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Back to Growth: Union Budget 2021-2022 announcement: Agriculture, Animal Husbandry, Dairying & Fisheries and Food Processing sectors

ECONOMIC SURVEY: OVERVIEW OF AGRICULTURE SECTOR

About 54.6 per cent of the total workforce in the country is still engaged in agricultural and allied sector activities (Census 2011) which accounts for approximately 17.8 per cent of the country’s Gross Value Added (GVA) for the year 2019-20 (at current prices). While the difficulties created by COVID induced lockdowns adversely affected the performance of the non-agricultural sectors, the agriculture sector came up with a robust growth rate of 3.4 per cent at constant prices during 2020-21 (first advance estimates). The sector has got renewed
thrust due to various measures on credit, market reforms and food processing under the Atma Nirbhar Bharat announcements.

Gross Value Added in Agriculture

As per the provisional estimates of national income released by CSO on 29th May 2020, the share of agriculture and allied sectors in Gross Value Added (GVA) of the country at current prices is 17.8 per cent for the year 2019-20. 

Production of Crops

In the year 2019-20 (as per fourth advance estimates), total food grain production in the country is estimated at record 296.65 million tonnes which is higher by 11.44 million tonnes than the production of food grain of 285.21 million tonnes achieved during 2018-19. Further, the production during 2019-20 is higher by 26.87 million tonnes than the previous five years’ (2014-15 to 2018-19) average production of 269.78 million tonnes.


Agricultural Credit

Given the large proportion of resource constrained small and marginal farmers in India, timely availability of adequate credit is fundamental for the success of farming activities.

The agricultural credit flow target for the year 2019-20 was fixed at Rs. 13,50,000 crores and against this target the achievement was Rs.13,92,469.81 crores. The agriculture credit flow target for 2020-21 was fixed at Rs.15,00,000 crores and till 30th November 2020 a sum of Rs. 9,73,517.80 crores were disbursed. The Agriculture Infrastructure Fund announced as a part of Atma Nirbhar Bharat Abhiyan will further boost credit flow to the agriculture sector. 


Production-Linked Incentive Scheme

Government gave its approval in November 2020 to introduce the Production-Linked Incentive (PLI) Scheme in 10 key sectors, including food processing sector, for enhancing India's manufacturing capabilities and improving exports. The approved financial outlay for the PLI scheme in food processing is Rs. 10,900 crores. The food segments identified includes ready to eat/ready to cook, marine products, processed fruits & vegetables, mozzarella cheese, and innovative/organic products of SMEs. The scheme would also support the branding and marketing abroad.

International Trade in Agricultural Commodities

In 2019-20, India’s agricultural and allied exports amounted to approximately Rs. 252 thousand crores. The major export destinations were USA, Saudi Arabia, Iran, Nepal, and Bangladesh. The top agriculture and related products exported from India were marine products, basmati rice, buffalo meat, spices, non-basmati rice, cotton raw, oil meals, sugar, castor oil and tea. While India occupies a leading position in global trade of aforementioned agri- products, its total agri-export basket accounts for a little over 2.5 per cent of world agri-trade.

 

ALLIED SECTORS: ANIMAL HUSBANDRY, DAIRYING & FISHERIES

Milk

India continues to be the largest producer of milk in the world. Several measures have been initiated by the government to increase the productivity of livestock, which has resulted in increasing the milk production significantly. Milk production in the country has increased from 146.3 million tonnes in 2014-15 to 198.4 million tonnes in 2019-20. The per capita availability of milk was 407 grams per day in (2019-20).


Livestock Population and Production

According to FAOSTAT production data (2019), India ranks 3rd in egg production in the world. The egg production in the country has increased from 78.48 billion in 2014-15 to 114.38 billion in 2019-20. Annual growth rate of egg production was 4.99 per cent during 2014-15, thereafter, there has been a significant improvement in the egg production with 10.19 per cent growth registered in 2019-20 over the previous year. The per capita availability of egg was 86 eggs per annum in 2019-20.

Fisheries

India is the second largest fish producing country in the world and accounts for 7.58 per cent of the global production. The fish production in India has reached an all-time high of 14.16 million metric tons during 2019-20.

Food Processing Sector

During the last 5 years ending 2018-19, food processing industries (FPI) has been growing at an average annual growth rate of around 9.99 per cent as compared to around 3.12 per cent in agriculture and 8.25 per cent in manufacturing at 2011-12 prices. Food processing sector has also emerged as an important segment of the Indian economy in terms of its contribution to GDP, employment and investment. The sector constitutes as much as 8.98 per cent of Gross Value Added (GVA) in manufacturing in 2018-19 at 2011-12 prices.

 

BUDGET ANNOUNCEMENTS: AGRICULTURE SECTOR

1.    The MSP regime has undergone a sea change to assure price that is at least 1.5 times the cost of production across all commodities. The procurement has also continued to increase at a steady pace. This has resulted in increase in payment to farmers substantially.

2.    Government has enhanced the agricultural credit target to Rs.16.5 lakh crores in FY22. This will focus on ensuring increased credit flows to animal husbandry, dairy, and fisheries.

3.    Government has enhanced the allocation to the Rural Infrastructure Development Fund from Rs.30,000 crores to Rs.40,000 crores.

4.    To boost value addition in agriculture and allied products and their exports, the scope of ‘Operation Green Scheme’ that is presently applicable to tomatoes, onions, and potatoes, will be enlarged to include 22 perishable products.

5.    The Agriculture Infrastructure Fund would be made available to APMCs for augmenting their infrastructure facilities.

6.    Government has proposed substantial investments in the development of modern fishing harbours and fish landing centres. Five major fishing harbours – Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat will be developed as hubs of economic activity.


In a significant mindset shift, the government’s focus is moving from increasing farm output to improving farmer incomes—it has set an aspiration to double farmers’ incomes by 2022. This will enhance productivity and have multiplied effects on the larger ecosystem. Increased farmer incomes will foster the use of high productivity measures to efficiently use stressed resources such as land and water. While pursuing the objective of doubling farmer income, it is important to keep an eye on the emerging trends in Indian agriculture. These will continue to shape growth and will lead towards the themes for transforming the sector.

Enhancement of ‘Operation Green Scheme’ will increase knowledge of the high productivity practices and high value product choices available to farmers thus giving a boost to value addition in agriculture and allied products and their exports
Enhancement of The Agriculture Infrastructure Fund would help farmers to better navigate market inefficiencies rather than settling for lower prices set by the middlemen.

Government has rightly focussed on Fisheries sector as it has been recognized as a powerful income and employment generator as it stimulates growth of a number of subsidiary industries and is a source of cheap and nutritious food, at the same time it is an instrument of livelihood for a large section of economically backward population of the country.

As bleak as things look for the global economy in the midst of the COVID-19 pandemic, the agriculture industry is poised for recovery. Commodity prices are stable, farmers appear to be boosting investment, and government has been very supportive of the agriculture sector. Collectively these will herald a new dawn for agriculture in India, transforming farmers into vibrant producers, integrated with the national and global economy.

#AatmanirbharBharatKaBudget #BacktoGrowth #UnionBudget2021

Union Budget