Budget 2020 gives the agri sector the much needed push

The union budget 2020 was quiet favourable for agri and allied sector. Articulation of a comprehensive 16 point agenda ensures comprehensive coverage of agriculture sector and lays out the overall vision for the transformation of the sector. There has been a continued focus of the government to bring in necessary reforms in the agriculture sector which is clearly reflected in the enhanced budget allocation of Rs 1.6 trillion. The  approach not only looks at developing the allied sectors but also looks at skilling and employment generation amongst the rural youth. 

The gap in cold chain infrastructure for perishable produce leads to approximately 40% post-harvest losses in India. Therefore, it is only appropriate that logistics and cold chain infrastructure was a major focus of the agricultural budget this year. ‘Kisan Rail’ is a unique step taken by the government for connecting farmers to the market. Transportation of perishable products such as fruits and vegetables, meat, fish and dairy products are expected to be benefited from this initiative, thereby increasing trade between Indian states.

Viability gap funding (VGF) for cold chain infrastructure is also a welcome move to address this issue. Implementation of VGF can be done by integrating it with existing schemes for operational ease. Prices of agricultural commodities may fluctuate due to various intrinsic and extrinsic factors. Cold storages provide holding capacity to farmers in times of distress. Hence, viability of cold storages would also contribute to price stabilisation.

‘Krishi Udaan’ is another initiative in the transportation sector to improve connectivity, especially in the north-east region (NER). NER has an abundance of natural resources and produces many high value agricultural commodities including fruits and vegetables. However, the region has not been able to prosper due to limited connectivity. With Krishi Udaan, the region can now look at developing high value products.

In the previous budget i.e in 2019, it was announced that Zero Budget Natural Farming (ZBNF) would be promoted. This year’s budget announcement to promote organic fertilizers and rationalising the use of chemical fertilizers further augments efforts towards promoting ZBNF. The subsidy regime for chemical fertilizer is also likely to be changed. Action now needs to be taken to boost the organic input sector which is more unorganised compared to the well-established fertilizer industry. Standardisation of product quality and efficacy are two major factors which need to be focussed upon for commercial adoption of organic fertilizers on a mass scale.

Some of the other measures announced in the budget for the agri sector include expansion of the KUSUM scheme for solar pumps to cover 20 lakh farmers, involving SHGs in village- or taluka-level storage, measures for 100 water-stressed districts in the country and focus on accessibility of agri credit. The detailed strategy and action plan, including schemes to be rolled out by the government to achieve these targets, remain to be seen. 
Ajay Kakra , Leader – Food and Agriculture, PwC India

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