Union Budget 2021: Agriculture remains key for rural India, here’s what more can be done for farmers

Updated: January 25, 2021 4:39 PM

Union Budget 2021 India: The upcoming Budget should enunciate agricultural strategies that promote new-age technologies, encourages data-driven solutions for intelligent farming and market connect.

Budget 2021-22, Union Budget 2021As compared to developed economies, research & development (R&D) investment in agriculture in India is minuscule at around 0.3% of agricultural GDP.

By T R Kesavan

Indian Union Budget 2021-22: Agriculture is the mainstay of India’s rural economy. This was proven yet again during the current challenging times – when the sector remained the only silver lining amid the dark clouds of the Covid-19 pandemic. Government of India has brought significant reforms in the agriculture sector which are crucial for long term prosperity of the nation and enhancing the profitability of 120 million small and marginal farmers with landholding of less than two hectares. Going forward, unlocking the true potential of Indian agriculture requires continued efforts and strategies which includes technology-led growth. Long-term sustainable growth is possible in agriculture only when the sector is made competitive and remunerative for farmers.  

The upcoming Budget should enunciate agricultural strategies that promote new-age technologies, encourages data-driven solutions for intelligent farming and market connect, empower Farmer producer organisations (FPOs) and enables investment in research and development (R&D).  Such a four-pronged approach will reduce input costs for farmers and cut down wastages, thereby help in achieving the dual goal of raising incomes for smallholder farmers and strengthening the sector’s competitiveness. 

As compared to developed economies, research & development (R&D) investment in agriculture in India is minuscule at around 0.3% of agricultural GDP. It is important to invest a significant part of the GDP in R&D to address emerging challenges of climate change, food and nutrition security, stagnating yields and galloping cost of inputs and wastages.

Secondly, the need of the hour is an investment in technologies which are effective, user friendly and ones that bring customised solutions to needs of medium and small landholding farmers. To ensure technology-led growth for agriculture, the Budget should stimulate investment in new-age technologies that improve farm economics by reducing the cost of production and wastages at pre and post-harvest stages. Promoting farm mechanisation technologies with an effective farmer to farmer rental models will act as a catalyst to increase agricultural yield. Lending to rent to the BPL smallholder farmers will enhance mechanisation which is currently unavailable for this marginal segment. Precision technologies will help in producing more with lesser input and will gradually lead to less consumption of farm power, seed, fertilisers and pesticides. Technological innovations for soil and water conservation are crucial, as nearly 90% of freshwater withdrawn in India is used for agricultural purpose and decrease in soil organic matter leads to low and stagnating yields.  Restoration of soil health and sustainable water use management certainly requires conscious attention. 

Enhancing the use of ICT and digital technologies will provide real-time market information and extension services to farmers.  Constant application of technologies that build solutions for food monitoring, quality assaying and traceability will also be equally important, as post covid food safety becomes more important than ever before.  India needs an autonomous Agri Technology Governing Council comprising of public and private participation and a policy push to build conducive Agri startup ecosystem in the country. It is also important to create linkages with Agri universities at the state level to build partnership projects at grass-root level. 

Thirdly, Government should have a special focus on strengthening Agri statistics to reduce information arbitrage on data for sowing, crop condition, prices and other vital parameters. Today, 85% of farmers in country are small and marginal. Use of Agri-stack built on a foundation of farmers database can bring instant access of disruptive innovations at their doorstep and will lead to intelligence driven decision making. 

Fourthly, new, innovative models of consolidation are imperative, considering that cost per unit with small land holdings is high and production output is rather low. Therefore, a sustainable aggregation model like creation of FPOs is a viable solution.  FPOs have a big role to play in not only building socio-economic resilience of farmers but also in achieving several sustainable development goals. It is suggested that FPOs should be included in definition of MSMEs. This will open new avenues of support for FPOs, help them in raising capital for business operations and avail other benefits that are available to MSMEs. 

Also, adoption of scientific storage technologies will further strengthen FPOs. Presently, the full potential of warehousing system and negotiable warehouse receipts in electronic form (e-NWR) is unrealised.  Strengthening the warehouse system in country will enable farmers and FPOs to store their produce after harvest and helps prevent distress sale. The role of a warehouse in future is going to be more than plain storage. Creating new capacities with technological features and innovative functional dimensions in Agri warehousing is important. 

It has been heartening to note Government’s attempt to change the crisis into an opportunity by taking a step towards the long-pending reforms in the agriculture sector. Going forward, adoption of technology at various levels of the chain and creation of Agri Council in line with GST Council for an integrated approach between Centre, State and all concerned ministries will be helpful. 

It is expected that in Union Budget 2021-22, the government will continue to display a strong commitment towards making Indian agriculture more competitive.

(T R Kesavan, Chairman, FICCI National Agriculture Committee & Group President (Corporate Relations & Alliances), TAFE Ltd. The views expressed are the author’s own)

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