Surging food inflation, decline in agriculture growth rate and the impending food security bill are expected to be at the centre of the coming Union budget.
With a bumper wheat harvest expected this rabi, there are projections of a turnaround in the farm sector from the present growth rate of 0.2 per cent. Food prices, which grew at an unprecedented rate of nearly 20 per cent in January, are expected to stabilise for a few commodities at least in the short-term. With the supply side constraints still a concern, the duty structure for import of sugar, pulses and edible oils is likely to be retained to augment availability.
After the noise made over the National Food Security Bill at the Chief Ministers’ conference earlier this month, there is an expectation that the Finance Minister will make an allocation for food grains subsidy for this purpose. The allocation may be a token one, as the requirement of food subsidy is estimated at about Rs. 37,000 crore to implement the Congress’ election promise of 25 kg food grains to the Below Poverty Line population at Rs. 3 a kg.
The Bill will take some shape after the Planning Commission firms up its poverty estimates in the light of the recommendations of the Medullar Task Force figures. The States have already disputed the Central government’s estimates of poverty.
Along with this, it is certain that the Food Subsidy Bill, which was budgeted at Rs. 60,000 crore last year will swell by at least Rs. 12,000 crore. The reasons for this are the higher minimum support price and the procurement costs of wheat and rice that the Food Corporation of India undertakes. At the same time, the Central issue price of wheat and rice sold through the public distribution system has remained the same since 2002.
However, there are deeper expectations from the budget of a long-term vision in agriculture and food sector. The attempts at raising production and productivity through the Rashtriya Krishi Vikas Yojna and the National Food Security Mission have so far not yielded the desired results. But these remain the flagship programmes of the Agriculture Ministry along with the Integrated Scheme of Oilseeds, Pulses, Oilpalm and Maize (ISOPOM), the Macro-Management of Agriculture (MMA), the National Horticulture Mission (NHM), micro-irrigation and SEEDS scheme to maintain stocks of certified seeds to meet exigencies during calamities.
But, with the Damocles sword — a hike in diesel prices — hanging over their head, farmers are wary about what to expect in the budget. Their biggest fear is that with growing input costs, the generous hike in the minimum support price of wheat and rice in the last two years will get offset if the prices of diesel and petrol are raised.
While there is no expectation of a bail-out package for farmers in debt as was extended two years ago for some districts on the eve of general elections, farmers do expect that the Finance Minister will look into their demand of setting aside some planned funds as pay-outs for climate change consequences or for dealing with vagaries of weather.
This crop year, for instance, farmers in the north were given a pay-out of over Rs. 1,500 crore for excessive use of diesel to pump out water for irrigation during the drought-hit kharif that reported a substantial loss of rice production.
This is a grey area that is crying for attention, along with the comprehensive crop insurance scheme that has been in the making for several years.
Fall in share
Despite the decline in the share of agriculture in the gross domestic product (GDP) from 36.4 per cent in 1982-83 to 18.5 per cent in 2006-07, the sector sustained the country’s years of recession and, that too, without a stimulus package for industry. However, the latest estimates say the worst monsoon in 37 years will bring down the farm growth rate to 0.2 per cent from 1.6 last year.
It cannot be expected that the agriculture growth rate will meet the expectations of 4 per cent when 60 per cent of cropping is rain-fed and dependent upon the rain god.
Despite that allocations in the budget must per force address the requirement of not only increasing production and productivity but also of per capita consumption, per capita nutrition and the purchasing power. More funds need to be allocated to ensure that production is supported by infrastructure in farm-to-shelf-food processing, warehouses, pre-cooling, cold storage chains, marketing and supporting services in a public-private mode if need be.
Along with the business-as-usual sectors getting attention, transgenic and the research and development sector is up for higher allocation.