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Thursday, August 18, 2022

Who Cares About Budget?

Central allocations for agriculture are less important than the state budgets.

union budget 2016, state budget, agriculture budget, budget day discussion, highlights of budget 2016, indian express editorial page, indian express
Central budget allocations for agriculture are far less significant than the collective budgets of the states because agriculture is a state subject.

I took the night train to Delhi to participate in budget-day discussions and my co-passenger, who boarded the train in ravaged Punjab, asked me a simple question: “50 farmers are committing suicide everyday; will the budget end farmer suicides?” My answer was — and still is — “No.” The Union budget is just the government’s bookkeeping exercise to balance revenue and expenditure. It is not the policy document it is projected to be.

Central budget allocations for agriculture are far less significant than the collective budgets of the states because agriculture is a state subject. While giving Aadhaar legal sanctity and linking it to welfare programmes is Parliament’s prerogative, it is in the states that implementation will actually take place and where every sharecropper and tenant’s name has to be recorded in the land records. These — and not the budget — will be the tipping points to achieving transformative rural change. The time for universally applicable, pan-India policy has passed. Less than 100 districts have 80 per cent of India’s poor and most of these are drought-prone. Funding has to be structured keeping this in mind.

More than the budget, it’s the executive decisions of the government taken in the normal course of work that pose a clear and present danger to the hopes of farmer prosperity. Take one such instance: 65 per cent of maize is consumed by the poultry industry and much of the rest by the starch industry. At their behest, India allowed duty-free import of 5,00,000 tonnes of subsidised maize. Consequently, the February spot price of maize fell by over Rs 400 and, for June deliveries in the futures market, to Rs 1,172, way below the MSP. The average maize yield is 25 quintals per acre. Farmers will suffer a loss of Rs 10,000 for each acre of maize sown. India has over 200 lakh acres under maize cultivation. That translates to a collective loss of Rs 20,000 crore for maize farmers alone. Now compare this to the ministry of agriculture and farmers welfare allocation of about Rs 20,000 crore.

Additionally, when maize prices fall below the MSP, as in the recent past, government does not initiate purchases. We farmers, too, seek international trade agreements and realise the need to ensure cheap food for consumers. But when this subdues farm produce prices, then the government must fully compensate farmers in more ways than it claims to do.

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It is also time to explore the benefits of devaluing the rupee to help farmers.

The chief economic advisor has presented the best Economic Survey ever. But that, too, shows a biased industry perspective. It claims that 31 per cent of the total urea subsidy of Rs 50,000 crore is siphoned off to industry and smuggled to neighbouring countries. The minimum urea subsidy is Rs 650 per bag. This means the 200 bags carried by a 10-tonne truck are collectively subsidised to the tune of Rs 1,30,000. It would require six lakh truck trips to smuggle out of India even just half of the amount (Rs 7,750 crore) that the Economic Survey claims is being siphoned off. This is hilarious. If true, the NSA must look into this, for such frequent unauthorised cross-border movements are a security threat to India. What is worrying is that these numbers will be used to justify policies that could turn out to be detrimental to farmer interests.

The big-ticket budget announcement of the Rs 9 lakh crore farm-credit target is deceptive. If the RBI could tabulate the list of the largest 10,000 farm-loan defaulters, it would be a challenge to find even a single genuine farmer on the list. The finance minister should have been transparent and set the record straight. Those able to access formal credit were hoping for a farm-loan waiver and were disappointed. But I worry about the majority who are oblivious to budget proposals.


Since Independence, budget speeches have consistently prioritised farmer pros-perity and there is a cross-party consensus on the matter. Even though it is not a contentious issue, farmer prosperity has remained elusive because transforming the farm sector will require more than niyat; it requires a niti whose fineprint is supported by a farmer consensus.


First published on: 03-03-2016 at 12:00:18 am
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