The approach paper for the Twelfth Five Year Plan recognises that a weakness in the economic performance so far is growth in the farm sector. In this context, an important initiative that has come from some state governments, and recently by the central government, is the decision to prepare a separate agriculture budget and a separate agriculture survey.
In late February 2011, the Karnataka government was the first to present a separate budget for agriculture. Madhya Pradesh was the second State to announce in June an exclusive ‘agriculture budget' in addition to the general budget for the coming year. Almost simultaneously, the Chhattisgarh government also decided to formulate a separate budget on agriculture from the next financial year.
The Eleventh Plan had sought to reverse the deceleration of agricultural growth in the Ninth and Tenth Plan periods. The growth in agriculture in the Eleventh Plan is likely to average 3.3 per cent per year as compared with 2.2 per cent in the Tenth Plan.
However, the country needs to ensure that at least 4 per cent average growth in agriculture is achieved in the Twelfth Plan period, if the overall target growth of around 9 per cent is to be met. While Plan efforts have brought about some overall improvement, decreasing investment in agriculture is a matter of concern.
Though the irrigated area has increased, agriculture remains largely dependent on rainfall. Productivity also has lagged, particularly over the last decade.But the reform initiatives since early 1990s almost totally bypassed the agriculture sector.
Lack of Clarity
The approach paper for the Twelfth plan brought out as late as August has not touched upon the issue of preparing separate agriculture budgets. It was the Union Minister of State for agriculture who recently announced the intention of the Union government to come out with a separate agriculture budget. .
The press statements on the subject so far do not convey any coherent approach towards the presentation of such budgets. They project different perceptions. According to one view, the agriculture budget will focus on all the branches related to the farm land as horticulture, animal husbandry, fisheries, panchayats and forestry. The intention of such a budget is to focus on development schemes related to irrigation, power supply for farming and supply of fertilisers and other goods to the farmers. The budget will be prepared in consultation with all the stakeholders involved in agriculture.
According to another view, the report will incorporate area-wise and comparative analysis of foodgrain, pulses, oilseed and commercial crops and products. It will also throw light on agriculture development, agriculture marketing and storage facility. Necessary financial arrangements (credit, long-term loan etc.) available to farmers of the state will also be considered.
Need for cohesive Strategy
Agriculture is a state subject and it is only proper for state governments to take the initiative. Furthermore, state level budgets can appropriately take into account the state-level differences in terms of resource endowment, structure and pattern of production and institutional differences in planning for agricultural development. This will rule out a ‘one size fits all' approach.
Data show wide differences among states in regard to certain important parameters. As per 2001 census, while cultivators were as low as 7.2 per cent of the state's population in Kerala and as high as 65.5 per cent in Himachal Pradesh with the national average of 31.7 per cent. Similarly, agricultural labourers constituted as low as 3.1 per cent in Himachal Pradesh and as high as 49.8 per cent in Uttarakhand, with a national average of 26.7 per cent.
Differences were also evident in the case of workforce participation rate, rural poverty levels, irrigation potential, fertiliser use and consumption of electricity by agriculture. Agriculture growth rates in respect of foodgrains, commercial crops and horticulture also show wide differences. Hence, any sectoral budget ideally should start with individual states.
However, a national budget and survey also would be essential. Since agriculture is a State subject, the Centre will have to work hand in hand with the States to bring coherence in policies and strategies.
Higher levels of investments in agriculture, both by the public and private sector can yield much better results if reforms are undertaken to streamline not only the incentive structures for the farmers, but also the institutional framework in which agriculture and related activities take place.
(The author is Director, EPW Research Foundation. The views are personal.)