R Krishna Das
With the on-going farmers agitation and impact on businesses due to COVID-19 induced lockdown, the focus was what Budget 2021-22 was doling out for the rural India and its economy.
Union Finance Minister Nirmala Sitharaman did not disappoint; made a major announcement in the Union Budget 2020-21 related to the agriculture sector on Monday, announcing that the Agriculture Infrastructure Fund would also be available for augmenting the infrastructure facilities of the Agricultural Produce Market Committee (APMC) mandis. The finance minister announced that 1,000 APMC mandis will be further integrated with e-NAM.
It was a big leap forward to ascertain that government was in no way going to close the Mandis or stop procurement at the minimum support price (MSP)—the two core issues of farmers’ stir.
Sitharaman has announced to hike the target of agricultural loans (farm credit) to Rs 16.5 lakh crore in the Union budget. Apart from this, the budget for Sukshma Sinchai Yojana (micro-irrigation project) has also been doubled.
Addressing the fears over abolishing the MSP regime, Sitharaman said the MSP regime had undergone a sea change to assure price that was at least 1.5 times the cost of production across all commodities.
She announced that the procurement has continued to increase at a steady pace and this has resulted in a substantial increase in the payment of farmers. Sitharaman launched a scathing attack on the previous UPA government by comparing numbers of wheat procurement under the current administration with that of 2013/14.
Similarly, she laid out the facts regarding increase in paddy procurement under Modi’s regime. Meanwhile, the agricultural credit target has been increased to Rs 16.5 lakh crores this year. The allotment to rural development infrastructure fund has been increased from Rs 30,000 crore to Rs 40,000 crore for animal husbandry, dairy and fisheries.
The Rs 5,000 crore worth micro irrigation fund created under NABARD has been doubled by an addition of Rs 5,000 crore.
The big thrust in this year’s budget is for infrastructure development. The National Infrastructure Pipeline (NIP) will expedite a total of 7,400 projects this year and a Development Financial Institute (DFI) will be set up with Rs 20,000 crore capitalisation and lending capabilities of 5 trillion over the next three years.
The fiscal deficit is estimated at 6.8 per cent of gross domestic product (GDP) in FY22, which is higher-than-expected but will facilitate boosting GDP growth in the financial year 2021-22. The downside, however, would be extensive government borrowing required this year and next year that could force the reserve Bank of India (RBI) to tighten monetary policy sooner.
Although the real economy would in the near-term benefit from the expansionary nature of the budget, one needed to see concrete progress in asset monetisation and privatisation. And if the government could pull that off in the post-Covid-19 economy, then the 2021 budget could go down in history as a turning point in the socialist orientation of the Indian state.
