Separate Budget for Agriculture

Raman Swamy

In its election manifesto, the Congress party has pledged to have a separate Budget for Agriculture. Although the idea may not yet have sparked off as much heated discussion in political and media circles as the Nyay scheme, it has aroused expectations among farm activists and agricultural economists alike, some of whom have been clamouring for an exclusive farm budget for long.

Even on the face of it, the proposal is based on logic and common sense. In a country where agriculture directly sustains much more than half the population and where 70 percent of the people live in rural areas, it is surprising that no other central government has seriously thought of separating the farm budget from the general budget. This is all the more so in view of the fact that till recently the Railways have had a budget of their own—the Railways employ 6 crore people whereas more than 60 crore Indians are involved in agricultural pursuits.

This is not to say that a separate farm budget does not have its share of difficulties and constraints. All game-changing proposals have pros as well as cons. Some State governments that toyed with the idea of dedicated farm budgets were faced with certain dilemmas and bureaucratic hurdles.

For instance, just last year the Telangana chief minister backed out of implementing the idea after publically announcing it. The reason cited was the "absence of a provision for a separate department wise budget in the Constitution".

Evidently, existing legislative procedures and statutory guidelines do not permit a separate budget for any department. Hence, after studying the complexities of having a general budget as well as a separate budget for agriculture, the idea was given up. Instead, the chief minister opted for business as usual by pledging to accord higher priority to agriculture from the very beginning of the allocation process and to provide sufficient funds for special programmes and schemes for farmers.

Farm experts however feel that at the national level such technical aspects should not be allowed to stand in the way of what is clearly a vitally needed new approach towards catering to the budgetary needs of the agriculture sector.

Certain arguments in favour of a separate farm budget appear difficult to refute, whatever the naysayers may come up with to stall the proposal.

Firstly, it will lead to higher growth. If a separate agriculture budget is prepared and presented by the government of India, it could trigger an increase in the growth rates in the entire Indian agriculture sector. It would also raise the percentage of agriculture sector's contribution to GDP.

Secondly, it would enable much better utilisation of funds. In regular general annual budgets many provisions for undoubtedly made for agriculture sector—but due to systemic hurdles the allocated amounts are seldom utilized properly or in full, as a result of which each year large sums of money in the form of allocations and grants are returned.

Thirdly, it will foster a distinct improvement in the standard of living in rural India. Indeed the basic intention of any budget is to enhance the living standards and quality of life of the people and a dedicated model of farm-oriented fund allocation would have a significant impact.

Fourthly, it would increase farm productivity. At the same time it will arrest the current trend of declining investments in agriculture as a proportion of total expenditure, which is blatantly inequitable.

This is a paradox because government data on the crisis-ridden agriculture sector appears on paper to reveal ever-increasing spending. The truth is different. For instance, in 2018-19 India's agriculture budget doubled over five years to Rs 57,600 crore under the NDA government. As a proportion of the total budget, however, the NDA's allocations for agriculture were less impressive—an average rise of just two percent over the previous four years.

It needs to be acknowledged that the present model of budgetary allocations is skewed in favour of business and industry. As a consequence, agriculture generates only 18 percent of GDP even though the farm sector sustains 833 million citizens, most of them poor and in deep distress.

Why a separate agriculture budget is important is that three-fourths of rural households depend primarily on agriculture, and nearly 86 per cent of India's farmers are categorised as "small and marginal", meaning they own less than two hectares--the size of 2 football fields--according to the agriculture census 2015-16.

Farmers are producing enough foodgrains for the entire population. India produced 252 million tonnes in 2015-16 and foodgrain output reached 285 million tonnes in 2017-18, with estimates of touching the 300 million tonne mark. Surely they deserve a better deal and if nothing else a separate budget.

Vol. 51, No. 45, May 12 - 18, 2019