Budget 2020: Agri sector highly under-funded; govt needs to increase allocation to boost rural demand

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January 31, 2020 6:47 PM

Union Budget 2020 India: Fertiliser subsidy should also be transferred directly to the farmers under Direct Benefit Transfer (DBT) but the ever-growing food subsidy should be limited to only those below the poverty line.

Budget 2020, Union Budget 2020 India, Budget 2020 India, Budget 2020-21, agri sector, agriculture sector, farm distress, farm stressBudget 2020-21: The first and the best way to push the economy and revive the rural demand is to increase the money given directly under the PM-KISAN scheme.

Budget 2020 India: The agriculture sector can play a major role in taking India out of the current economic slowdown if the government increases the budget allocation in the sector. “The Agri sector that provides occupation to a majority of the population is highly deprived of funds,” Pushpendra Singh, President, Kisan Shakti Sangh, told Samrat Sharma of Financial Express Online in an interview. He also said that the fertiliser subsidy should also be transferred directly to the farmers under Direct Benefit Transfer (DBT) but the ever-growing food subsidy should be limited to only those below the poverty line. Here are the excerpts of the interview. 

Why do you think the budget for the agriculture sector should be increased?

The total allocation in the Union budget 2019-20 is around Rs 27.86 lakh crore. Out of this, the allocation for the rural development ministry is Rs 1.18 lakh crore, for the agriculture ministry it is about Rs 1.38 lakh crore, for the animal husbandry it is just Rs 2,932 crores, and for fertilizer subsidy, it is Rs 80,000 crores. If we add them all, it amounts to about Rs 3.4 lakh crore only, which is about 12 per cent of the total budget. Since 70 per cent of the population lives in rural areas, this budget should be increased substantially.

How do you think more allocations to the agri sector may help the overall economy?

The quarterly growth rate of the GDP is falling for the last many quarters. The economy is facing a serious question of demand revival. Since the rural areas contribute about 30 per cent of the GDP, and agriculture contributes around 15 percent of the GDP, any revival of demand necessarily means ensuring more money in the hands of the rural people. Hence, policies and budgetary allocations must be focused more on the rural economy to revive the demand.

How can the rural demand regain the lost momentum?

The first and the best way to push the economy and revive the rural demand is to increase the money given directly under the PM-KISAN scheme. Started last year the PM-KISAN scheme gives a payment of Rs 6,000 per farmer family per annum. In the last budget, an allocation of Rs 75,000 crore was made for it but given the pace of disbursement this year, the government won’t be able to spend this money. In the upcoming budget if the money paid under the scheme is increased to Rs 24,000 per farmer family per annum, we can ensure a demand revival in the economy.

Secondly, the farmers were promised that they would be given one-and-a-half times the cost of production of their produce. But only one-and-a-half times the A2+FL cost of production is being declared as MSP and not the C2 cost, which is the comprehensive cost of their products as per the CACP calculations. So the MSPs should be declared on the basis of C2 cost of production.

Should animal husbandry be included in the agriculture ministry?

About a third of the agriculture income comes from animal husbandry and allied activities, but this sector is highly neglected. Its budget is even less than Rs 3,000 crore. I think the budget of this ministry should be at least 30 per cent of the agriculture ministry i.e. about Rs 40,000 crore. It is strange that animal husbandry is not even considered a part of agriculture and its income is not exempted from income tax. Also, the farmers’ organisations like Amul, IFFCO and other co-operatives are facing tax discrimination. 

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How has the current tax structure affecting the agriculture sector?

The income tax on the domestic companies was reduced last year from 30 to 22 percent but strangely these farmer’s organisations are still being charged income tax at the old rate of 30 percent. Till 2005-06 these farmer cooperatives were charged income tax at a rate that was five percent lower than that of the companies. So in this budget, the earlier scheme of five percent less income tax rate than that on the companies on these farmer organisations should be restored. Since the current rate is 22 percent for the companies, not more than 17 percent of income tax should be levied on these farmer co-operatives.

The government could also allocate a handsome amount for agri-infrastructure, cold chain, and other storage facilities. The fertiliser subsidy should also be transferred directly to the farmers under DBT. The ever-growing food subsidy should be limited to only those below the poverty line. Oilseeds and pulses should be encouraged instead of other crops where surplus production is creating other problems. So by focusing on our farmers and rural areas, we can come out of this economic slowdown.

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