The slew of measures announced in the Budget for strengthening agriculture, including fixing the minimum support price (MSP) for kharif crops at 1.5 times the cost of production, if implemented well, could possibly push up the farm incomes in the long run — in line with doubling farmers income by 2022.

No debt relief

However, the Budget appears to provide no near-term respite for the farmers, who have been reeling under the impact of low prices. Besides, Finance Minister Arun Jaitley has also belied the farmers’ expectations on a direct income support that the Economic Survey had advocated and a debt relief.

Presenting the NDA government’s last Budget, Jaitley hiked the food subsidy by 21 per cent or around ₹30,000 crore to ₹1,69,323 crore for the next financial year, majority of which will go towards funding the MSP purchases.

The outlay for the Agriculture Ministry has been increased by 13 per cent to ₹46,700 crore, including a 21.5 per cent hike in allocation for the ambitious Pradhan Mantri Fasal Bima Yojana to ₹13,000 crore from the revised estimate of ₹10,698 crore.

However, the outlay towards the market intervention scheme and price support scheme has been pared down drastically to ₹200 crore from the revised estimate of ₹950 crore.

While the target for farm credit has been raised by a tenth to ₹11 lakh crore, the Budget, however, fell short of making a large outlay towards tackling the impact of climate change, which threatens to shrink farm incomes by up to 25 per cent in the medium-term, which the Economic Survey had warned.

Infrastructure funds

Jaitley announced setting up of a₹10,000-crore infrastructure fund for fisheries and aquaculture, and a ₹500-crore fund for boosting supplies of politically-sensitive commodities such as onion, potato and tomato, while doubling the allocation to ₹1,400 crore to the Food Processing Ministry.

Outlay towards irrigation and the national food security mission has been hiked to ₹4,000 crore (₹3,000 crore) and ₹3,600 crore respectively.

Jaitley also announced the launch of National Bamboo Mission with an outlay of ₹300 crore.

However, Jaitley’s biggest announcement was relating to the fixing the kharif MSP at 1.5 times the cost of production, which, besides boosting farm incomes, could also fuel inflation because of higher prices of farm produce.

Jaitley said the MSPs of most of the rabi crops have already been raised and the government will ensure farmers get MSP even if prices fall. The NITI Aayog will discuss with the State governments putting in place of an institutional mechanism to ensure that farmers get better prices for their produce.

U-turn

The major recommendation of the MS Swaminathan Commission, made way back in 2006 to alleviate farm distress, seems to be finally getting implemented. Though the BJP in its election manifesto in 2014 had promised an MSP of 50 per cent over cost of production, it later backed off from implementing it citing that it would ‘distort’ markets.

“We are really surprised because the government had given an affidavit in the Supreme Court that they would be unable to provide cost plus 50 per cent. With the claim that the government has provided for higher rabi MSP, they need to withdraw the affidavit now,” said Devinder Sharma, a food policy analyst. Jaitley should have taken a cue from Telangana, which has provided an income support of ₹8,000 per year, and extended the concept nationally, he added.

Farmers groups have been demanding that the government consider comprehensive costs (C2), which includes imputed rent on land and capital as the cost of production — while the government largely uses operational costs (input costs and family labour) as the cost of production — while announcing the MSP.

“It is a big disappointment for the farmers. The announcement on MSP is a hoax on the farmers. The claim that they are implementing the promise on MSP is very misleading. This is shifting of goalposts — taking a lower estimate of Cost of Production and claiming 50 per cent margin,” said Kiran Vissa of Raithu Swaraj Vedike.

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