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Budget 2021-22: Finance minister proposes 9 measures for agriculture, allied sectors; agri credit target enhanced to INR 165,000 crore

Budget 2021-22: Finance minister proposes 9 measures for agriculture, allied sectors; agri credit target enhanced to INR 165,000 crore

In a slew of steps to support the agriculture sector, minister for finance & corporate affairs Mrs Nirmala Sitharaman announced 9 measures for Agriculture Sector as part of inclusive development for aspirational India while presenting the Union Budget 2021-22.

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NEW DELHI, 2 February 2021: In a slew of steps to support the agriculture sector, minister for finance & corporate affairs Mrs Nirmala Sitharaman announced 9 measures for Agriculture Sector as part of inclusive development for aspirational India while presenting the Union Budget 2021-22.

To provide adequate credit to our farmers, the finance minister enhanced the agricultural credit target to INR 165,000 crore in FY22 and further said that the Government will focus on ensuring increased credit flows to animal husbandry, dairy, and fisheries.

Speaking about the budget to industry people, this is what various stake holders told AgriTimes about the 2021-22 budget.

Budget 2021-22 statements from agriculture & allied sector

This is certainly a very good budget, says NCML president

Unupom Kausik, President, National Collateral Management Services Ltd (NCML) said “This is certainly a very good budget. It is aspirational, honest and transparent, trust based and forward looking. First time in a long history, we are seeing no accounting gimmicks on deficit, we are witnessing government placing trust in citizens for compliance, using technology for better tax compliance  and  focussing on drivers of economy by following  pareto principle. It is very good for infrastructure sector , capital goods, auto, housing, sectors with huge export potential and industries for imports substitution. Best part of the budget that the government has starting looking at revenue and expenditure from 3-5 years perspective and not with the immediate year as  filter. This resource visibility and government commitment to allocate resources for 3-5 years will significantly improve business sentiment and business planning by industries committed to sectors with highest government spending. This is certainly a very momentous break from the tradition of past where everything was looked through one year spend commitments. This is certainly a tall ask as resource mobilization is a big challenge without touching the rate slabs and only by  relying  on asset monetization and better compliance. A very bold initiative.

Agriculture infrastructure and development cess will certainly support for meeting the short term resource requirements for government’s multiple programs working towards doubling farmer’s income. Overall this budget will stand tall as a mile stone in the journey of India for the  social and economic development of its citizens.”

Focus on building agri-infrastructure and one-district-one-cluster would play a pivotal role in attracting investment, INI Farms chairman

"Agriculture, as anticipated for Budget 2021, has been the key focus area. The increased target of INR 165,000 crore for agricultural credit, focus on building agri-infrastructure and one-district-one-cluster initiative would play a pivotal role in developing product specific competencies and attracting more investment in the emerging agri space. Logistics is very critical component to reduce costs and wastages – the focus of Kisan Rail and Krishi Udaan will enhance domestic and export competitiveness," Pankaj Khandelwal, Chairman and Managing Director, INI Farms.

INI Farms works with over 5000 farmers across 8 Indian states, and exports 40,000 tonnes of fruits in over 35 countries. INI Farms is a leading exporter of banana and pomegranates from India.

Agriculture, Food and Commodities – Continued Support and Realism Reflected in Budget Announcements, says By Sanjay Kaul, Chairman, National Collateral Management Services Limited  

By spelling out steps taken by the government to enhance procurement of paddy, wheat, pulses and cotton the Finance Minister and by announcing that the Agriculture Infrastructure Fund would be made available to APMCs for augmenting their infrastructure facilities, she has attempted to dispel fears that the MSP regime would be discontinued - this should provide assurance to the protesting farmers.

The budget is a positive for agriculture and rural infrastructure through two measures. Agri infrastructure such as warehousing, silos and cold chains have long gestation periods and the establishment of a professionally managed Development Financial Institution with an outlay of INR 20,000 crores to capitalise this institution could become a catalyst for agriculture infrastructure financing. Second, rural infrastructure would also get a boost by the enhanced allocation to the Rural Infrastructure Development Fund from INR 30,000 crores to INR 40,000 crores.

Two other steps in the food and commodity space are worthy of note. Past budgets have not been fully reflecting the actual food subsidy implications of food procurement and the public distribution system by asking the FCI to resort to loans from the NSSF. The decision to discontinue the NSSF Loan to FCI for Food Subsidy and correct the Budget Provisions for food subsidy in RE 2020-21 and BE 2021-22 are the steps towards greater realism and transparency.

Though India is the world’s largest consumer of gold, price discovery does not take place in the country -  we end up being price-takers. This could change through the announcement to  establish a system of regulated gold exchanges in the country through SEBI and the Warehousing Development and Regulatory Authority which would enable the setting up a gold market eco system.

The budget proposals have shown a lot of pragmatism given that the Finance Minister has had to work under severe fiscal strain. Notwithstanding this, some direction should have been provided on how the government would achieve the laudable objective of doubling framer income and improving the livelihood of farm households as it has done so in the health and infrastructure sectors.

Overall, it is a status quo budget for agriculture in general and for seed industry, says Federation of Seed Industry of India

FSII is a 40-member led association of R&D based plant science industry said overall, it is a status quo budget for agriculture in general and for seed industry in particular.

  Agriculture contributed significantly to our successful fight against COVID. But the sector did not get the needed attention in the budget. No transformative measures have been proposed.

  Positive points:

a)      Increase in agricultural credit to Rs. 16.54 lakh crores. Will help farmers in accessing more credit.

b)      Infrastructure oriented budget. Rs. 40,000 cr for rural infrastructure is a good measure. Will help villages and will indirectly benefit farmers.

c)       Rs.10,000 cr for micro irrigation is a good measure.

d)      Including 22 perishable crops in Operation Green is good. It will help farmers.

e)      Increasing import duty on cotton is a good measure that should help improving domestic prices although we are no longer a major cotton importer. We are actually the largest exporter in the world, courtesy Bt Cotton driven increase in cotton production.

f)        Output marketing related measures like extending ENAM to 1000 more Mandis and making Agri Infrastructure Fund available for upgrading infrastructure in APMCs are good. This will also help farmers.

Disappointments:

a)      Investments in Research in agriculture are not addressed, especially, since research & innovation is one of the 6 pillars of Aatma Nirbhar Bharat and there is a need to scale up private sector investments in agricultural research. There is an urgent need to step up investments in research into agri biotechnology, seed technology and modern technologies for farmers. Seed industry was expecting restoration of 200% tax deduction of research expenses but it has not been met.

b)      The industry expected a major project to invest in scaling up domestic oilseeds production through incentives for farmers, use of modern technologies in crops like mustard, soybean and ground nut, etc would be announced with an eye on reducing huge imports of edible oils. No such project was announced.

c)       The industry also expected some major announcement of investment to push up agricultural exports to 100B$ in the next 4-5 years. A special economic corridor and cluster approach investments would have been in order.

d)      The industry also expected some major announcement of investments to scale up mechanization of agriculture to address high labour costs that farmers are incurring but no such measures have been taken.

Decision to add 1,000 more APMC mandies under e-NAM network will spur development of the logistics and infrastructure

India's leading commodities exchange, National Commodity & Derivatives Exchange Limited (NCDEX) in a statement welcome the Union Budget for 2021-22 and thank the Finance Minister Nirmala Sitharaman for further extending her support to the agricultural sector and the overall commodity market.

We have seen an excellent performance of the agriculture sector during the Pandemic which was further strengthened by an allocation of INR 150,000 crore for the sector under Covid-19 financial package earlier this year. The Finance Minister’s today’s proposals will take development of the agricultural eco-system to the next level. 

A sharp increase in the agricultural credit target to INR 165,000 crore with increased focus on allied sectors and higher allocation of INR 40,000 crore to the Rural Infrastructure Development Fund will play a big role in sustainable development of the rural economy and prove to be a major step in enhancing farm incomes.

Post-production Infrastructure is a backbone of the development of the agriculture sector as it raises incomes of farmers and lowers food prices for the consumer. We must say that the Finance Minister’s decision to allow use of the Agriculture Infra Fund corpus for the upliftment of APMC market yards will aid establishment of a vibrant agriculture market and improved price discovery in the farm sector.

The decision to strengthen the Warehousing Development and Regulatory Authority and adding 1,000 more APMC mandies under e-NAM network will spur development of the logistics and infrastructure necessary for the development of commodity exchanges and electronic agri-commodity platforms.

We also welcome the decision to consolidate the SEBI Act, Depositories Act, Securities Contracts (Regulation) Act and Government Securities Act to create a single Securities Markets Code that will be helpful in streamlining the regulatory environment to protect the interest of investors and strengthen the risk management framework.

Significant impetus to the Agriculture sector, says Sanjiv Lal – MD & CEO, Rallis India

“The Union Budget presented is progressive and balanced with a long term impact in mind. The focus is not just to provide short term relief but empowers the industry to leverage the rising domestic and international demand. The Indian Economy has shown tremendous resilience in showing a sharp recovery from the Covid-19 hit economy. This recovery is led by continued normalization in economic activities and further strengthening it with the rollout of COVID-19 vaccines.

The economic reforms announced provide a significant impetus to the Agriculture sector. Government is committed to the welfare of farmers which is evident from the enhanced agri credit target to INR 165,000 crore. Additional allocations for rural infrastructure & irrigation, development of fishing harbours, micro irrigation corpus doubled to INR 10,000 cr will surely boost the sector.

The governments’ proposal to expand the Green scheme to 22 perishable vegetable products will significantly help the farming community. The agri sector will further benefit from the massive infrastructure development proposed in the union budget.

The first budget of the new decade has ensured the right balance of sustainable growth, R. Mukundan, Managing Director and CEO, Tata Chemicals

“The first budget of the new decade has ensured the right balance of sustainable growth, social equity and long-term competitiveness of the Indian economy.

The proposed step to create more stability in tax regime is a welcome move. This, combined with simplification and a further improvement in the dispute resolution process, will augur well for tax compliance and increase in resource mobilization.  

The impetus in funding towards railways, roadways and ports will go a long way in improving the competitiveness of Indian industry by reducing the cost of logistics.

The continued support of manufacturing with the Productivity Linked Incentive (PLI) Scheme will further strengthen the Atma Nirbhar Bharat Mission to help the country integrate more strongly with the global supply chain. The PLI scheme coupled with duty rationalisation of inputs especially naphtha will bode well for value-added products and speciality chemicals.  

All in all, a balanced approach to resource mobilisation, stability in taxation and focused sectoral steps to spur manufacturing growth will ensure that we come out of this pandemic stronger and more competitive.”


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