Agriculture and Rural Economy in 2018-19 Budget

BUDGET- 2018-19

Doubling farmers’ Income: government keeps MSP of all hitherto unannounced Kharif crops at least at one and half times of production cost

Finance minister announces raising institutional credit for agriculture sector to Rs.11 Lakh crore for 2018-19 from Rs.10 Lakh Crore in 2017-18

Rs. 500 Crore ‘operation greens’ announced to address price volatility of perishable commodities like potato, tomato and onion and benefit both producers and consumers

Rs.200 Crore allocated to support organized cultivation of highly specialized medicinal and aromatic plants and associated industry

22,000 rural Haats to be developed and upgraded into Gramin agricultural markets (grams) for farmers to directly sell to consumers and bulk purchasers

Rs.2000 Crore fund to be set up for developing and upgrading agricultural marketing infrastructure in the 22000 grams and 585 APMCS

Doubling allocation for food processing sector to Rs.1400 Crore, government to promote establishment of specialized agro-processing financial institutions

Facility of Kisan credit cards extended to fisheries and animal husbandry farmers to help them meet their working capital needs; Rs.10,000 Crore funds announced cumulatively for infrastructure development in the two sectors

Rs.1290 Crore re-structured national bamboo mission announced to promote bamboo sector in a holistic manner

Special scheme to be implemented to support haryana, Punjab, Uttar Pradesh and the Delhi to address air pollution and to subsidize machinery required for in-situ management of crop residue

 Government has decided to keep Minimum Support Price (MSP) for all hitherto unannounced crops of Kharif at least at one and half times of their production cost. “This historic decision would prove an important step towards doubling the income of our farmers and NITI Ayog in consultation with Central and State Governments will put in place a fool proof mechanism so that farmers will get adequate price for their produce”, 

As a primary measure, the Government announced raising institutional credit for agriculture sector to Rs.11 lakh crore for the year 2018-19 from Rs.10 lakh crore in 2017-18. Taking Government’s vision ahead, the Finance Minister, in Budget 2018-19, announced the launching of ‘Operation Greens’ to address price volatility of perishable commodities like potatoes, tomatoes and onions, at an outlay of Rs. 500 crore. ‘Operation Greens’, on the lines of ‘Operation Flood’, shall promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management in the sector. Also, Shri Jaitley announced 100% deduction in respect of profits to Farmer Producer Companies (FPCs), having turnover up to Rs. 100 crore, for a period of 5 years from FY 2018-19, in order to encourage professionalism in post harvest value addition in agriculture.

Further, Shri Jaitley informed that the Government has promoted organic farming in a big way. Organic farming by Farmer Producer Organizations (FPOs) and Village Producers’ Organizations (VPOs) in large clusters, preferably of 1000 hectares each, will be encouraged.  Women Self Help Groups (SHGs) will also be encouraged to take up organic agriculture in clusters under National Rural Livelihood Programme. Also, a sum of Rs.200 crore have been allocated to support organized cultivation of highly specialized medicinal and aromatic plants and aid small and cottage industries that manufacture perfumes, essential oils and other associated products, the Minister added.

Announcing the development and upgradation of existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs), the Finance Minister said that more than 86% of farmers in India are small and marginal who are not always in a position to directly transact at APMCs and other wholesale markets. In these GrAMs, physical infrastructure will be strengthened using MGNREGA and other Government Schemes and would be electronically linked to e-NAM and exempted from regulations of APMCs. This would provide farmers facility to make direct sale to consumers and bulk purchasers, the Minister added.  

Shri Jaitley said that in the last Budget, the Government had announced strengthening of e-NAM and to expand coverage of e-NAM to 585 APMCs. Out of that, 470 APMCs have been connected to e-NAM network and rest will be connected by March, 2018. Further, an Agri-Market Infrastructure Fund with a corpus of Rs.2000 crore will be set up for developing and upgrading agricultural marketing infrastructure in the 22000 Grameen Agricultural Markets (GrAMs) and 585 APMCs, the Minister informed.

Announcing doubling of allocation for Ministry of Food Processing from Rs.715 crore in RE 2017-18 to Rs.1400 crore in BE 2018-19, Shri Jaitley said that the Prime Minister Krishi Sampada Yojana is our flagship programme for boosting investment in food processing and the sector is growing at an average rate of 8% per annum. With the increased allocation for the sector, the Government will promote establishment of specialized agro-processing financial institutions in this sector and to set up state-of-the-art testing facilities in all the forty two Mega Food Parks, the Minister added.

Announcing a major step to help small and marginal farmers in fisheries and animal husbandry sector to meet their working capital needs, the Finance Minister extended the facility of Kisan Credit Cards (KCC) to the sector. This would give benefit of crop loan and interest subvention, so far available to agriculture sector only under KCC, for rearing of cattle, buffalo, goat, sheep poultry and fisheries. Further, the Finance Minister also announced setting up of a Fisheries and Aquaculture Infrastructure Development Fund (FAIDF) for fisheries sector and an Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirement of animal husbandry sector. Total Corpus of these two new Funds would be Rs.10,000 crore.

Calling Bamboo as ‘Green Gold’, Shri Jaitley announced the launch of the Rs.1290-crore Re-structured National Bamboo Mission, which is based on a cluster based approach to address the complete bamboo value chain and promote bamboo sector in a holistic manner.  With a focus on linking bamboo growers with consumers; creation of facilities for collection, aggregation, processing, marketing, MSMEs, skill building and brand building, this announcement would contribute in generating additional income for farmers, employment opportunities for skilled and unskilled youth especially in rural areas.

As a measure to tackle the challenge of air pollution in the Delhi-NCR region, Shri Jaitley said that a special Scheme will be implemented to support the efforts of the governments of Haryana, Punjab, Uttar Pradesh and the NCT of Delhi to address air pollution and to subsidize machinery required for in-situ management of crop residue.

Summery

Agriculture and Rural Economy

            Referring to the Government’s commitment to the welfare of farmers and doubling farmers’ income by 2022, the Finance Minister announced a slew of new schemes and measures. 

Government has decided to keep MSP for all unannounced kharif crops atleast one and half times of their production cost after declaring the same for the majority of rabi crops. 

The volume of institutional credit for agriculture sector from year-to-year increased from Rs.8.5 lakh crore in 2014-15 to Rs.10 lakh crore in 2017-18 and he proposed to raise this to Rs.11 lakh crore for the year 2018-19. 

 After the establishment of Dairy Infrastructure Fund, Shri Jaitley announced setting up a Fisheries and Aqua culture Infrastructure Development Fund (FAIDF) for fisheries sector and an Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirement of animal husbandry sector with a total corpus of  Rs.10,000 crore for the two new funds.  

On the lines of ‘‘Operation Flood’’ a new Scheme ‘‘Operation Greens’’ was announced with an outlay of Rs 500 Crore to address the challenge of price volatility of perishable commodities like tomato, onion and potato with the satisfaction of both the farmers and consumers. 

He also announced to develop and upgrade existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs) to take care of the interests of more  than 86% small and marginal farmers. These GrAMs, electronically linked to e-NAM and exempted from regulations of APMCs, will provide farmers facility to make direct sale to consumers and bulk purchasers. Moreover, an Agri-Market Infrastructure Fund with a corpus of Rs.2000 crore will be setup for developing and upgrading agricultural marketing infrastructure in the 22000 Grameen Agricultural Markets (GrAMs) and 585APMCs. He said, so far 470 APMCs have been connected to e-NAM network and rest will be connected by March, 2018. 

Shri Jaitley announced Rs 200 crore  for organized cultivation of  highly specialized medicinal and aromatic plants and said that the organic farming by Farmer Producer Organizations (FPOs) and Village Producers’ Organizations (VPOs) in large clusters, preferably of 1000 hectares each will be encouraged. Similarly, allocation of Ministry of Food Processing has been doubled from Rs.715 crore in 2017-18 to Rs.1400 crore in 2018-19. 

Terming Bamboo as ‘Green Gold’, the Finance Minister announced a Re-structured National Bamboo Mission with an outlay of Rs.1290 crore to promote bamboo sector in a holistic manner. Under  Prime Minister Krishi Sinchai Yojna-Har Khet ko Pani, 96 deprived irrigation districts will be taken up with an allocation of Rs 2600 crore. The Centre will work with the state governments to facilitate farmers for installing solar water pumps to irrigate their fields. He also proposed to extend the facility of Kisan Credit Cards to fisheries and animal husbandry farmers to help them meet their working capital needs. 

Shri Jaitley said India’s agri-exports potential is as high as US $100 billion against current exports of US $30 billion and to realize this potential, export of agri-commodities will be liberalized.

 He also proposed to set up state-of-the-art testing facilities in all the forty two Mega Food Parks. 

He also announced a special Scheme to support the efforts of the governments of Haryana, Punjab, Uttar Pradesh and the NCT of Delhi to address air pollution  in the Delhi-NCR region by  subsidizing machinery required for in-situ management of crop residue.

            On the loans to Self Help Groups of women, the Finance Minister said it increased to about Rupees 42,500 crore in 2016-17, growing 37% over previous year and expressed confidence that  loans to SHGs will increase to Rs.75,000 crore by March, 2019. He also substantially increased allocation of National Rural Livelihood Mission to Rs 5750 crore in 2018-19.

            Referring to the measures taken for the benefit of lower and middle class, the Finance Minister said, under Ujjwala Scheme distribution of free LPG connections will be given to 8 crore poor women instead of the previous target of  5 crore women. Under Saubahagya Yojana, 4 crore poor households are being provided with electricity connection with an outlay of Rs.16,000 crore. To fulfil target of housing for All by 2022 ,more than one crore houses will be built by 2019 in rural areas, besides already constructed 6 crore toilets under Swachh Bharat Mission.    

            Shri Jaitley stressed that the focus of the Government next year will be on providing maximum livelihood opportunities in the rural areas by spending more on livelihood, agriculture and allied activities and construction of rural infrastructure. He said, in the year 2018-19, for creation of livelihood and infrastructure in rural areas, total amount to be spent by the Ministries will be Rs.14.34 lakh crore, including extra-budgetary and non-budgetary resources of Rs.11.98 lakh crore.  Apart from employment due to farming activities and self employment, this expenditure will create employment of 321 crore person days, 3.17 lakh kilometers of rural roads, 51 lakh new rural houses, 1.88 crore toilets, and provide 1.75 crore new household electric connections besides boosting agricultural growth.