By Nageshwar Patnaik in Bhubaneswar, August 6, 2024: Article 112, Constitution of India 1950 makes it mandatory for presenting “Annual Financial Statement”, which is also called Budget in the Parliament every fiscal. Every Finance Minister tries to meet many of the expectations encoded in the Directive Principles of State Policy (DPSP) to promote socio-economic welfare. But some fail and some succeed.

In the inaugural budget of the 18th Lok Sabha, Finance Minister Nirmala Sitharaman’s mentioned the word ‘welfare’ only once. The budget has given a boost to capital expenditure with a growth of 28.17% in 2023-24, achieved at the cost of reducing revenue expenditure on social sector and welfare schemes.

India is presently the fastest-growing economy globally, with 6.8% real growth, as reported by the International Monetary Fund (IMF). Its capital expenditure as percentage of its Central Government Expenditure (CGE) has almost doubled from 12% in 2014 when Narendra Modi took over the baton from Dr Manmohan Singh. During Modi’s tenure, the net inflow of Foreign Direct Investment (FDI) has gone up from $ 2 billion in 2000 to $ 71 billion in 2023. Even the percentage of Non Performing |Assets (NPA) in banks has come down to two per cent in 2023 from a high 10.5% in 2018.

However, these achievements mask massive underperformance in key constitutional expectations for promoting socio-economic justice. India presently allocates approximately 1.4% of GDP for social sector (excluding health) as against an average of 2.5% for low- and middle-income countries as per the World Social Protection Report 2021.

The FM had stated began here speech saying that the Budget focuses on four key pillars — annadata (farmers), mahilayen (women), gareeb (poor) and yuva (youth). But there are no substantial budgetary allocations to social security and welfare programmes for support provided to crucial segments of the population. As farmers are regarded as the backbone of the nation, it is important for the budget to address their pertinent issues. Let us examine how the FM has addressed Annadata issue.

Agriculture contributes only 15% of output and 12% of exports. In fact, the employment figures mask a “huge underemployment” problem. Farming is increasingly unviable, making it unattractive as an occupation, but people remain in agriculture because there are few options outside of it. The agriculture sector contributes only 19% to the Gross Domestic Production (GDP), although its share of employment is 46%. Agricultural sector growth declined to 1.4% in 2023-24 from 4.7% in 2022-23. Food grain production declined to 328.8 million tonnes in 2023-24 from 329.7 million tons in 2022-23. The decline in the agricultural sector growth is ignored in both the Economic Survey and the Budget Speech.

The Budget allocates Rs 1.52 lakh crore to agriculture and allied sectors, a slight increase from the allocation of Rs 1.25 lakh crore in the previous budget. However, the share of agriculture in the total budget is a mere 3.1 per cent in a country. Despite FM’s rhetoric about boosting agricultural productivity and resilience as the first of her nine priorities, the budget fell short of delivering concrete steps to transform the agrarian landscape.

In its previous term, the Modi government had enacted three major agriculture reform laws. But the government was forced to repeal following widespread protests by farmer unions. The demand for a legal Minimum Support Price (MSP) has been long overdue and remains a point of contention between farmers and the government. This issue, however, has not been addressed. Legalising MSP for a broader range of crops could potentially diversify crop production, enhance farmers’ livelihoods and benefit the climate.

The plan to “initiate” one crore farmers into natural farming “in the next two years” is a virtual repetition of the budget promises of 2023-24 and 2022-23. In the Budget 2023-24, a ‘National Mission on Natural Farming’ was also announced with a meager budget of Rs 459 crore. The revised expenditure is Rs 100 crore only. However, instead of increasing the allocations of the scheme, it is further reduced to Rs 365.6 crore for 2024-25. Building a digital public infrastructure for agriculture to upload the details of farmers and their lands found mention in last year’s budget too.

The access to market is a critical issue for both conventional and sustainable farmers, and Farmer Producer Organisations (FPOs) can be an essential tool in addressing this challenge through direct marketing and economy of scale. The government has again reiterated its commitment to supporting and promoting FPOs. The 2020 scheme aimed to establish and promote 10,000 FPOs.

The scheme has a total allocation of Rs 6,865 crore — Rs 4,496 crore for 2019-24, and a further Rs 2,369 crore for 2024-28 to support each FPO for five years. However, for the year 2024-25, only Rs 581.6 crore has been allocated. It was Rs 500 crore in 2022-23 and Rs 700 crore in 2021-22. The decreasing and fluctuating yearly allocations suggest a weakening of the financial commitment. The information on the outcomes of the previous scheme is also not provided.

Sitharaman has stated that the government will undertake a “comprehensive review” of the agriculture research set-up “to bring the focus of raising productivity and developing climate resilient varieties”. But the budget for the department of agricultural research and education has been raised only marginally to Rs 9,941 crore, from Rs 9,877 crore in the revised estimates for 2023-24.

A country with a population expected to peak at 1.7 billion and growing incomes cannot import its food requirements beyond a point. If more has to be produced from less land and per unit of water, nutrients and labour, while coping with climate change, it calls for a long-term plan. Sitharaman surely has missed an opportunity to draw a road map to make India an agricultural super power.