Fix Farm Distress, Boost Rural Demand

Better infrastructure, export push also vital to revive the sector

- TV Jayan

Higher spending for creating agricultural infrastructure, including storage facilities, and putting more money in the hands of people in rural parts of the country to boost demand are some major challenges before Finance Minister Nirmala Sitharaman, who will present her second Union Budget on February 1.

The agriculture sector is currently passing through a crisis situation. Production levels remain high, but the domestic demand is not picking up. There was a whopping 16 percent drop in the export of agricultural produce in the first seven months of the current financial year as compared to the corresponding period in the previous year. But it is ironical that despite all this, food prices remain high.

Crop insurance claims

During the monsoon season last year, many major agriculturally-important States experienced severe floods leading to heavy crop losses in the Kharif season. This resulted in an increase in crop insurance claims in these States. If the payout rates are high, there is a possibility of premium rates going up, forcing the governments — both the Centre as well as States — which highly subsidize the Pradhan Mantri Fasal Bima Yojana (PMFBY) to cough up more. Last year, the budgetary allocation for PMFBY was ₹14,000 crore.

One of the major announcements made by the Finance Minister in her Budget speech in July last year was the creation of 10,000 farmer producer organizations (FPOs) over a period of five years. Even though several months have passed since then, the proposal to set up there has not yet been approved by the Union Cabinet.