As the economic recovery continued, India was able to successfully step in to meet the surge in global demand after the second half of 2020. This was observed despite the unprecedented global pandemic. India’s agricultural sector was among the few segments that remained robust amid the pandemic miseries.
According to experts, our agricultural growth rate is expected to be 3.6% in the current fiscal year ending March 2022. On the other hand, India’s agricultural sector is expected to grow by 3.9% in 2022-2023 , ie better than the current exercise. Total exports of products from the Agricultural and Processed Food Export Development Authority (APEDA) increased from $6,485 million in April-August 2020 to $7,902 million in April-August 2021. estimates recently published by the General Directorate of Commercial Intelligence and Statistics (DGCI&S). A notable jump was noted in exports of agricultural and processed food products during the first five months of the current fiscal year. This is a continuation of the export growth seen in the 2020-21 financial year.
Agriculture has played a vital role in these pandemic times and is one of the most critical sectors of the economy, we anticipate that this budget will surely focus on agriculture, as it has in previous years . The government is likely to come up with policy measures to boost the landscape by improving access to credit and expanding the scope of crop insurance. The government will also focus on building and enabling institutions to further mobilize essential agricultural services and production inputs of new era technologies. In addition, the government’s priority will continue to double farmers’ incomes by 2022-23 and become a $5 trillion economy by 2024-25. For the new taxation – Subsidies/allowances or incentives are expected in agricultural infrastructure, exports, retail segment, storage facilities in addition to credit related services and allowances to improve their security conditions social. Policy announcements should now be made, given the need for demand-driven activities.
Focus on boosting exports and farmers’ incomes
The government is likely to encourage value addition in farming, to improve farmers’ incomes, as it aims to grow the sector even after the withdrawal of the Farm Bills at the end of last year. Value-added services are essential to encourage backward linkages with farms. It will also involve expanding support for farmers selling overseas to help them establish markets for their produce. Emphasis should also be placed on providing additional transport, marketing and branding incentives for exports covering various agricultural products.
Assistance in research and manufacturing services
India’s agrochemical industry is witnessing significant growth and has the potential to become a global sourcing hub, if there is an improvement in the facilities provided to the sector. Further help is needed for research and manufacturing in India. A better product pricing refinement system is another concern that needs to be addressed. The government is expected to focus on reducing input costs to the greatest extent possible in order to improve the standard of living of smallholder farmers as well as marginal farmers in the country.
Allocation for credit-related services
Agricultural credit plays a crucial role in the development of the agricultural sector and facilitates the adoption of new technologies. In previous budgets, credit related policies along with necessary government and RBI interventions have yielded good results in the area of agricultural credit. Credit is a crucial element in increasing agricultural production. Institutional loans will also help farmers break free from non-institutional sources where they are forced to borrow at exorbitant interest rates, impacting their profit margins. The government has increased the lending target for the agricultural sector each year, and it is possible that a higher allocation will be expected for the 2022-23 budget.
Funds for logistics/storage facilities
Storage is an important marketing function and involves the holding and safekeeping of goods from production until they are needed for consumption. Similarly, logistics management in the agricultural industry ensures that agricultural products flow continuously from manufacturers/suppliers to growers and ultimately to every customer’s doorstep. The government seems interested in providing incentives in addition to the ₹10,900 crore Production Linked Incentives (PLI) scheme for food processing to promote the establishment of relevant storage and logistics infrastructure.
Focus on spending to strengthen the retail segment
India is the world’s sixth largest food and grocery market according to industry reports. In India, food and grocery retail accounts for more than 65% of the total retail market. There is an urgent need for the processing industry to be linked to the retail trade, as this would strengthen farm-to-fork channels and provide more liquidity to the farming community. A farm-to-fork model sets up a logistics chain possesses by the retail company or outsources it to a logistics company. The chain includes small wholesale markets, or mandis, where the farmer can come and get a good price for his produce. The food sector in India has successfully established its presence over the past 5-10 years. According to agricultural economists, the country’s food ecosystem offers huge investment opportunities with stimulating growth in the food retail sector, favorable economic policies and attractive tax incentives.
Allocation in major plans and grants
Compared to the previous budget, there is less chance of a significant increase in rural allocations. But there are opportunities for increased allocation to programs such as MGNREGS, fertilizer subsidies and the extension of free food grains for about six more months. As the pandemic is not yet over, these programs will likely remain under review in the next budget. In 2021, an allocation was allocated to the rural infrastructure development fund and the amount was increased to Rs 40,000 crore.
Impact on agricultural products
The 2021-2022 budget was indeed a bold budget that aimed for a greater push towards growth and investment in the agricultural sector. There is a clear message that the focus must continue to be on the well-being of the agricultural sector and the agricultural community in future budgets. Although the government is keen to control food inflation, the expansionary policies expected this year in the agricultural exports/credit services/infrastructure/logistics and retail segments would benefit income growth. longer-term farmers.
Benefits in terms of profit margins should also trickle down to other actors in the value chain. Overall, the expected fiscal initiatives will have the potential to keep average agricultural commodity prices well above the previous year’s levels.