Agriculture Sector, Budget for Infrastructure (March 2021) (Download PDF)

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Agriculture Sector

  • A paradigm shift in agriculture from a rural livelihood sector to a modern business enterprise.
  • Amid many speculations on future of Agriculture Produce Market Committee (APMC) mandis, Govt. signaled its intention by announcing the agriculture Infrastructure fund would also be made available to APMCs for augmenting their infrastructure facilities.
  • Micro Irrigation Fund doubling the corpus to ₹ 10,000 crore.

Payments to Farmers

Payments to Farmers
Procurement2013 - 142019 - 202020 - 21
Wheat₹ 33,874₹ 62,802₹ 75,060
Paddy₹ 63,928₹ 1,41, 930₹ 172,752
Pulses₹ 236₹ 8,285₹ 10,530

Economic Survey 2020 - 21

COVID Policy Response

  • Short-Term pain, Long-Term gain.
  • Focus on saving lives and livelihoods.
  • Lessons for Spanish Flu tailored to India՚s unique vulnerabilities.
  • V-shaped recovery across all key economic indicators after lockdown.
  • Upturn in economy while avoiding a second wave of infections makes India a sui generis case in strategic policy making.

Food Grains

Economic Survey 2020 - 21
YearFood grains Production (million tonnes)
2017 - 18285.0
2018 - 19285.2
2019 - 20 (4th Advance Estimates)296.7
2020 - 21 (1st Advance Estimates)144.5

Agriculture & Allied Sectors

Growth in agriculture sector clocked a growth of 3.4 % at constant prices during 2020 - 21 despite the COVID-19 pandemic.

Agriculture & Allied Sectors
YearAgriculture & Allied Sectors
2017 - 185.9
2018 - 19 (1st Revised Estimates)2.4
2019 - 20 (Provisional Estimates)4.0
2020 - 21 (Full Advance Estimates)3.4

Growth rate of GVA at basic prices in percent

Committed to the Welfare of Farmers

  • The SWAMITVA scheme that provides a record of rights to property owners in villages will now cover all states/UTs. Villagers use their property as financial assets for taking institutional loans and other financial benefits. So far there are 1.80 lakh property owner-ship cards.
  • 1000 more mandis to be integrated with e-NAM.

Credits, Corpus and Caring

  • Timely and adequate credit to resource constrained and small and marginal farmers is fundamental for the success of farming activities and welfare of farmers.
  • Agriculture credit flow for 2020 - 21 was fixed at ₹ 15 lakh crore and till November 30,2020, a sum of ₹ 79.73 lakh crore was disbursed.
  • Govt. has enhanced the agricultural credit target to ₹ 16.5 lakh crore in the proposed budget.
  • Focus on ensuring Credit flows to animal husbandry, dairy, and fisheries.
  • A provision to include livestock sector in Kisan Credit Card was passed in the previous budget targeting 1.5 crore dairy farmers.
  • As of mid-Jan 2021, over 44,000 KCCs have been issued to fishers and fish farmers.
  • Micro-irrigation is being promoted in farms with subsidies for which a corpus of ₹ 5,000 crore was created under NABARD.

Financing Fisheries and Allied Sectors

  • Animal Husbandry and Dairying sector has been allocated a sum of ₹ 3,289 crore.
  • India is the second largest fish producing country in the world with 7.58 % share in global production.
  • During 2019 - 20, the fish production was 14.16 million metric tons.
  • Sustains income of over 28 million people.
  • Majority of people belong to marginalized and vulnerable communities.
  • Substantial investments in the development of fishing harbours and fish landing centres.
  • Five major fishing harbours namely at Kochi, Chennai, Vishakhapatnam, Paradip and Petuaghat will be developed initially.
  • Inland fishing harbours and fish landing centres will also be developed along the banks of major rivers and waterways.

Seaweeds Farming

  • A sunrise sector with potential to transform lives of coastal communities.
  • India is bestowed with a coastline of more than 7500 km and over 800 species of seaweeds.
  • Economical potential is recognized as a renewable source of food, energy, chemicals and as source of medicines.
  • Govt. intends to support seaweed cultivation by proposing to establish a Multipurpose Seaweed Park in Tamil Nadu.
  • It will also provide a large-scale employment and additional incomes.

Conclusion

  • Budget provisions for agriculture and allied sectors are set to energize the sector with substantial investments in building agricultural infrastructure.
  • The money through the hands of farmers through the MSP regime will keep the momentum seen during the Covid times going in agriculture.

MsP

  • Minimum Support Price.
  • MSP regime was introduced in India in 1966 - 67 for Public Procurement Purpose.
  • MSP for wheat was fixed for the first time at ₹ 54 per quintal.
  • The guaranteed price of notified crops acts as a safety net to farmers.
  • Govt. of India notifies MSP for 23 ‘Kharif’ and ‘Rabi’ crops at the start of each cropping season that includes selected commercial crops as well.
  • The group comprises:
    • Seven oilseeds namely groundnut, rapeseed, mustard, soyabean, sesamum, sunflower, safflower and nigar seed.
    • Seven Cereals namely paddy, wheat, maize, sorghum, pearl millet, barley and ragi.
    • Four commercial crops namely copra, sugarcanes, cotton, and raw jute.
  • MSP is fixed by the govt. of India based on the recommendations of the Commission for Agricultural Costs and Prices (CACP) , a statutory body.
  • CACP submits its recommendations to the Government in the form of price policy reports twice a year separately for Kharif and Rabi seasons.
  • Post harvesting, the govt. procures crops from farmers at the MSP across APMC mandis procurement centres.

The National Commission on Farmers

  • Headed by Prof. M. S. Swaminathan had recommended in 2006 that MSPs must be at least 50 % more than the cost of production.
  • Commission suggested three criteria to calculate the cost of production:
    • A2- It includes cost of various inputs, such as seeds, fertilizers, labour, fuel, irrigation etc.
    • A2 + FL- It includes cost of unpaid family labour in A2 parameters.
    • C2-It includes the implied rent on land and interest on capital assets over and above A2 + FL.
  • At present, the CACP reckons only A2 + FL cost for calculation of MSP.
  • C2 costs are used as benchmark reference costs to see if the recommended MSPs cover these costs in some of the major producing states.

Budget for Infrastructure

  • A welcome focus on infrastructure being part of one of the six pillars- Physical and Financial Capital, and Infrastructure.
  • The infrastructure allocations have gone up substantially.
  • The capital allocations have gone up by over a third of the previous year՚s allocation to ₹ 5.5 lakh crore keeping up with the plans of the National Infrastructure Pipeline.
  • Bill to set up a Development Financial Institution (DFI) for infrastructure financing with a provision of ₹ 20,000 crore to capitalize DFI with aim to have a lending portfolio of at least ₹ 5 lakh crore in three years.
  • Amendments to enable debt financing by FPIs.
  • Launch of a “National Monetisation Pipeline.” Transmission assets worth ₹ 7,000 crore via PGCIL InvIT. Oil and Gas Pipelines of GAIL, IOCL AND HPCL.
  • Railways to monetize Dedicated Freight Corridor assets for operations and maintenance.
  • The next lot of airports to be monetized for operations and management concession.
  • No explicit mention of the ports and shipping sector.
  • An ongoing programme called Sagarmala (to enhance the performance of the country՚s logistics sector) .
  • A recent visioning exercise called the Maritime India Vision for 2030.
  • Provides a roadmap for significant growth.
  • A long-term policy of the government.
  • Significant implications for the infrastructure sector.
  • Stated as the Public Sector Enterprises Policy.
  • Classification of various sectors as Strategic and Non-Strategic.
  • Strategic sectors would have ‘bare minimum’ presence of public sector enterprises.
  • All central public sector enterprises in the non-strategic sectors will be privatized.

Roads and Highways Infrastructure

Highest ever outlay of ₹ 1,18, 101 for Ministry of Road Transport and Highways.

Economic Corridors Being Planned

  • 3,500 km of NH in Tamil Nadu at an investment of ₹ 1.03 lakh crore. Include Madurai-Kollam corridor, Chittoor-Thatchur corridor.
  • 11,00 km of NH in Kerala at an investment of ₹ 65,000 crore including 600 km section of Mumbai-Kanyakumari corridor in Kerala.
  • 675 km of NH in West Bengal at a cost of ₹ 25000 crore including upgradation of existing Kolkata-Siliguri road.
  • NH of around ₹ 19,000 crore are currently in progress in Assam. Further works of more than ₹ 34,000 crore covering more than 1300 km of National Highways will be undertaken in next three years.
  • Advanced Traffic Management system with speed radars, variable message signboards, GPS-enabled recovery vans will be installed in all new four and six lane highways.

Power Infrastructure

  • A comprehensive National Hydrogen Energy Mission 2021 - 22 will be launched for generating hydrogen from green power sources.
  • A framework to provide various alternatives to consumers to choose Distribution Company.
  • Revamped reforms-based result-linked power distribution sector scheme will be launched with an outlay of ₹ 3,05984 crore over 5 years to provide assistance to DISCOMS for infrastructure creation.
  • In past 6 years 139 Giga Watts of installed capacity & 1.41 lakh circuit km of transmission lines have been added, connected an additional 2.8 crore households.

Railway Infrastructure

  • National Rail Plan for India-2030 to create a ‘future ready’ Railway system by 2030.
  • Western Dedicated Freight Corridor (DFC) and Eastern DFC to be commissioned by June 2022, will bring down the logistics costs thereby enabling Make in India strategy.
  • 100 % electrification of Broad-Gauge routes will be completed by Dec 2023.
  • Aesthetically designed Vista Dome LHB coach on tourist routes for better travel.
  • Indigenously developed automatic train protection system to eliminate train collision due to human error.

Urban Infrastructure

  • A new scheme of ₹ 1,000 crore for augmentation of public bus transport services.
    • Scheme will boost the automobile sector.
    • Provide fillip to economic growth.
    • Create employment opportunities for youth.
    • Enhance ease of mobility for urban residents.
  • Technologies ‘MetroLite’ and ‘MetroNeo’ :
    • Provide metro rail systems at much lesser cost with same experience.
    • Convenience and safety in Tier-2 cities and peripheral areas of Tier-1 cities.
  • Central counterpart funding will be provided to:
    • Kochi Metro Railway Phase-II of 11.5 km at a cost of ₹ 1957 crore.
    • Chennai Metro Railway Phase-II of 118.9 km at a cost of ₹ 63,246 crore.
    • Bengaluru Metro Railway Project Phase 2A and 2B of 58.19 km at a cost of ₹ 14,788 crore.
    • Nagpur Metro Rail Project Phase-II and Nashik Metro at a cost of ₹ 5,976 crore and ₹ 2,092 crore respectively.

- Published/Last Modified on: June 13, 2021

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