Agro-Focused Strategy: The Budget Implications-2010-11

Introduction: Every year when the union budget is tabled in the parliament, from
Political leader to Public, from Economist to Financial analyst, start studying of the
budget. It is nothing but "Samundra Manthan". The outcome of this critical analysis
may be good or bad or a mixed blessing. Recent budget-2010-11has been presented
amidst curiosity and caution.

The budget of the country is not just a financial statement, but much more than
that. Its scope is quite wide spread from poverty to growth, down to development,
rest to rescue etc. It reflects the political manifesto of the ruling party and
furthermore it shows the attitude, cleverness, wisdom & trick of the current
government to deal the matter of regional and national importance. Budget has
multi-faceted dimension through which it fosters economic growth and development.
The budgetary allocations of resources to a great extent determine the sectoral
growth and overall prosperity of the country. In the present context, we have
highlighted the importance assigned to the agriculture sector as being of national
importance.

Agriculture: In India, agriculture is always considered the mainstay of the large

number of people. It directly or indirectly contributes fairly to the livelihood of the
rural masses as a whole. Besides, its contribution to the GDP itself signifies its
national importance. The food price inflation in the recent year laid more emphasis
on the agricultural development. The food price have increased manifold over the
years making the food basket costlier and threatens the survival of the poor masses.
To make it more complicated, expectation of high growth of agri-production in the
previous year unable to find its own way to moderate the inflation. However the
erratic nature of monsoon, flood, and draught conditions only added flavors to the
despair.

In the budget-2010-11, a lot of importance has been given to the agriculture sector,
being the source of rural life and create income, employment of the country and help
in reduction of inequality, poverty & unemployment.

Spot Light: In the budget a four-pronged agro-strategy has been announced, for
raising agricultural production. The need of the day is to focus on agri-development
strategy. To accelerate it, the government's agro-focused strategy through
budgetary allocation is resolved to promote inclusive growth, raising the rural
income, sustaining food security, eco-friendly technique to fight with the adverse
effect of climate change.

A FOUR-PRONGED AGRO-STRATEGY:

(A) Enhancement of Agricultural Production: It envisages extending the second

generation green revolution in the eastern region comprises Bihar, Chhattisgarh,
Jharkhand, Eastern U.P., West Bengal and Orissa. To achieve the above Rs. 400
crores are allocated and mention the active involvement of Gram Sabha and farming
families to make it more grass-root all-inclusive. It is proposed to organize 60,000
'pulses and oil seed villages' soon.
As an added step, Rs. 300 crores is allocated as a part of Rashtriya Krishi Vikas
Yojna to increase the farm productivity by targeting dry land farming. Besides it,
inclusive intervention for water harvesting, water shed management and soil health
is needed. To make it more progressive, a fund of Rs. 200 crores announced for
conservation of farming through climate resilient agriculture initiative by which water
conservation and preservation of bio-diversity is possible.

(B) Reduction in Waste Produce: It is proposed to minimize the wastage in

storage as well as in the operation in the existing food supply chain in the country.
So there is a greater need of competition and opening up of retail trade by which
the gap among firm get prices, wholesale price and retail price can come down to
minimum. This leads to value addition to the farming segment. The crop purchased
for buffer stock and PDS get wastage due to shortage of storage capacity and lack of
standardized storage facility to reduce the damage or pilferage. It should work on
PPP model. To facilitate better storage, the government has planned to promote cold
storage in India.

(C) Rural Credit Support: The availability of credit to the rural sector has-been
increased from Rs. 3, 25,000/- crores to 3, 75,000/- crores. Under the debt waiver &
debt relief scheme for farmers, the loan repayment period has been extended by six
month up to June 30, 2010. As an incentive to those farmers, who repay the short-
term crop loan in time, will get 2% interest subvention instead of 1%. So the
effective rate of interest of such farmers will be 5% per annum.

(D) Infrastructure for food-processing sector: The budget signifies the

importance of agriculture sector by providing state of the art infrastructure to the
food processing sector. Ten Mega food parks have already been set up and
government proposed to set up five more such projects. As a farm to market
initiative, external commercial borrowing will be made available for cold storage or
cold room facility which includes farm level pre-cooling, for preservation of
agriculture & allied products, marine products and meats.

Looking Ahead. The government has announced a new fertilizer subsidy policy in
this budget. This balanced fertilization which is meant for more direct transfer of
subsidies to the farmers. Rural credit played a significant role in agricultural
development. RRB which steers the growth process now gets extra capitalized so
that rural economy will spur the growth. To streamline the growth process, a series
of tax relief that includes confessional customs etc. are provided to set up cold
storage. Service tax exemption may help food processing industry to grow faster .In
this way the government targeted agriculture development in the budget.