Opinion Progress on the farm

But budget could have gone further if it had listened to farmers.

Ajay Vir Jakhar

March 11, 2015 12:00 AM IST First published on: Mar 11, 2015 at 12:00 AM IST

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I fear that the supposed windfall to states will be used elsewhere and ‘farm extension services’ will suffer further.

The Bharat Krishak Samaj (BSK) has long urged the merger of the agriculture ministry with the water resources and rural development ministries, in the interests of better coordination. With cooperative federalism gaining currency as an idea, that might just become possible. Now, the panchayati raj and food processing ministries could join the club, leaving agriculture, for all practical purposes, to the states, as envisaged by the Constitution. But we must be careful what we wish for.

This year, we had a landmark budget in terms of the devolution of resources, which could have mixed consequences. Allocation for the Rashtriya Krishi Vikas Yojana (RKVY), a flagship programme sponsored by the Central government, has been halved. The RKVY was cleverly designed. If a state government spent more on agriculture than it had the previous year, the RKVY funds it got would increase proportionately. But if the state government spent less, it would get no new funds. This guaranteed and incentivised state investment in agriculture. States are famous for diverting funds from Centrally sponsored schemes to pet populist measures for electoral gains. Many states also face constraints in ensuring the timely release of salaries and employee allowances. Now, I fear that the supposed windfall to states will be used elsewhere and “farm extension services” will suffer further. Even after state governments used a large chunk of RKVY funds on animal husbandry, the milk yield of indigenous cattle remains at a low of approximately 2.5 litres a day. A national programme to deworm cattle would increase milk yields by 20 per cent. However, this would require Central coordination. Whether the NITI Aayog can generate simple, practical advisories for implementation, or has the clout and resources to influence state policy, will be tested over time.

The budget has been perceived as targeting long-term growth rather than short-term gains. The finance minister recognised that agriculture incomes are under stress and announced the Soil Health Card Scheme and the Pradhan Mantri Gram Sinchai Yojana. It would have been even better if micro-irrigation had been given infrastructure status. It would have enabled cheaper funding and substantially lowered costs to farmers. The proclaimed objective of organic farming was not matched by financial allocations.

On the marketing side, the creation of a national agriculture market will benefit farmers and consumers alike. The finance minister must now convince the states of the benefits of a unified market. They may agree if revenue loss is compensated with Central grants for at least five years. The proposal to merge the Forward Markets Commission with Sebi will definitely strengthen the regulation of commodity futures markets, increase transparency and reduce speculation.

The budget proposes having tax deducted at source (TDS) on term deposits held by farmers in a cooperative society or by cooperative societies in a cooperative bank. It is puzzling that there should be a TDS on the income of primary agricultural credit societies or cooperative societies (other than cooperative banks) when they are exempt under Section 80(P) of the Income Tax Act, 1961. Such inconsistencies must be removed. Meanwhile, the praise for the public banking sector was rather too generous. Considering how agricultural credit is disbursed, they should have been castigated. Agricultural credit has been increased to Rs 8.5 lakh crore, but there is no transparency in terms of who receives this largesse. The recent untimely rains, which destroyed yields of grape, pomegranate and vegetables as well as of cereal, should be a wake-up call for the government. It needs to start incentivising crop insurance by sharing premiums.

In the discussions that went before, it was said that this budget was the last opportunity to fix various problems, and later, some economists hailed it as the best budget since 1991. We at the BSK would tend to disagree, and with every missed opportunity, the problems only get more difficult and expensive to fix. To make farms prosper, jobs need to be created for the rural young. If this budget delivers on that promise and spurs job creation then it can be termed as the defining moment we have been waiting for. But let’s not buy into the idea that jobs can only be created if industrialists are allowed to acquire farmers’ lands without their consent.

In a changed federal structure, it will become more difficult for us to advocate for a particular farm policy, since agricultural policy will now be spread out among the various state capitals. And states will soon realise they can’t get away with just blaming the Central government for farmer woes. We can only hope that states utilise funds with integrity. Criticism of the budget has banded together a motley crew of farmers’ organisations, from the Bharatiya Kisan Sangh (affiliated to the RSS) to the All India Kisan Sabha (with ties to the CPM). Let’s not underestimate the progress made, but imagine how much further it could have gone if farmers had been listened to. It is not too late to change.

The writer is chairman, Bharat Krishak Samaj.

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