Budget 2020: Farmers’ income to rise if FM Sitharaman’s 16-point agenda materialises

February 2, 2020 2:23 AM

Budget 2020 India: Expansion of PM-Kusum to 20 lakh farmers to set up solar power units on barren land and sell the power to grid can only work if discoms pay the farmers on time.

Budget 2020 India, Budget 2020-21Budget 2020-21:Finance minister Nirmala Sitharaman did well to outline a 16-point agenda for the agri-rural sector.

By Siraj Hussain

Budget 2020 India: The government must be given credit for permitting in-house economists to write their frank assessment of the economy in the economic surveys. All the economic surveys since 2014 have produced brilliant analyses of what is happening in the broader economy. They also suggested the way ahead for sustained economic growth. It is a different matter that most suggestions of structural reforms have been ignored. This year was no different.

Finance minister Nirmala Sitharaman did well to outline a 16-point agenda for the agri-rural sector. It will be helpful to those who do not want to read the Dalwai Committee report of 14 volumes.

It seems the government has not been able to persuade all the BJP-ruled states to accept model laws on land leasing, agricultural marketing and contract farming. Uttar Pradesh, Uttarakhand and Maharashtra have enacted model laws but the impact on farmers is yet to materialise. In most other states, the model acts have not even been enacted.

The announcement to identify 100 water-stressed districts and take steps to bring the cropping pattern in consonance with the need of sustainability is a good decision, which will hopefully address the need for diversification from paddy and sugarcane to less water-intensive crops.

Expansion of PM-Kusum to 20 lakh farmers to set up solar power units on barren land and sell the power to grid can only work if discoms pay the farmers on time. At the end of November 2019, dues of Rs 73,000 crore were unpaid. It is not going to be easy for farmers to recover their payment from the discoms.

The Economic Survey devoted a full chapter to adverse effects of essential commodities Act and loan waivers. However, the finance minister made no mention of foodgrain management or EC Act in her speech. The Budget provides only Rs 1.15 trillion in 2020-21, lower by about Rs 69,000 crore from BE of Rs 1.84 trillion in 2019-20. The FM also said nothing about this in her speech. Since there is no indication of reduction in coverage under the National Food Security Act from about 70% to 20% of the population or increase in issue price (as suggested by Economic Survey), reduction in food subsidy masks the real fiscal deficit. FCI will have to borrow more to continue its operations. And to top it all, there is nothing in the FM’s speech about FCI’s outstanding liability of Rs 1.8 trillion. So, off the budget books borrowings are not going to disappear any time soon.

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The FM’s announcement to double milk processing capacity, set up cold chain of railways, increase fish production and create additional storage will be a booster for the rural economy. But balance use of fertilisers cannot be achieved without decreasing subsidy on urea and the finance minister did not provide any hint of that.

If the 16-point programme actually materialises, farmers’ income will certainly be better off.

The writer is Visiting Senior Fellow, ICRIER

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