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Prospects for agriculture bright with higher govt spending, farm exports

Nine Years of TransformationProspects for agriculture bright with higher govt spending, farm exports

Indian agriculture may have been weathering a series of storms over the past one year, including a heatwave in 2022 which cut the country’s wheat production and, more recently, torrential unseasonal rains and hailstorms across India’s fertile northern plains in March this year, but the monthly economic review (MER) of the Finance Ministry for April 2023 puts out a demonstrated success story of agricultural growth riding on Government strategy to augment crop and livestock productivity, promote crop diversification, enhance farmers’ income as well as increase public expenditure.

The narrative will play out in an expected bumper harvest of foodgrains in FY23—as per the 2nd Advance Estimates for the agriculture year 2022-23—amidst a brightened scenario for the kharif season in FY24 led by forecast of a normal monsoon, surplus water reservoir levels, adequate availability of seeds and fertilisers, higher minimum support prices (MSP) for crops, robust tractor sales as well as increased budgetary spending by the Government, as the MER observes. Foodgrain production is estimated at 32.4 crore tonnes, 2.5% higher than the previous year’s estimate and achieving record production levels for the seventh consecutive year. As for the unseasonal rains, the Finance Ministry review does not see it as a challenge since “smooth public procurement of wheat augers well for food security”. Moreover, higher wheat arrivals at the Mandi in April 2023, compared to the previous two years, signal no major impact of the recent unfavourable weather conditions on the produce. Going forward, like the manufacturing and services sector, prospects for the agriculture sector have brightened, suggests the report.

The confidence, of course, builds on years of committed strengthening of Indian agriculture and allied sector growth which has been buoyant through the years. The sector has recorded an average annual growth rate of 4.6% over the last six years, employs 45.6% of the workforce and contributed to 18.6% of the country’s gross value added in 2021-22. The agriculture sector grew by 3 per cent in 2021-22 compared to 3.3% in 2020-21. A slew of enablers have sowed the seeds of the farm successes—from PM-KSIAN, PM-Fasal Bima yojana to setting up of an agriculture infrastructure fund and formation of e-NAM with 1.74 crore farmers and 2.39 lakh traders.

As per the Economic Survey 2023, in recent years, India has also rapidly emerged as the net exporter of agricultural products. During 2021-22, agricultural exports reached an all-time high of $50.2 billion but propelled by higher global commodity prices and resilience of the farm sector, exports of agricultural produce through the Agricultural and Processed Food Products Export Development Authority have touched a record USD 20 billion in the first three quarters of financial year 2022-23 which is a 12.6% rise on-year.

The policy approach towards agriculture is spelt out by Narendra Singh Tomar, Minister of Agriculture and Farmer’s Welfare. “Growth of the agriculture sector and profitability of farmers have always been a key priority for the Government. Focus today is on pushing a digital agriculture mission to deliver new, robust technologies tand uplift farmers from the old, traditional, marginally less-profit-driven agricultural practices,” Tomar said at an industry event in March 2023.

The vision resonates in the Union Budget 2023-24 which has ushered in a paradigm shift in the way the agriculture sector will be governed, funded and stakeholders empowered. The Budget allocation of Rs 20 lakh crore for the upliftment of the agriculture sector encompasses farmer-centric solutions, building digital infrastructure for the agriculture sector so that the demand and supply in the agriculture sector are balanced and less impacted and setting up 100 labs using 5G services in engineering institutions which will focus on developing applications to provide ease and accuracy in farming to the farmers. The plan to set up 10,000 bio-input resource centres will enable 1 crore farmers over the period of the next 3 years in adopting natural farming.

The farm sector is also gaining from private investment which has increased by 9.3 per cent in financial year 2021 as compared to 7 per cent in FY20 while institutional credit in the farm sector has grown by as much as Rs 18.6 lakh crore in FY22 from Rs 15.8 lakh crore in FY21. In an effort to incentivise this flow, the Budget provides for setting up agricultural accelerator funds which will help new and existing agricultural start-ups to increase their presence in the global market as well and encourage young entrepreneurs in rural areas to utilize these opportunities and build their careers in agri-startups.

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