What to expect for Agriculture Budget 2023?

The agriculture sector, which accounts for 18% of the GDP, has received more attention than any other union business in many ways. Since the COVID-19 pandemic hit the country two years ago, the agriculture sector has been the most resilient and has absorbed economic shocks. , , Despite the rising cost of production, supply, and labor disruptions created by the pandemic, there was record acreage put under cultivation of food grains in the kharif season of 2020. The public stock of buffer and food grains remained above the desired levels. Earlier this year, with the Russian invasion of Ukraine, the Indian government was eyeing the opportunity of gaining export markets for its wheat in the midst of global supply chain disruptions. However, a heatwave spanning across northern India, including Punjab, Haryana, and Uttar Pradesh, which contribute to the majority of the country’s surplus wheat production, left farmers with grains and huge production losses. , , Government estimates suggest that the production loss may have been up to 3% less than the previous year. While in some wheat-producing areas, farmers reported a loss as high as 30%. Nonetheless, despite the loss, wheat contributed 5% of total agri-exports, up from 2%-3% previously. , , As per the latest data released by MoSPI, the agriculture sector (including forestry and fishing) is expected to grow at 3.5% in the current fiscal year, slightly higher than the 3.0% growth rate recorded in the previous year. This growth is expected despite the erratic distribution of the monsoon and the output loss reported in several parts of the country in the post-monsoon period due to excess rainfall. Several initiatives have been undertaken by policymakers in recent years to achieve the required efficiency in the agri-, culture-, produce-, trade-, and marketing systems. Amendments to the APMC Act, the introduction of e-NAM (National Agricultural Markets), allowing private players to establish APMCs, and a focus on the development of FPOs (Farmer Producer Organizations) as aggregators and profitable farmer enterprises are among the key initiatives. Clearly, several reforms taken to make the agriculture sector more resilient are bearing fruit. However, to maintain the resilience of the agriculture sector, it is also crucial to scale up investment. Budget 2023 should prioritize three key areas of agriculture and culture: Infrastructure Investment: Infrastructure investments are required to boost market linkages. Bridging the gap on primary processing, storage, quality assaying, and logistics infrastructure requirements are the key requirements. The Agriculture Marketing Infrastructure (AMI) introduced in 2018 and the recent Ati Manirbhar Bharat Scheme in 2020 to develop farm gate infrastructure are expected to mobilize farm gate investment in the next 3–4 years. , , These initiatives are steps taken in the right direction to make agricultural markets vibrant and efficient. , , Technology adoption: Infrastructure alone cannot promote agricultural production or trade efficiency. Because of variations in produce quality, seasonal production, the spatial and temporal spread of consumption, and the lack of reliable information about production and prices across various markets, agricultural trade is inherently complex. , , Globally, technology has taken over a large portion of the agricultural sector. Post-Covid, the need for technological upgrades across the agricultural value chain has become even more imperative. The two key prerequisites for technology adoption are: (a) the ecosystem, which is required to integrate the agriculture value chain into one system as a whole, i.e., providing the appropriate environment for the aggre-, gators to function effectively; and (b) a shift in mindset, or a willingness to abandon traditional farming methods in favor of newer technology that can yield higher profits. This can be done by building strong human capital that connects agriculture research with the market. Further, creating awareness through extension centers and reducing dependency on input dealers can play a significant role in technology adoption. , Farmer’s income: It needs to be recognized that behind the present inflationary trend in food prices experienced in India, which has been an outcome of global prices, supply constraints, and weather shocks, there also lies a continuing condition of lack of adequate incomes and stunted consumption. As a result, any meaningful approach to addressing the food crisis must also seek an adequate income for its farmers while accounting for the increasing losses they incur as a result of climatic variability. The coalition of farmers’ organizations, Samyukt Kisan, and Morcha (United Farmers’) movement, which spearheaded the farmers’ movement against the Farm Laws, continues to demand expansion of procurement and a legal right to remunerative prices and MSP. The agriculture sector has been the most promising sector in the country’s post-Covid-19 economic revival, and the government’s measures have reaffirmed its commitment to farmer welfare. Agriculture allocations in the 2023 budget are expected to focus on improving crop production as well as the efficiency and enhancement of the supply chain, which can lead to more sustainably growing farm income.

Dr. Minakshi Chakraborty is a senior economist at Mahindra & Mahindra.

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