Union Budget 2016: What is in store for India’s agricultural sector?

The Modi government was always assumed to be pro-corporate and anti-farmer. The last two budgets were indicators of this as significant concessions/incentives were not introduced for rural India and specifically, the agricultural sector. The Union Budget for 2016-17 aims to shatter this image of the government in power.

Arun Jaitley, the Finance Minister of India, has announced a slew of measures to boost the farm sector. A sector that has been reeling under immense stress mostly due to El-Nino induced drought. A worldwide phenomenon. Not to mention farmer suicides that have been headlining media reports.

The agricultural sector has gone from being a marginal presence in the government’s grand plan in the last two years to grabbing the spotlight in this year’s budget. A media frenzy naturally ensued.

But, what exactly does the budget hold for the completely sidelined sector that is considered the backbone of every economy?

  • The government is hoping to double the income of farmers in the next five years. Which means, the sector will be the fast growing in comparison to the rest of economy.
  • Under the Pradhan Mantri Krishi Sinchai Yojana 28.5 lakh hectares of land will be brought under irrigation.
  • Under NABARD, a dedicated long term fund will be created with an initial corpus of Rs 20,000 crore. For which a total of Rs. 12,517 crore has been allocated using budgetary support and market borrowings in 2016-17.
  • Another big step is the programme for sustainable management of ground water resources. The estimated cost of this programme is Rs 6,000 crore.
  • In rain fed areas, 5 lakh farm ponds and dug wells and 10 lakh compost pits for organic manure production will be initiated using the allocations under MGNREGA.
  • The Soil Health Card Scheme will cover 14 farm holdings by March 2017 and 2,000 model retail outlets of fertilizer companies will be provided with soil and seed testing facilities during the next three years. The soil health card scheme aims to provide farmers with information about the nutrient level of the soil. This is mainly to help them better use fertilizers.
  • The government is also focused on promoting organic farming. To improve crop yield in rain fed areas, which constitute nearly 55% of the country’s arable land two important schemes have been introduced. 5 lakh acres will be brought under organic farming over a three year period under the Parmparagat Krishi Vikas Yojana. A value chain based organic farming scheme called “Organic Value Chain Development in North East Region” will ensure that organic produce grown in these parts will find domestic and export markets. Rs 412 crore has been allocated for both the schemes.
  • Rs 500 crore has been dedicated to pulses under the National Food Security Mission. 622 districts will be covered now.
  • To improve the efficiency and performance of Kendras a national level competition will be held. The winner amongst 674 Krishi Vigyan Kendras will be awarded Rs 50 lakh.
  • Through the Unified Agriculture Marketing Scheme the government hopes to launch a common e-market platform that will span 585 regulated wholesale markets.
  • The government, this time around is focused on ensuring farmers have access to credit. The agricultural credit in 2016-17 will be an all time high of Rs 9 lakh crore. Also, Rs 15,000 crore has been kept aside to reduce the burden of loan payment on farmers.
  • The crop insurance scheme, the Prime Minister Fasal Bima Yojana will be allotted a sum of Rs 5,500 crore for effective implementation.

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