Budget 2023 for Agriculture Sector: Why agriculture is important for the budget, what the government is doing for the farmers
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Union Budget 2023: Union Finance Minister Nirmala Sitharaman will present Budget 2023 on February 1. The expectations of farmers and workers and businessmen associated with the agriculture sector are high from this year’s budget. Let us tell you that the agriculture sector is very important for the budget, government and economy. The reason for this is that farming not only fills the stomach of the people of the country and the world, but it is also the biggest resource for providing employment. Apart from farmers, workers, scientists and business-entrepreneurs are also associated with the agriculture sector. Therefore, its scope is large. Come, let us know why the agriculture sector is very important for the budget, government and economy.
Agriculture still under threat
Explain that the agriculture sector in India accounts for about 15 percent of the gross domestic product (GDP), but more than 40 percent of Indian workers get employment in this sector. One of the most ambitious promises made by the National Democratic Alliance (NDA) government after coming to power in 2014 was to double farmers’ income by 2022. Evidence from the latest Situation Assessment Survey (SAS) shows that farming is still in crisis and is fast becoming a marginal occupation for farmers. As far as government expenditure is concerned and budget is concerned, you can understand in the best way through these five points.
How much government spends on agriculture
A report states that according to the budget estimates for the financial year 2022-23, the annual expenditure of the Ministry of Agriculture is Rs 1.33 lakh crore. For the Union Budget for 2022-23, Rs 1.5 lakh crore was proposed to be spent on agriculture and allied activities. A rough calculation suggests that this number may include expenditure on irrigation under the Ministry of Jal Shakti and some other smaller heads. Certainly the actual expenditure of the central government on agriculture is much more than this amount. This is because of spending on two major subsidy items, food and fertiliser.
use of food grains
India’s Public Distribution System (PDS) uses food grains procured from farmers at the minimum support price (MSP), which is distributed at zero cost to the beneficiaries. Similarly, the government subsidizes fertilizer manufacturers to provide cheap fertilizers to farmers, while all this expenditure does not directly reach the farmers. A large part of it benefits them. Therefore, the money spent on these items should be included in the overall measure of central government support to farmers. The Center for Monitoring Indian Economy (CMIE) data provides a separate classification of expenditure on agriculture and allied activities under different heads. This shows that the total expenditure on agriculture has been much higher than the annual allocation of the Ministry of Agriculture.
Very little is spent on the future of agriculture
According to the report, it appears from the condition of the average Indian farmer that the budget estimated by the government for the agriculture sector is very low. This can be seen in the meager allocation for agricultural research and development (R&D). In the financial year 2022-23, the central government’s expenditure on this item was 8,013 crores, which is only 6.4 percent of the total expenditure by the Ministry of Agriculture. Government spending on agricultural research and development is important because, unlike in the case of industry, farmers do not have the economic resources to undertake such activity on their own. According to CMIE data, the total capital expenditure on agriculture was only 1.1 per cent in the year 2022-23, which also includes the expenditure incurred by other ministries. This is much less than 19 per cent of the overall share of capital expenditure by the central government.
Center spends more than the states
According to the report, technically agriculture is under the state list in the constitution. However, the strategic considerations of food security and the political importance of the sector have ensured that the Center spends on the sector far more than what is spent by the states in total. This is in contrast to the case of overall government spending, where states now spend more than the Centre. When the government announced the PM-Kisan scheme in 2019, the Centre’s share of total farm expenditure got a big boost.
Center and state expenditure separately
While the Center accounts for the majority of the total government expenditure on agriculture, the state expenditure cannot be considered insignificant at all. This is because the spending priorities of the two levels of government are vastly different. Analysis of CMIE data shows that state expenditure in important agriculture and allied activities such as animal husbandry, dairy development and fisheries is huge compared to central expenditure.
Wide variation in agricultural expenditure per farmer across states
The report states that the importance of agriculture and the share of farmers in the total workforce varies widely across Indian states. This also means that there is a wide variation in the per farmer expenditure across states. One way to compare this is to look at total spending per farm household by states. In the latest (2019) SAS, an agricultural household is defined as a household that has produced more than Rs 4,000 worth of farm or horticulture crops, livestock, or other specified agricultural products and has lived 365 years before the survey. In those days, there was a self-employed member in agriculture.
According to the report, government expenditure per agricultural household in FY 2022-23 varied from Rs 9,264 in Uttar Pradesh to Rs 99,768 in Tamil Nadu, as states account for a larger share (compared to the central government) in expenditure on animal husbandry. It may be useful to examine whether this large difference in expenditure on animal husbandry persists. This can be done by computing the combined expenditure on animal husbandry, dairy development and fisheries and dividing it by the number of households engaged in animal husbandry. Even this expenditure varies widely across states with Rs 29,562 in Telangana and Rs 2,637 in Uttar Pradesh in 2022-23.
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