Budget 2018: Sometime earlier this month Finance Minister Arun Jaitley said that country’s economic growth is not “justifiable and equitable” unless the benefits are “clear and evident” in the farm sector, indicating that in the Union Budget 2018, a lot of focus is likely on agriculture and farmers.
Budget 2018: Sometime earlier this month Finance Minister Arun Jaitley said that country’s economic growth is not “justifiable and equitable” unless the benefits are “clear and evident” in the farm sector, indicating that in the Union Budget 2018, a lot of focus is likely on agriculture and farmers. Also, since, this is the last full Budget of the government ahead of the General Election in 2019, many experts are estimating this to be a populist Budget with the focus on rural population.
The Economic Survey 2018, tabled in the Parliament by Arun Jaitley on Monday, flagged concern over climate change, saying that it could lower the farmers’ income by up to 25%. “Farmer income losses from climate change could be between 15% and 18% on average, rising to anywhere between 20% and 25% in unirrigated areas, according to the survey,” according to the survey released three days ahead of the Budget 2018. India needs to spread irrigation – and do so against a backdrop of rising water scarcity and depleting groundwater resources, the survey added.
Building on the current crop insurance program (Pradhan Mantri Fasal Bima Yojana), weather-based models and technology (drones for example) need to be used to determine losses and compensate farmers within weeks, the way Kenya does it, the survey suggested. In fact, the government seems to be working on the plan. PTI quoting unidentified sources reported that the government is likely to increase the budget allocation for the Pradhan Mantri Fasal Bima Yojana (PMFBY) to Rs 13,000 crore for 2018-19 from Rs 10,701 crore for the current financial year.
The government is also likely to increase the budget allocation for farm education, research and extension by up to 15% to around Rs 8,000 crore in 2018-19 fiscal as the focus will on making rapid strides in doubling farmers’ income in the Budget 2018. While the Agriculture Ministry has demanded Rs 11,000 crore budget for the next fiscal for the flagship scheme, but the ministry is hopeful of getting more funds from the Finance Ministry considering the importance of the scheme.
In the last GST Council meet, which now takes care of the indirect taxes in the country, reduced rate on some agriculture products, including fertilizer grade Phosphoric acid, drip irrigation system and mechanical sprayer.
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It is notable that the Union Budget 2018 is coming against the backdrop of a bad fiscal year for the agriculture sector. The government, in its advance GDP growth data, pegged the expansion of activities to slow to 2.1% in ‘agriculture, forestry and fishing’ in FY18 as compared to 4.9% in the preceding year. In 2017, India witnessed multiple farmers’ protests in many states over issues including crop loan waiver and plummeting crop prices. In addition, there have been instances of farmer deaths while they protested over minimum support price for their farm produce.
While farmers wanted loan waivers, and Uttar Pradesh and Maharashtra allowed it, Reserve Bank of India governor Urjit Patel reiterated his warnings about the consequences of waiving farm loans for distressed farmers, saying it led to higher government spending and had an adverse impact on lenders.
The Economic Survey said that that the government can use cooperative federalism “technology” of the GST Council that brings together the Center and States. The survey said that it could be promisingly deployed to further agricultural reforms and durably raise farmers’ incomes.