Relevance: GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment; Government Budgeting; Issues related to direct and indirect farm subsidies and minimum support prices.

Key Phrases: Agriculture Budget, indebted agriculture households, agriculture and allied activities, Rain-fed farming, small and marginal holdings, tenant farming, FPOs, Farm Insurance, Commodity Boards, Agriculture tax.

Why in New?

• In August, Tamil Nadu became the third state, after Karnataka and Andhra Pradesh, to have a separate agricultural budget.

Highlights:

• In the light of the farm reform Bills’ repeal, the idea that each State should formulate a separate agriculture budget, with the Centre too bringing out a separate agriculture budget, akin to the Railway budget in the past, is gaining traction.
• Though agriculture is a state subject, it requires collaborative approach, with the Union government taking care of research, marketing, education, and exports while farming per se, and extension are the responsibilities of the States.
• During the last five years, in the Union Budget, allocation to agriculture has seen positive shifts consistent with the Centre’s role in research, marketing, exports, and agricultural education.
• A separate Budget for the sector at the Centre and State levels is pertinent because agriculture is not just crop culture, but also animal husbandry, bee culture, aquaculture, forestry and (podu) hill cultivation and horticulture.

Agriculture Budget in States:

• The tradition of having an exclusive Budget for agriculture was started by Karnataka in 2011-12, and was followed by the undivided Andhra Pradesh state in 2013-14.
• Though states like Telangana, Rajasthan, and Bihar, too, had similar plans, these did not take off.
• What prompted the Tamil Nadu government to opt for a separate Budget, is the high rate of indebted agriculture households, which is 83 per cent, third only to Andhra Pradesh (93 per cent) and Telangana (89 per cent). (Agricultural Statistics 2020).
• Going by the sector’s contribution to the state’s economy, the Andhra experiment was a success story.
  • The gross value added by the economic activity in agriculture increased 52 per cent from Rs 52,569 crore in 2012-13 to Rs 79,980 crore in 2018-19, much more than the sector’s contribution nationally.
  • During the same time, the GVA at Basic Prices (Base Year : 2011-12) Constant Price saw an increase of 28 per cent nationally from Rs 15.24 trillion to Rs 19.48 trillion.

Concerns:

• The higher percentage of indebted farmers in Andhra Pradesh, despite the state's separate budget, is a matter to look into.
• Many experts are of view that it is more of a political move.
  • What it does is that it consolidates all the spending made for agriculture and allied under various heads under one roof and then it obviously will show an inflated number.
• Budget for agriculture will include the crop loan targets, for populist measure.
  • It will be totally misleading. The money lent by the banks should have no place in the Budget as it is depositors and investors’ money.
  • It would further increase the demands for loan waivers, deteriorating the credit culture.

Few Suggestions:

• The Budget Exercise should start from the universities engaged in Agriculture, Animal Husbandry and Horticulture, and NABARD to prepare a profile of the State in terms of soil, climate changes, emerging technologies and the pitfalls or inadequacies of the present system.
  • This will ensure an optimum allocation of funds to various sub-sectors.
• Irrigated farming and rain-fed farming should be separate components as much as livestock, horticulture, apiculture, and aquaculture.
• The Budget should contain only those resources that flow from the governments and not from the credit institutions.

Other Steps:

• Most holdings are small and marginal, and large farmers lease out their farms to marginal and tenant farmers. There are produce transfers and resource transfers among them with no law governing them.
  • With tenant farming constituting a substantial portion of crop farming in India, there should be a separate Farm Contract Act, that should specify the contracts between farmers, between farmers and traders and between farmers and industry.
  • Farmer producer organisations would draw strength from such legal facilitation.
• Focussing on Farm Insurance and Income Security: The Telangana government has shown the way with an integrated approach.
  • In the Rythu Bandhu, Rythu Vedika and Rythu Bima Yojana, the State pays the premium — irrigation and power being the key components.
  • The State’s agriculture growth is the highest in the country at 17 per cent at the current prices in 2020-21.
• Reforming Commodity Boards in India, which are not democratic.
  • It is time to recast them, give them clear agenda to function in a manner that they deliver the right income to the farmer.
• The perverse subsidies in farm sector, like for fertilisers, should also be scrapped.
• Focus on mechanization: while countries like Israel, Vietnam, China etc, have been spraying pesticides in a regulated manner through sprayers from the sky, Indian farmers to a large degree are spraying them manually.
• In the high-income zones of the farm sector, we see the adoption of robots, artificial intelligence and machine learning.
• Investors are searching for the food system transformers. Corporate agriculture, contract agriculture and organic agriculture or natural agriculture are gaining traction.
• Keeping in view these developments, it is also a good time to introduce agricultural income tax.

Way Forward:

• Balancing the food system with environment and renewable or alternate energy systems are essential to build resilient food production system.
• When States budget for agriculture, there is scope for the right balance between the resources and expenditures consistent with their respective agro-climatic zones.

Conclusion:

• Any transition in agriculture should be beneficial for the farmers and farm workers. It is imperative to give a helping hand to the farm sector, given the crucial role it performed during the pandemic. We need to remember that the farm sector continues to be the largest employer.

Source: The Hindu BL

Mains Question:
Q. Comment on the feasibility of bringing a separate budget for Agriculture at both Union and State level. (250 Words)