Separate Budget for Agriculture- To make Indian Farmers Globally Competitive

Article by - Kapil Mishra

About 70 per cent of the population in the country depended on agriculture and related activities, it is unfortunate that there is no separate budget with policies and welfare measures for the benefit of the farming community.

If we look at the Present Agriculture Scenario in India, we observe that Agriculture is Primary sector and backbone of Indian Economy but total plan allocations are only 3.9% in 10^th plan which are down by 1% over 9^th Plan. More than 65 crores population directly dependent on agricultural for its livelihood, but still we do have a separate budget for Agricultural in India, whereas with only 5 crores travelers, Railway has a separate budget. The logic is difficult to understand. Prime Minister of India Dr. Manmohan Singh has announced a target of 4% annual growth for agriculture sector during his independence day speech this year but the actual growth in last quarter is into negatives and there are no signs of recovery in near future.

Farmers suicides in Vidarbha and other parts of country are just symptoms of larger problem of ignorance and insensitive attitude of policy makers towards Indian Agriculture in general and farmers in particular.

Public Investment in agriculture has been on a decline and is currently estimated only 1.5%. The flow of capital is not increasing as stipulated in the Credit Policy of Govt. of India. Farm loan interest rates are still very high and the process of availing a loan from bank is too complex and time taking for small farmers. Large scale corruption in schemes like Kisan Credit Cards is a well known fact. Good quality seeds and other inputs are not easily accessible to the farmers. Most irrigation projects are pending since 1970s. Power supply is a major worry for most of the farmers across country. There is no consistency on Export- Import Policy on agricultural products and inputs. All these factors together makes Agriculture as least desired profession in India which proudly claims to be an Agricultural Economy. According to a survey done by National Farmers Commission, 50% of Indian farmers do not want their children to take up the profession. Agriculture as a profession has lost its dignity and respect in India because of low profitability, physical drudgery and high risk involved in it.

India has most varied agro-climatic conditions but so far we have not exploited its potential and our exports are only 1.1% of global trade.

To deal with changes in world economy and climate and to manage food security while ensuring sustainable development, India needs to focus on Agriculture. This is high time when we should have a separate budget for Agriculture in India. A separate budget may hep in prioritizing the needs of agriculture sector and may provide much needed relief to 600 million small farmers of India. The separate presentation of budget will get exclusive focus and new initiatives. As per recommendations of National Round table on Farmers Issues and agriculture, The Budget for Agricultural should be increased to Rs. 25,000 crores from its present level. By special measures the Gross capital formation in agriculture shall be increased to 15% from its present level of 10%. This would call for more budgetary allocations, greater investments, more credit flow, better prices for farm produce, increased savings and more economic activities and enterprises at village level. Given the size of agricultural operations, the scope for value addition and need to accelerate growth, the public investment in agriculture has to be taken to 5%.

Time has come for making Indian farmers Globally Competitive, like service and industry sectors, Indian farmers also have the potential to compete at Global level while meeting the needs of food security of country, only a focused approach and farmer centric policies are needed. A separate Budget for Agriculture will be a right step in this direction.

Kapil.cifa@gmail.com

Campaign for Separate Budget for Agriculture (CSBA)

Campaign for Separate Budget for Agriculture (CSBA)

YOUTH FOR JUSTICE under its programme "Farmers and I" announces launch of "Campaign for Separate Budget for Agriculture" (CSBA)

Why this Campaign:

This is to demand from Central Govt. to Present a Separate Budget for Agriculture.

About 70 per cent of the population in the country depended on agriculture and related activities, it Is unfortunate that there was no separate budget with policies and welfare measures for the benefit of the farming community.

Why it is needed:

• India has got the largest research and extension system in the world, but we are importing 3 million MT wheat to meet our food security needs
• India has the most varied agro-climatic conditions, but so far, we have not exploited its potential and our exports are 1.1 % of the global trade.
• India is the most favourite destination for the global giants, but we are unable to provide forward linkages & the processing is below 2%.
• With having advanced technologies, India still wastes over 25% of its fruits & vegetables production.
• Agriculture is the primary sector, but total plan allocations are only 3.9% in 10^th Plan, which are down by 1% over 9^th Plan.
• Agro trade assumes an important dimension, but till now, we don’t have Agricultural Counselors, as the other countries like Holland, Russia, Israel are having.
• More than 65 crore population depending on Agriculture, but still we do not have separate budget for this, where as with 5 crore traveler Railways have a separate budget.
• After globalization, we are dangerously placed in 32 crops, if opened up completely our 5 crore farmers will get eliminated, but no planning for the crop shift program.
• 68% of the pesticides samples picked up from UP by CARD, failed in quality standards,
• Indian agriculture scientists have done a lot, but the government is yet to wake up to confer a Bharat Ratna to honour to any person connected with farming research and development

(Source: National Round Table on Farmers Issues)

What we Demand

1. Policy Initiatives:

• Given the massive implications of WTO for Indian agriculture, a national level WTO Centre on Agriculture should be set up, which should do global studies on trends, opportunities and challenges for Indian agriculture and agro trade on one hand and providing critical information and guidelines to states on the other hand, besides providing training to various key stake-holders on WTO

• The Government must make a separate budget for agriculture on the pattern of Railway Budget, given the fact that 2/3^rd of the country’s population depends on agriculture. The separate presentation of budget will get exclusive focus and new initiatives.

• India is an agricultural country. But, till date not a single Agricultural Counsellor has been appointed in any of the countries to promote agricultural trade. All major countries like USA, Australia, Japan, Holland, Israel etc. have their exclusive Agricultural Counselors in major countries, who are promoting agri & food trade of their countries.

• There are more than 300 channels in India from film to fashion and from sports to spirituality, but none for agriculture. There must be an exclusive DD channel on agriculture to focus on farmers issues and technology transfer.

2. Budgetary Support:

• The budget for agriculture to be increased to Rs. 25,000 crores from its present level of less than Rs. 6,500 crores. The increased budget to be directed primarily on agricultural research and extension, which hold key to agricultural productivity and quality.

• Public investment in agriculture has been on a decline over the last five years, and is currently estimated at 1.5%. Given the size of agricultural operations, the scope for value addition and need to accelerate growth, this has to be taken to 5%. Greater public investment would mean better infrastructure development and attracting more private investment.

• By special measures the gross capital formation in agriculture to be increased to 15% from its current present levels of 10%. This would call for more budgetary allocations, greater investment, more credit flow, better prices to farm produce, increased savings and more economic activities and enterprises at village levels.

• Despite so much ‘so called focus’ of the Union Governemnt on agriculture, the Plan allocations to agriculture increased by 39% in 10^th Plan over the 9^th Plan, as compared to 89% growth in 9^th Plan from 8^th Plan. This brought down the Plan allocations for agriculture down to 3.9% in 10^th Plan from 4.9% in 9^th Plan.

3. Farm Credit and insurance

• The flow of capital to be increased, as stipulated in credit policy of the Government. The shortfall in 18% stipulated norms for agri lending by most nationalised banks in 2004 - 05 should be made up by additional flow in 2006 - 07 by opening up more retail outlets, installing KCC compatible ATMs and privatizing credit distribution systems on the pattern of urban models. But, more importantly the outreach need to be expanded to cover more farmers, rather than serving the farmers with more credit

• The farm loan interest rates are still high, particularly in non-commercial banks, which are still between 12 - 18 %. The interest rates by commercial banks to be reduced to 5 % and by non - commercial banks at a maximum of 10%. This can be done by reducing the cost of processing by more computerization, flatter structures of banks, reduction in risks and by breaking high rate FDs and raising low cost funds.

• Given the difficult situation of farmers and in light of the large scale suicide deaths, farmers Group Insurance should be introduced by Government on 75 : 25 percent sharing basis, wherein union Government subsidizes by 75% of a Rs. 2.0 lacs term insurance of one member per family basis. This would cost the union Government a small amount of about Rs. 15,00 crores annually.

• The issue of large scale corruption rampant in issuance of KCC needs to be seriously viewed by the Government. According to some MPs, the corruption was earlier in Cooperatives, RRBs and LDBs, but the phenomenon is now extended to Commercial Banks, who ask for 7 – 10% money upfront before issuing KCC. Same is true with most banks for sanctioning ACBC loans

4. Agricultural Inputs

• Seeds holds key to crops productivity. Given the need for varietals improvement and diversification, an accelerated R&D program on seeds and biotechnology R&D needs to be taken up to provide technological support to public sector as well as private seeds companies. The Ministry of Agriculture should effectively utilize the budget of Rs. 2,00 crore, preferably under PPP for focussed R&D work for release of high quality hybrids.

• The subsidy bill of over Rs. 20,000 crores on fertilizers needs to be rationalized to best utilize and stop its wastage. The subsidy is highly urea centric and the result is fast soil degradation, affecting crops productivity and defeating the very purpose for which subsidies are given. The subsidy does not encourage fertilizer industry to spend on extension, new products development and fertilizers application technologies. There is no subsidy on bio-fertilisers and disbalanced support for P and K and non urea based nitrogenous fertilizers.

• Crop losses in India are estimated over Rs. 60,000 crores annually. Pesticides play an important role not only in crop productivity, cost reduction and quality improvement but also in protecting crops from pests and diseases. The cost benefit ratio in using pesticides is heavily in favour of farmers. The Government however needs to check flood of spurious pesticides in market by strengthening quality enforcement and tackling rampant corruption in insecticide laboratories. 16% excise duty on pesticides also needs to be removed (as there is no duty on other agri-inputs) to reduce farmers cost on crop protection.

5. Water Resource Management

• To address the scarcity of water and promote scientific agriculture micro-irrigation needs to be promoted on a large scale. The Task Force on MI had suggested an investment of Rs. 63,000 crores over a period of next fifteen years to cover 69.5 million hectare area under drip (27.0) and sprinkler (42.5) systems. As the UPA Government has dropped the Inter-linking of River Project, just 10% of the funds of Rs. 5.60 lac crores envisaged for that project can be allocated for promoting MI.

• Water is the major issue in 21st Century, particularly ground water. The ongoing watershed programs needs to be strengthened by sufficient funding support with a focus on how to recharge ground water and involving communities in water harvesting system on farmers' lands. The awareness should be created against un-accountable mining of ground water.

• Free power supply to farmers is a major problem, which destroys water resources in the ground due to excessive use. The experiments in Punjab, Haryana and Tamilnadu have proved this point beyond doubt. More over free power supply reverses any progress made in water conservation, judicious use and also affects soil productivity. This needs to be stopped.

• Farmers however need to be educated on water usage systems to drift them away from flood irrigation systems, which affects productivity and wastes water. The most important part is the crops planning, which needs to be done keeping water resources of a region and the water intake by various crosp in mind. For example high water consuming crops like paddy and sugarcane should be grown in high rainfall areas.

6. Agricultural exports

• India should take firm stand on agricultural market access issue and insist a level playing field as far as agricultural subsidies and market access issues are concerned. Developed countries can not continue heavily subsidizing their farming and ask India to open up its markets. The time gained with the temporary failure of WTO should be utilized for preparing farmers to face the imminent global competition.

• The most important issue is to prepare a national crops competitiveness index, based on their competitiveness. There are about 32 crops in which India is uncompetitive in medium and long run, a national level crop shift program needs to be executed.

• Just by standing firm on WTO issues, India can not avoid import onslaught far long. It is therefore urgently needed to strengthen our agriculture, improve productivity and quality, reduce post harvest losses by better PHM and accelerate value addition activities at farm level. The processing in fruits and vegetables which is less than 2% needs to be taken to 10% level and for that an investment of Rs. 100,000 crores is needed.

• India holds 15% of the world's arable land and numero uno position in several items of agriculture but its share in global trade is less than 1.2%. Through above mentioned measures, market driven R&D, more crop based AEZs and effective exports facilitation, India should aim at 5% of the global trade in agriculture.

7. Rural Employment and Poverty alleviation

• The market led reforms in Indian agriculture needs to be introduced and the agricultural operations should be integrated with markets to realize best value of the farm produce. This would also create enough jobs and have catalytic impact on quality.

• The income from agriculture needs to be enhanced, which can happen by either reduction in costs or extra productivity or increased support prices. The farm incomes need to be supplemented by more off-farm economic activities, which shall create more jobs and extra disposable income at farmers level. This would improve agri operations, create more demand for manufactured goods and thus step up economic growth rate.

• Rural infrastructure, particularly power, storage systems and market yards needs to be strengthened. The quality and supply of power needs improvement. More multipurpose market yards complex, comprised of go downs, cold storage, farmers service centre etc. needs to be set up. Farmers need to be educated on the available scheme of the Ministry and private sector needs to be invited for partnership. Currently support provisions do not permit large scale play of corporates in agricultural marketing and storage operations.

• Centre for Agriculture and Rural Development has prepared a mega project of establishing Panchayat Level Agri Growth Centres at an estimated cost of Rs. 21,000 crores. The project outlines creating 10.0 million jobs, 30,000 crores of additional annual farm value, providing market opportunities of Rs. 50,000 crores and initiating various multifarious socio-economic activities, aimed at improving rural quality of life This project needs to be executed.

8. Special initiatives

• Public - private partnership needs to be promoted in agriculture research and extension activities, after studying models of various other countries. Over the years industry has developed specialized, cost effective and market oriented technologies and services to supplement Government efforts in this direction.

• Positioning Indian agriculture globally in the wake of globalization and leading the pack of developing countries. India can assist them by providing help in research, extension, education and institution building and thus earn money and also goodwill. The World Agriculture Summit needs to be organized in India to move toward that.

• Estimation of losses to farmers on account of price fluctuations of farm produce by putting in place a mechanism to regularly monitor on the pattern of Kerala. The system should be developed to compensate farmers due to such losses, as their loss bearing capacity is totally eroded due to poor returns from farming.

• Structural reforms in agriculture pertaining to land leasing and market restrictions need to be addressed. The market regulation on movement and procurements by private players is hampering market growth and prices realization by farmers. Similarly due to land leasing policies of State Governments the concept of contract farming is not successful. The experiments of contract farming are based on "win all", bringing value to all partners in operations. This needs to be encouraged on a large scale.

• Organic agriculture needs to be given all support. The world market of organic products is estimated at $24 billion and is projected to go to $ 100 billion by 2015. India is ideally placed to take advantage of this, as many regions of the country are organic by default. Such regions and high value crops needs to be identified. Government should support in "India Branding", certification, extension services and in subsidizing bio-inputs. On the pattern of AEZ, Organic Zones need to be promoted.

• States profiling of crops and animal resources needs to be done, indexing them against national and global benchmarks on cost, quality and productivity parameters, and their short, medium and long term strategic advantages. Based on this national indexing and estimation of market demands in short, medium and log terms national crop planning needs to be done, using a mix of incentives and dis-incentives. If India has to succeed in global market on a long term basis, this task is unavoidable.

• Advanced MSP to be fixed for crops so that farmers can do their crops planning accordingly. This will avoid shortage and glut situations to a large extent.

(Source: National Round Table on Farmers Issues)