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    Union Budget 2017: Doubling farmer’s income dream or reality?

    The union budget has been unveiled and labeled as “pro village and pro-farmer”. Mr.Jaitley in his budget speech has reiterated the focus for this government is to double the farmer’s income by 2022.Allocations to the rural and agriculture sector have been proposed to be increased by 24% in fiscal 2017-18 amounting to 1, 87,223 crore.

    Primary source of income for a farming household is through cultivation of crops. Other important ancillary sources are rearing livestock and wages earned by farm or casual labor. A national study on farmer’s income in India suggests that 47% of the total annual income of a farmer comes from cultivation whereas 32% comes from wages. Income from livestock and nonfarm activities are 13% and 8% respectively.Substantial focus has been given in this budget to increase each component of the income.

    If the 2022 vision has to be achieved then the government needs to aim at an annual growth rate of around 10.4%. In order to achieve the target, it is quintessential to understand possible drivers and complexities involved in the current situation. Considering the general scenario,the significant factors contributing to the revenue generation are the market prices of agriculture produce and increased productivity. Better price realization for farmers can be ensured through competitive markets, value chains and improved linkages between field and fork. A step towards this goal in the current year budget is expanding the coverage of National Agricultural Market (e-NAM) from the current 250 markets to 585 APMCs.The NAM Portal gives a single window service for all APMC related information and services. This includes information about commodity arrivals, prices, trade offers, provision to respond to trade offers etc. This online market will help reduce transaction costs and information asymmetry. This is expected to formalize the trade and ensure transparency of price which in turn will work in favor of farmer. Central government has also requested state governments to delist perishables such as vegetables and fruits from Agriculture Produce Marketing Committees (APMCs) and allow farmers to sell such items directly to consumers, so as to safeguard their profitability while eliminating the middlemen. In addition to this, a model law on contract farming is proposed to be circulated among states which would facilitate backward integration. Other key step which was taken by the government last year was allocation to Pradhan Mantri Fasal Bima Yojana (PMFBY). This ensures income security for farmer and equips them to deal with vagaries of nature.

    Initiatives like setting up mini labs for soil testing, Micro Irrigation Fund, increase allocation to irrigation fund are dedicated to increase productivity of the crops in the country. The budget announced setting up of a dedicated micro-irrigation fund with a corpus of Rs 5, 000 crore under NABARD and addition of Rs 20,000 crore to the corpus of Long Term Irrigation Fund. This in turn would contribute to decrease the dependency of farmers on monsoons and increase access to water which will directly boost agriculture output. The government also plans to upgrade the targeted amount for farm credit disbursement to Rs 1000 thousand crore in 2017-18, from Rs 900 thousand crore. In addition to this, a sum of Rs 1,900 crore has been announced for cooperative banks which would further smoothen the flow of credit to small and marginal farmers. This is expected to provide better access to the credit, which in turn will help in procuring better inputs in time that would result in increased yield.

    Keeping in mind other sources of income for a farmer, the government has given a boost to MNREGA .A budget provision of Rs 48 thousand crore has been announced.This might have a mixed effect on farmer. One hand it will have a positive effect on the wages of farmers engaged in farm labor through MNREGA, whereas it might significantly increase the field labor costs for the cultivator. Dairying has become an important secondary source of income for millions of rural households engaged in agriculture.Around 75 million families in rural India are engaged in activities related to milk production.The budget also has are commendation of setting up of a dairy processing and infrastructure development fund at NABARD with a corpus of Rs 8,000 crore over three years. The funds are planned to be utilized for upgrading of milk processing units and to promote setting up new bulk milk cooling units, improve milk production and productivity and promote clean milk production, modernization of breeding facilities.This is expected to provide an enhancement in the ancillary income of farmer. Higher allocation for rural roads, housing and electrification of villages are announced in the budget providing for development of rural infrastructure, which will facilitate the implementation of the above mentioned activities successfully.

    All things considered the budget is definitely in sync with the last year’s objective of doubling the farmer’s income. On the face of it, the budget seems to be farmer-friendly. These initiatives along with effective implementation of the schemes will certainly lead the way to realize government objectives



    Lasya is an Associate Consultant with Life Sciences Advisory group at Sathguru. She has pursued her MBA in Agribusiness from Symbiosis,Pune. She is a graduate in biotechnology from Osmania university. Previously during she worked with FMCG and in retail sector that gave her exposure in the field of operations and supply chain.

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