Measures in Sitharaman's Budget 2020 will give impetus to rural economy

Topics Budget 2020 | e-NAM | NABARD

It’s heartening to see that the major themes of the Union Budget were Aspirational India, economic development for all, and a caring society.


Finance Minister Sitharaman said the Centre was committed to doubling farmers’ income by 2022. Considering the multiple pulls and pressures, the FM has managed to achieve a fine balancing act. After laying the foundation for a new India in last year’s Budget, the FM has reiterated the government’s resolve to make India a $5-trillion economy. The plan announced for farmers, comprising 16 action points, will definitely boost the agriculture sector. It will work towards liberalising farm markets and making the sector more competitive, especially if it is accompanied with a much-needed nudge to state governments. This Budget endeavours to handhold farmers towards sustainable cropping patterns and the use of new-age fertilisers.


Talking about figures, the outlay on agriculture and allied activities, irrigation, and rural development has increased to an impressive Rs 2.83 trillion. The insurance and financial support to farmers, suffering crop loss/damage arising out of unforeseen events, will now reach 61.1 million farmers under the Pradhan Mantri Fasal Bima Yojana. This will help substantially in stabilising their income, thus ensuring risk mitigation.

Ajay Shriram
An initiative like Kisan Rail is a good solution to develop a national cold supply chain for perishables, based on a PPP model. This measure, along with ‘The Village Storage Scheme’ and NABARD’s exercise of mapping and geo-tagging agricultural warehouses, will work towards improving efficiencies in the entire logistics space for agriculture, and help farmers get better value realisation.


Further, the Village Storage Scheme, to be run by self-help groups, will result in restoring the status of women in villages as Dhanya Lakshmi. The Budget encourages states to adopt three central model laws relating to land leasing, marketing reforms, and contract farming. This should help in transformation of agriculture — a point strongly made in the economic survey.


High usage of urea fertilisers had become a bane in recent years, and the Budget encourages balanced use of fertilisers. It also focuses on initiating comprehensive measures for 100 water-stressed districts, under the Jal Jivan Mission. This measure will go a long way in helping districts that have faced water crisis historically.


Expanding the PM Kusum scheme to reach out to 2 million farmers for setting up stand-alone solar pumps will remove dependence on kerosene. It will encourage clean energy, in line with our international commitments. A scheme for use of fallow land for generating solar power will be an additional source of income.


The NABARD Refinancing Scheme has been further expanded and covers NBFCs and cooperatives that are active in agriculture lending. The agri credit target has been set at Rs 15 trillion for FY21. This measure will not only result in increased and uninterrupted flow of credit to farmers, but also give a boost to capital formation in the agriculture sector.


The concept of one product for one district for supporting states will help in giving momentum to horticulture, by better marketing and support. The FM has also proposed integration of negotiable warehousing receipts (e-NWR) and National Agricultural Market (e-NAM). Another scheme that will give wings to the farmer is Krishi UDAN. This will be launched by the Ministry of Civil Aviation on international and national routes. It will improve value realisation in the north-east and tribal districts.


The government has done well by bringing all these initiatives to address some of the challenges in the agriculture sector. An area where the government needs to act on is direct subsidy for fertilisers. It can link Aadhaar for the same, which will eliminate leakages and misuse in the system. Conservation of water needs top priority. A pricing mechanism to ensure prudent use of water could lead to curtailment of unnecessary and excessive usage.


Overall, measures in this Budget look promising and will definitely give an impetus to the rural economy. We should see higher productivity and efficiency in the value chain, which would result in making the PM’s vision of doubling farmer’s income by 2022 a reality. Needles to say, the execution with the support of the States will be a deciding factor.    


The writer is chairman & senior managing director, DCM Shriram


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