The major challenge in the agriculture and food sector is to increase production and productivity (yield per hectare) so as to provide all citizens with food security and to contain domestic food inflation that has remained high for an entire year till November-December last when it peaked.
It is expected that the outlay for food and public distribution will reflect enhanced food subsidy to meet the requirements under the proposed National Food Security Bill if only to display the government's intent of giving citizens food security.
The food subsidy now stands at about Rs. 82,000 crore, including the Rs.12,000 crore “carried forward” from the previous year. This is expected to go up substantially, if wheat and rice are to be made available to Public Distribution System beneficiaries at Rs. 2 and Rs. 3 a kg. There is no official word yet on the number of beneficiaries, but the government will have to make a much higher food subsidy allocation. In fact, the allocation might have a clue to the government's intentions.
That the government has been unable to rein in price rise is obvious from the increase in onion prices in December. Responses to such situations have mostly been ad hoc: when onion prices zoomed to Rs.80 a kg, there was a hasty announcement on the setting up of vegetable clusters around cities. Again when foodgrains were damaged because they were kept in open-air cap-and-plinth storage, the government declared that storage and warehousing capacity would be enhanced, but there was no adequate financial support. For that, the government wants the private sector to come forward.
Therefore, in this year's budget, the Finance Minister is expected to allocate adequate funds for enhancing storage capacity. As per one assessment, about Rs.4,000 crore is required for creating the storage capacity needed to store grain under the food security bill.
At the same time, money would have to be set aside for the proposed vegetable clusters. This will be in addition to the demand for farmers' markets that sell perishables directly to consumers without the licensee or the ‘cartelised system' of artiyas in mandis set up under the Agriculture Produce Marketing Committee Act.
The onion crisis exposed the role of the middlemen as never before. Even when prices have fallen to Rs.4 to Rs.8 a kg at the traditional growing centres in Nashik in Maharashtra, the consumers are still paying up to Rs.25 a kg.
As the number of farmers who committed suicide increased last year, making farming remunerative also needs attention. There is no solution yet to the high input costs, pressure on land and water and farmers' borrowings from the informal sector. There is a pressing demand to lower the interest on farm credit to four per cent.
In this final year of the 11th Plan, the government is expected work towards consolidation of the Agriculture Ministry's flagship programmes for enhancing farm growth. The Rashtriya Krishi Vikas Yojna, the National Food Security Mission, the National Horticulture Mission, the Integrated Scheme of Pulses, Oilseeds and Maize and the Technology Mission for Integrated Development of Horticulture in North-East and Himalayan States have started showing results: the farm growth expected to increase from 0.2 per cent last year to 5.6 per cent this year. However, much of it is projected to come from the dairy, fishery and horticulture sector rather than from foodgrains.
With 60 per cent farming centred in rain-fed areas that dependent on monsoon, it is imperative that higher investment be made to bring more areas under irrigation. Linked to this is the crop insurance scheme, which, even after several years, remains at the experimental stage in a few districts and covering a few crops. This needs to be strengthened to adequately compensate rain-fed farmers for losses from the vagaries of weather.
There should be higher investment in improved assessment of weather and crop conditions for timely action and management of markets. At the same time, the allocation for agriculture research and development has to be enhanced to increase grain productivity and tackle the challenges of climate change.
