Union Budget 2010-11 - Impact on Agriculture

The government has proposed steps towards boosting food and food processing sectors in Union Budget 2010-11. For agriculture growth, government has formulated a four-pronged strategy covering – agriculture production, reduction in wastage of produce, credit support to farmers and impetus to the food processing sector. Effective implementation, which has been the challenge also in the past, is the key to converting the plans into results.

Government is making efforts to extend the green revolution to the states of Bihar, Chattisgarh, Jharkhand, Eastern UP, West Bengal and Orissa. High Yielding Varieties (HYV), the cornerstone of green revolution, outperform the traditional varieties with adequate irrigation, pesticides and fertilizers. However, in the absence of these inputs, traditional varieties may outperform HYVs. Use of fertilizers and pesticides requires large capital thereby generating requirement for farm credit support. Therefore, the green revolution earlier has been a success only in the areas with adequate water supplies, large inputs of fertilizers and farm credit – northern and north-western India. The government has taken the right step by allocating Rs 400 crore to support extension of the green revolution to the eastern region, offering credit support to the farmers and reformulating the fertilizer subsidy policy. The other factors being taken care of, the success of green revolution will therefore depend largely on the irrigation resources available in largely rain fed eastern region of India. This is especially true for crops like wheat which is a Rabi season crop and is therefore largely dependent on the irrigation facilities for water supplies. The amount of Rs 400 Crore, however, should be increased in the light of the fact that Asian Development Bank’s project on Chhattisgarh Irrigation Development, which covers upgradation of irrigation schemes covering about 2,00,000 hectares, itself has a budget of Rs 290 Crore.

Pulses requirement too is a burning issue in front of the Indian government with a recent sharp increase in the prices. Rs. 300 crore provided by the government to organise 60,000 “pulses and oil seed villages” in rain-fed areas through water harvesting, watershed management and soil health, is the first positive step forward in a country where the primary source of protein is pulses. There is a huge gap between the static domestic production levels (15.1 million tones in 2007-08) and the consumption levels and India still imports pulses from countries like Canada (import of 2.8 million tones in 2007-08). The yield level in India is still low at 638 kg/hectare compared to that of Canada (1900 kg/hectare). The green revolution is yet to touch pulses as it is grown primarily in rain-fed areas and the high yield varieties are yet to be introduced in India.

The budget allocation to achieve water supplies through water conversation measures is therefore the right direction. After attaining adequacy in water supplies through these measures, the next step should be introduction of High Yield Varieties (HYV) which can further boost the yield by 20-25%. However, the funds allocated come to Rs 50,000 per village which is on the lower side when compared to the capital requirements of water harvesting and watershed management systems. Therefore the funds need to be utilized very effectively for these crops where only 15% of the cultivated area is irrigated.

Another issue addressed in the budget is sustaining the gains already made in the green revolution. Depleting soil health and decreasing water table are the two main ill-effects associated with green revolution. Conservation farming, through its water conservation and attention to soil health, shall hence help in addressing these issues.

The setting up of five additional Mega Food Parks is a strong commitment from the government towards boosting of the food processing sector from India. The progress in making the existing ten food parks operational has been slow. Therefore, with the additional food parks coming up, the efforts need to be complemented with the participation from the private sector. India being strategically located on the globe also has a big opportunity to tap the international export market in food processing apart from the potential in the domestic market.

The current budget has multiple positive steps which would foster agriculture growth. But the private sectors and the implementation agencies will have to participate equally for achieving concrete results. The growth-conducive policies need to be reciprocated with participation from the private sector. The investments and funds need to address the core issues keeping the time-frame as the guideline.