Finance Minister Arun Jaitley today sought to give a rural and farmer-friendly push to the Budget, but by relying more on routing finances through financial institutions like the National Bank for Agriculture and Rural Development (NABARD) rather than enhancing budgetary allocation for schemes.
This approach of enhancing the financing capability of existing institutions by creating dedicated funds, instead of allocating more to schemes and programmes, is being seen by many as a deft move to ensure funds for the government’s farming initiatives without denting the fiscal roadmap.
Big programmes like Rashtriya Krishi Vikas Yojana (RKVY) have, in fact, seen a 12 per cent reduction in allocation – from the 2016-17 Budget Estimate of Rs 5,400 crore to Rs 4,750 crore in BE 2017-18. Meanwhile NABARD’s refinancing capability has been enhanced by almost Rs 34,900 crore across various initiatives.
“This new way of raising finances through NABARD, rather than allocating more resources through the Budget, seems to be a good initiative,” Ashok Gulati, former chairman of Commission for Agriculture Costs and Prices, told Business Standard.
On the marquee Pradhan Mantri Fasal Bima Yojana, the finance minister has allocated Rs 9,000 crore in BE 2017-18, which is lower than the RE of Rs 13,240 crore in 2016-17, but slightly more than that year’s Budget estimate of Rs 5,500 crore.
The coverage under the scheme, according to Jaitley, would be increased from the current 30 per cent of cropped area to 40 per cent in 2017-18 and 50 per cent in 2018-19.
In 2016-17, till recently, around 26 per cent of the cropped area was covered under the programme. At a time when the coverage is struggling to reach even 30 per cent, expanding it to 40 per cent looks ambitious.
Overall, the allocation for agriculture and allied sectors rose from Rs 53,806 crore, according to the Revised Estimate of 2016-17, to Rs 56,992 crore according to the Budget Estimate of 2017-18 – a marginal increase of less than 6 per cent.
Just like the 2016-17 Budget, this also includes the component of interest subvention on short-term crop loans of Rs 15,000, which has since the last financial year become a part of the Budget 2017-18 agriculture ministry’s budget. The interest subvention till then used to a be part of the finance ministry’s budget.
“The overall theme of the Budget for the agriculture sector seems to indicate that they have spent more than the Budget Estimates of 2016-17, while there has not been a big increase in the coming year’s allocation,” said Abhijit Sen, agriculture economist and former member of the Planning Commission of India. “It’s a typical finance ministry’s Budget, with no definitive thrust in any area of agriculture.”
Jaitley announced the expansion of the Rs 20,000-crore long-term irrigation fund by an equal amount, something that was also announced by Prime Minister Narendra Modi on December 31, 2016.
That apart, he also announced the setting up a dedicated fund of Rs 5,000 crore, also in NABARD, to fund micro-irrigation schemes under the ‘Per Drop More Crop Initiative’, a Dairy Processing and Infrastructure Development Fund with a corpus of Rs 8,000 crores over three years and Rs 1,900 crore to quicken the computerisation in the 63,000 functional primary agriculture credit societies.
All of this would be in NABARD. The farm credit target has been raised to Rs 10 lakh crore as against Rs 9 lakh crore in 2016-17 Budget Estimates.
The finance minister also proposed a new model law on contract farming that will be circulated among states and urged them to denotify perishable commodities from the Agricultural Produce Market Committees.
He also mentioned that the coverage of the electronic National Agricultural Market (e-NAM) would be expanded from the current 250 markets to 585 mandis and new mini-labs would be set up in Krishi Vigyan Kendras to speed up the issuance of soil health cards that have been falling below target.