Context: 

This editorial is based on the news “Ignoring an agriculture sector in distress” which was published in the Hindu. Recently, the Finance Minister of India presented an interim budget in the Parliament and it has been observed that there is no substantive plan to reverse the decline in agricultural growth through any welfare or investment measures.

Indian Agriculture Sector Under Stressed Income and Profitability

• Declining Trend: The sectoral deflator in agriculture and allied sector declined from 9.4 in 2013-14 to 5.0 in 2019-20 and 3.7 in 2023-24.
• No Improvement: The stagnation or fall of agricultural prices in the market was not ameliorated by any rise in minimum support prices (MSP). 
  • The refusal to adequately raise MSPs affected the government’s ability to intervene effectively in the market to control prices on the farmers’ side and the retail side.
• Incomes and Profitability: There was a strong downward pull on agricultural prices leading to a squeeze on farmers’ incomes. 
  • Real incomes of agricultural households from cultivation fell by about 1.4% between 2012-13 and 2018-19.
    • The fall of incomes from cultivation was due to the stagnation or fall of agricultural prices and due to a sharp rise in the costs of inputs in agriculture, particularly fertilizers.
  • The real wages in rural India have never risen after 2016-17 and have even fallen after 2020-21.
    • All rises in nominal wages were wiped out by inflation.
• Rise of Unemployment: Rural unemployment rose between 2011-12 and 2018-19. For rural men, the rise was from 1.7% to 5.6% and for rural women, the rise was from 1.7% to 3.5%. 
  • Rural unemployment rates fell after 2018-19 but their levels remained higher than in 2011-12 in 2022-23 at 2.8% for men and 1.8% for women. 
  • There was a crowding of the agricultural sector by unemployed workers from the non-agricultural sectors at a time when agricultural prices were not rising and agricultural incomes were falling.
• No Significant Investment: Public investment in agriculture, in general as well as in specific fields like agricultural research and extension, were stubbornly stagnant, and occasionally even fell, over the past decade. 
  • Capital investment in agricultural and allied sectors did not rise. 
  • Most of the long-term bank credit supplied to agriculture was also diverted away as short-term loans to corporates and agri-business firms.

Union Budget 2024 For Agriculture Sector: Arising Concerns

• No Significant Action: The Budget Estimates for 2024-25 has no plan in the Budget to substantively reverse the decline of growth in agriculture.
• Decline in Fertilizer Subsidies: From ₹1.9 lakh crore in 2023-24 to ₹1.6 lakh crore in 2024-25. 
• Decline in Food Subsidies: From ₹2.1 lakh crore in 2023-24 to ₹2 lakh crore in 2024-25. 
• Decline in Allocation for the Pradhan Mantri Gram Sadak Yojana: From ₹17,000 crore in 2023-24 to ₹12,000 crore in 2024-25. 
• Decline in Allocation for MGNREGS: From ₹90,000 crore in 2022-23 to ₹86,000 crore 2024-25. 
• No Improvement in transfers under the PM-Kisan Scheme: It remains the same as during its inception in 2019.
• Negligible Rise in Allocation for Fisheries Sector: It has been increased by only ₹134 crore. 
• Negligible Rise in Allocation for the Department of Animal Husbandry and Dairying: It has increased only by ₹193 crore between 2023-24 and 2024-25.

Conclusion

The Finance Ministry’s report and Budget speech highlight increases in agricultural production however fail to acknowledge the long-term decline in growth rates. The revival of agricultural growth from its long-term slump requires imaginative policy shifts and decisive fiscal measures.