Impact of Union Budget 2015 on Agriculture

India is primarily an agrarian economy. A major portion of its population is dependent on agriculture for a livelihood. Agricultural income is not taxed in India. The Finance Minister, Mr. Arun Jaitely in his Budget speech made it clear that one of the five key challenges facing the co is the stress in agricultural income.

In the year 2014 – 15, the growth in agricultural GDP fell to a mere 1.1%. The average GDP for the first three years of the current Five Year Plan period is also just 2% as against a targeted GDP of 4 %. The GDP rate achieved in the last Five Year Plan was 4.1%. This is worrisome and not good news for a country where the majority lives in the country side. Therefore, the government’s task on the agricultural front is clear – it has to raise GDP to a level of 4% at least, if not more. Moreover, a good agricultural growth rate is not only good economics, but also good politics.

In the Union Budget 2015-2016, the Finance Minister has provided for the following, with the intention to rev up the agricultural sector:-

•    The Soil Health Card Scheme was kicked off some days ago. This will help in better nutrient management.

•    Rs. 5,300 crore is set aside for micro-irrigation programme – The Pradhan Mantri’s Gram Sinchai Yojana. The states have been asked to help with this scheme.

•    NABARD will set up a fund of Rs. 25,000 crore towards the Rural Infrastructure Development Bank.

•    To revive credit in the agricultural sector, the Rs. 15,000 crore Long Term Rural Credit Fund, The Rs. 45,000 crore Short Term Cooperative Rural Credit Refinance Fund, and the Rs. 15,000 crore Short Term RRB Refinance Fund are being set up.

•    A common national market for agri-produce is proposed. There is an increased level of trade in the domestic market and a good amount of interstate movement of agricultural produce. This kind of market will ensure that there is better intermediation, price stability and better realization for farmers.

•    There will also be service tax exemption for the pre-cold storage infrastructure. This will help farmers extend the life of agricultural produce, especially fruits.

The Budget has however failed to provide any thrust for growth in exports in the agricultural sector, and is silent on crop insurance and the food processing sector. It is also silent on cold chain management of agricultural products.

The budgetary allocation for the agricultural sector remains at much the same levels as in the previous year. So one may wonder how a higher level growth can be achieved. This is where the states can play an important role. With the increase in share of revenue from the center at 42%, it may be possible for them to act quickly to boost agricultural growth. Since a 1 percent growth in the agricultural growth is two or three times more effective in reducing rural poverty, it may be in the best interest of the states also to give agriculture a much needed leg up.

Atreyee Roy (have 690 posts in total)

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