Union Budget 2022: What can India's agriculture sector expect?

All eyes are set on the launch of the Union Budget for the impending 2022-23 fiscal tomorrow, February 1. Among all, the agricultural sector, the backbone of the rural Indian economy, is looking forward to significant policies and reforms being declared this time. 

Agriculture has played a pivotal role in holding up the COVID battered economy and is one of the most critical sectors, therefore it is anticipated that the budget shall largely focus on the needs of the Agri sector. Finance Minister Nirmala Sitharaman is likely to bring about fresh reforms to stimulate the agricultural economy to enhance the farmer’s access to credit and widen the crop insurance facility to boost the farmer’s income. It is important to note that the agricultural sector was the least affected due to the pandemic, and it had clocked 3.9% growth in the current fiscal 2021-22, as per this year's economic survey.

With the withdrawal of the three farm laws, some other reforms aimed at the welfare of the farmers can be added to the budget. Monetary allocation can be increased this year to push the use of technology in farming methods. Experts suggest that the Union government shall also focus on setting up institutions to educate about critical agriculture-related services and cutting-edge technology. In addition, the government's priority would remain to double farmers' income by 2022-23, as promised. Allocations are also expected to be made to refine agro infrastructure, exports, retail segment, storage facilities.

Scaling up export and enhancing farmers’ income

The government is committed to strengthening the agricultural industry, despite the withdrawal of farm laws 2020. Measures related to increasing farmers’ income like assistance in selling their crops nationally & internationally and to help them establish different markets for them will be looked upon. Assistance in other important areas like transportation, marketing, and branding incentives for exports should also be prioritised.

Strengthening food retail sector

India’s food and grocery market is the world’s sixth-largest market chain. Food and grocery retail accounts for more than 65 per cent of the total retail market in India. The processing industry should be linked to retail to strengthen the farm-to-fork chain in order to scale up farmers' income. Good economic policies and attractive tax benefits shall be provided to strengthen the food retail sector.

An increase in allocated subsidies expected

 Keeping the pandemic in consideration, increasing the budget for MGNREGA, fertiliser subsidies, and the extension of free grains for another six months might be on the cards. The budget set up for the rural infrastructure development fund was enhanced to Rs.40,000 crores in 2021 and it is expected to be further increased this year.

The Union budget of the previous fiscal was an ambitious one, pushing for a greater effort toward growth and investment in the agricultural sector. Despite the government's efforts to keep food inflation under control, some accommodative monetary policies are expected. Policies in the sectors including exports, credit services, infrastructure, logistics, and retail will benefit farmers' income growth in the long run. The aim shall be on increasing the farmers' income as the Profit margin improvements will trickle down to other value chain participants in the economy. In totality, the expected budget measures shall help the farmers to scale up the prices of the agricultural goods significantly higher than last year.

With Inputs from Agencies
Image: PTI/ Shutterstock