoring soil and crop health have been initiated,” the Survey stated.

The Survey further said that smart farming enables crop diversification, which will help farmers reduce their dependence on monsoons for water, adding that there are more than 1,000 agritech start-ups in India that assist farmers in improving farming techniques.