Agriculture can’t wait

Agriculture can’t wait

PM-Kisan can be effective only if other reforms and investments dovetail into it.

It has been noted that the NDA-3 government’s first budget has been a mishmash of reformist and socialist moves, rather than a bold departure from the old Nehruvian “mixed economy” approach. Despite a plethora of pro-farmer rhetoric, the same cautious incrementalism marks the budget’s approach to agriculture. Into its sixth year in power the government has struggled to develop a cogent farm policy and Union finance minister Nirmala Sitharaman had the opportunity to present a fresh vision. But that will have to wait.

In February’s interim budget, stand-in FM Piyush Goyal had signalled a big shift towards “income support” for farmers through the PM-Kisan scheme. But it was also hoped that such direct benefit transfers would transition into investment support that would ultimately subsume market distorting subsidies towards food procurements, fertilisers, electricity and farm loan interest. This isn’t materialising though the PM-Kisan scheme witnessed a near fourfold rise in allocation from Rs 20,000 crore in 2018-19 to Rs 75,000 crore this fiscal. Worrying signs of PM-Kisan hogging the fiscal space without triggering any other structural reforms are evident.

Attempts to rationalise the food and fertiliser subsidy could have been made, the Essential Commodities Act that stigmatises food commodities trade needs amendment if not dismantling, and states that take credible initiatives to improve farmers’ market access like scrapping APMCs could be offered generous incentives. The allocation for agricultural R&D – which can produce the biggest bang for every buck invested – has seen only a negligible increase, raising the possibility that PM-Kisan could in future starve investment towards other areas in the farm sector.

This is reminiscent of the situation in defence where a huge salary and pensions bill constrains India’s ability to increase capital expenditure for defence modernisation. Recent months have also seen farmers losing patience with government’s irrational moratorium on GM food crops like Bt-Brinjal. With their promise of increased productivity and resistance to pests, farmers cannot be blamed for hoping that GM crops will save them money on inputs and boost incomes. Talk of doubling farm incomes by 2022 is no longer frequent, finding mention once in the budget speech in the context of the quixotic “zero budget farming”. Progressively shrinking the market distorting subsidies can create space for investment and fresh ideas. But that requires political boldness, which this government coming off a phenomenal electoral mandate must muster.