Union Budget 2021 | Is Nirmala sending a message to agitating farmers?


Finance Minister Nirmala Sitharaman’s emphasis on the government’s track record in paying Minimum Support Prices (MSP) to farmers and the decision to allow state-run Agricultural Produce Marketing Committees (APMCs) to access the ₹1 lakh crore Agriculture Infrastructure Fund seemed to be sending a signal to the tens of thousands of farmers who have been protesting on Delhi’s borders for the last two months.

They are demanding a repeal of the three farm reform laws that they claim will lead to the collapse of APMCs and weaken the system of government procurement at MSP rates, leaving small farmers at the mercy of corporate players.

Farmer advocates are not impressed by the on-ground impact of the budget announcements.

Agriculture Infrastructure Fund

The ₹1 lakh crore Agriculture Infrastructure Fund was created last year, as part of a COVID-19 stimulus package, to provide subsidised financing to projects by primary agriculture cooperative societies, farmer producer organisations, agriculture entrepreneurs and start-ups to develop cold chain storage and other post-harvest management infrastructure. Now Ms. Sitharaman has announced that APMCs will also be able to access these funds.

Budget 2021 updates

“It can be seen as a sign of support to the APMC system. If they are making APMCs eligible to borrow from this fund, and thus strengthen their infrastructure, the government seems to be sending a message that they are not going to be killed,” said Siraj Hussain, former Agriculture Secretary and currently a fellow at the Indian Council for Research on International Economic Relations. “On the whole, this seems like an interim budget for agriculture. There are no major announcements. The government will wait for a settlement with [protesting] farmers before announcing anything concrete,” he added.

Unlike in recent years, when headline agriculture announcements were first mentioned in budget speeches, Ms. Sitharaman only touched on the sector after the first hour of her speech on Monday.

 

She also announced an Agriculture Infrastructure Development Cess to be levied on petrol, diesel, gold and other imports, which is meant to improve facilities for production, conservation and processing of farm produce and thus “ensure enhanced remuneration for our farmers”. Operation Green Scheme to boost value addition of tomatoes, onions and potatoes is being expanded to cover 22 perishable crops. A Rural Infrastructure Fund allocation is being hiked from ₹30,000 crore to ₹40,000 crore. The Micro Irrigation Fund’s corpus is being doubled to ₹10,000 crore.

Farm advocates said announcements regarding such infrastructure funds were not reflected in changes on the ground.

Kiran Vissa, a leader of the Rythu Swarajya Vedika, said, “If you introduce laws to weaken the APMC system, then what is the point of giving APMC mandis access to an Agriculture Infrastructure Fund.”

Jai Kisan Andolan convenor Avik Saha said, “According to the Economic Survey data, nothing has yet been spent out of the Agriculture Infrastructure Fund of ₹1 lakh crore or the Animal Husbandry Infrastructure Fund of ₹15,000 crore, although they were supposed to have been part of the COVID-19 stimulus package.” Out of the ₹1 lakh crore, only loans worth ₹2,991 crore received “in principle sanction” as of mid-January 2021. “While big figures are announced in the name of the infrastructure funds, these are actually not budget allocations, but simply notional funds which are meant to finance projects through loans,” he added.

Former Food and Agriculture Secretary T. Nanda Kumar agreed that the challenge was implementation. “Infrastructure fund increases are welcome, but the real catch here is delivery. It’s a credit plus subsidy game. The question is whether there will be enough takers on the credit side, and that depends on whether sufficient revenue models exist to ensure that borrowers can earn money from their godowns and warehouses,” he said. He welcomed the cess for agri infrastructure, noting that just the act of reserving money for this purpose in a separate account could enthuse investors.

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