The budget vowed to double farmer income by 2020, but was silent on the National Commission on Farmers recommendation of a minimum support price (MSP)–the price at which the state buys crops from farmers–of 50% above agricultural production costs. Except for rabi pulses during 2008-09 and 2013-14, the MSP for foodgrains has not increased substantially over four years.
Continuing the poetic trend seen in budget speeches, Finance Minister Arun Jaitley started with these lines, signalling the fiscal path of his government towards budget management during a global slowdown and farm distress at home.
With agriculture growth contracting 1% in the October to December quarter of 2015 and growing only 1.1% in the financial year 2015-16 (advance estimate, obtained by extrapolation of latest available data); back-to-back droughts, the worst in 30 years; and winter (rabi) crop sowing dropping below 60 million hectares, the worst in four years; and a few thousand farmers committing suicide in 2015—Jaitley, 63, kept his budget for 2016-17 focused on the 834 million people who live in rural India.
In addition, rural workers’ wages (inflation adjusted) declined for the first time in half a century, Jawaharlal Nehru University economist Himanshu wrote in the Indian Express.
Jaitley’s budget has nine pillars: Agriculture, rural development, health, education and jobs, infrastructure, financial reforms, governance and ease of doing business, prudent fiscal management, and tax-administration reforms.
With the rural-focus explicit, stockmarkets (BSE Sensex) tanked 2% during the speech and then recovered, as Jaitley laid out accelerated reforms in tax compliance and administration, especially for small and medium enterprises, and closed 0.66% below.
Jaitley’s aim–to double farmer income by 2020–is very tough
Jaitley set aside the most money ever for agriculture and farmer welfare: Rs 47,912 crore ($7 billion), a rise of 84% from Rs 25,988 ($4 billion) last year. This includes Rs 6,000 crore for groundwater management, Rs 12,500 crore for irrigation and Rs 5,500 crore for crop insurance.
Changing irrigation, insurance and groundwater-use patterns will not be easy.
Only 34% of India’s farmland is irrigated, despite more than Rs two lakh crore spent over 65 years, as we reported, and no more than 15% of 138 million farmers (2010-11 Agriculture Census), or 20 million, have crop insurance, although no more than 10% (12.5 million) actually received insurance benefits.
As for groundwater, levels in India are now more critical than anywhere else on earth, IndiaSpend reported. More than half of India now faces what is called “high” to “extremely high” water stress, most across the fertile Ganga-Brahmaputra basin, as this graphic indicates.
The budget vowed to double farmer income by 2020, but was silent on the National Commission on Farmers recommendation of a minimum support price (MSP)–the price at which the state buys crops from farmers–of 50% above agricultural production costs. Except for rabi pulses during 2008-09 and 2013-14, the MSP for foodgrains has not increased substantially over four years.