In terms of the overall Budget, considering the circumstances that our economy was in and the fiscal situation of the government, I would not have expected a very different Budget. The Budget is a good attempt considering it is one year before the elections. For 2012-13 the government had drastically curtailed expenditure, and on that lower base they have talked about a 30% increase next year, so a certain amount of growth will come through that additional expenditure next year, which is a positive.
This Budget comes against the backdrop of high input costs for farmers and a bad monsoon last year. So expectations were high but delivery has been moderate. Overall, the agriculture budget is about R27,000 crore. Considering the size of the agricultural sector being 14% of the overall GDP and with more than 50% of the population dependent on agriculture, this is too small. Having said that, this 22% increase over last year is quite good given the compulsions the FM had. The agriculture ministry?s budget is not the only one that impacts agriculture. The irrigation ministry, for instance, has this programme called accelerated irrigation benefit or AIB, which has been increased 13% to R14,000 crore. The rural water supply programme has been increased from R11,000 crore to R14,000 crore, a substantial increase. The watershed programme to conserve water by way of rainwater harvesting has been increased from R3,000-odd crore to R5,300 crore.
In drip irrigation, last year?s Budget was R1,460 crore but the revised estimate is only R1,200 crore. This year, it has been budgeted at about R1,659 crore, which is a 38% increase, again significant, since the overall expenditure is growing by 30%. The finance minister has provided for R500 crore towards crop diversification in northern areas, where technology introduction is happening. Nabard is going to spend R5,000 crore towards building of warehouses and cold storages, which creates a positive impact on the value chain, as it will aid in having large storage capacities.
Nabard has also got R20,000 crore for its rural infrastructure development fund, which goes towards rural roads and agricultural programmes.
The government also announced a credit target of R7 lakh crore, an increase of more than R1.25 lakh crore. Private sector banks can also give crop loans where interest subvention is available, which will create more competition to push loans to farmers.
What the government is doing here is a balanced and sensible allocation of resources. It needs to spur growth, and taxes cannot be increased, so revenues cannot grow but expenditure still has to grow. All this also results in more exports coming out from agriculture, which can help our current account deficit, and agriculture exports have been growing quite rapidly. Agriculture exports make a crucial contribution to the country?s foreign exchange kitty because there are almost no imported inputs in agriculture exports.
While there are areas where farmers are suffering on account of drought and other issues, agriculture is overall doing better and farmers are making more money that they used to seven to eight years ago, while credit to agriculture has also improved considerably.
So all in all, if you focus on rural infrastructure, rural consumption and agriculture, including the credit being given to farmers, the government has made sincere efforts to make larger allocation than what was feared it would be able to do. Let us see how effective implementation is. In essence, this is an incremental Budget and not an transformative one.