Union Budget 2011 For Agricultural Sector

Union Finance Minister presented India’s budget for the financial year beginning in April 2011. The budget covers (a) Taxes, (b) Subsidies, (e) Fiscal Deficit, (d) Sector Spending, (e) Agriculture, (f) On the state of the economy, (g) Spending, (h) Revenue, (i) Growth inflation expectations, G) Disinvestment, (k) Borrowing, (1) Policy reforms and for some more areas for development. The overall budget shows Fiscal deficit 4.6 per cent of GDP in 2011-12. The total expenditure in 2011-12 will be 12.58 trillion rupees and grow tax receipts for the year will be 9.32 trillion rupees. The budget shows that there will be disinvestment of 400 billion rupees in 2011-12 and revised gross market borrowing for the year will be 4.47 trillion rupees.

The highlights of the Budget for Agricultural Sector are:

1. Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5 per cent.

2. Food subsidy of Rs. 605.7 billion.

3. Fertilizer subsidy of Rs. 500 billion.

4. Removal of supply bottlenecks in the food sector.

5. Green Revolution in eastern region.

6. Credit flow to agriculture sector to Rs. 4.75 trillion.

7. Three per cent interest subsidy to farmers.

8. Cold storage to be given as infrastructure (23 per cent higher allocation)

9. Capitalization of NABARD of Rs. 30 billion in a phase manner.

10. Provision of Rs. 3 billion for 60,000 hectares under palm plantation.

11. New fertilizer policy for urea.

12. Augmentation of 15 more mega food parks to the previous 15 parks.

13. Policy for development of public private partnership (PPP) model.

14. Farmer’s affordable credit.

15. Improvement of nutritional security.

16. Acceleration of fodder production.

The present problems of Indian agriculture are:

1. Scarcity of input water.

2. Shortage of agricultural labor because of NREGS.

3. Mass desertion from farming to non-farm occupations because of expanding constructions.

4. Shortage of organic manures in spite of rising demand.

5. Feed problems of diary and farm animals and poultry birds.

6. Mounting overdue of farm loans and failure of cooperatives.

7. Climate related crop failures and outbreak of diseases.

8. Mental trauma of the farm families in combating economic reform.

9. Rising cost of living and deficit family budget.

10. Uncertainly of the cropping system and changing package of practices.

11. Confuse in the channel of marketing aid loss of market during harvesting.

12. Widening gap of income between farmers and non-farmers.

13. Abrupt rise and fall of agricultural commodities supply because of liberalization.

14. Transportation problems from farm to main roads.

15. Community ownership system of land adopted in the hills of NE region.

16. Acute problems of drinking water in rural areas.

17. Rising expenditure of socio-cultural activities and overconsumption.

18. Shortage of electric power and cooking fuels in remote villages.

19. Loss of working days due to extreme hot and extreme cold, and road blockade, etc.

The present Budget 2011 expected that:

1. There will be more agricultural machinery because of falling customs duty.

2. There will be enough food supply through sound Public Distribution System.

3. There will be abundance of fertilizers through agents and marketing societies.

4. There will be sufficient food supply to meet the demand at minimum price.

5. There will be successful green revolution or mechanization of agriculture in eastern India through sound credit system.

6. There will be credit expansion to all the agriculturists for increasing productivity with repayment capacity.

7. Interest subsidy of 3 per cent will be attractive to all the farmers for improvement of banking system.

8. NABARD’s activities will be sound for farm sector.

9. There will be suitable land for palm plantation for import substitution.

10. There will be abundance of urea fertilizer to meet the demand during need days.

11. Mega food parks will help to produce enough food and quality seeds.

12. Public private partnership would be successful to execute the schemes with mutual cooperation.

Empirically it was evidence that there were the following common problems in India during the last Five Year Plan:

1. Most of agricultural machineries were not working in villages because of several problems of repairing, handling and fuelling.

2. In India most of the farmers were unable to get fertilizers in right time because of long process and unsatisfactory mismanagement.

3. The activity of public distribution system was not managed properly and honestly in rural and remote areas.

4. Eastern India including the Northeast is mostly hilly and ecologically most important region. New Green Revolution would be hazardous to climate security and sustainable environment.

5. Land policy is not effective in the hill areas because of community ownership.

6. Most of the Agricultural credit cooperative Societies were not working.

7. Most of agricultural insurance facilities were not covered to the needy farmers.

8. Farmers are ignorant about the functioning of NABARD and the necessary conditions for getting facilities from the bank were not fulfilled.

9. There was limited area for palm cultivation in the country because of widely diversification of cropping pattern for local needs and for growing economic crops.

10. Urea consumption for food grains cultivation was decreased for want of organic manure.

11. Micro food parks suitable to local climate is more attractive instead of mega Food Park because of high costs of management.

12. Public private partnership was mostly managed by the people of ruling class and there were cases of down fall of NGOs.

Prospect of the budget

Generally, budgets are split up on political ground as well as on economic causes, politically India is ruled by majority of the peoples representatives and economically the country is not always possible to foresee and provide for all emergencies i.e., socio­economic disturbances or natural calamities, etc. which will necessitate extra expenditure. After the entire budget is accompanied by an account of the performance of the fiscal policies and programs of the government during the previous year 2010-11. During past two three years, India experienced a large scale loss of farmers life due to depression and losses of animals and crops because of climate change. Compensation for the damages and waiving of loans to the farmers covered widely. Import of oilseeds, food grains and even vegetables are continuing. In the midst of the devastating economy of the country from both global depression and nationally sick economy it is not easy to present a balanced budget. The national budgetary flows from an important portion of the flow of funds of an economy and therefore have a profound role in directing its working. In the context of the budget it is mentioned, “Corruption is a problem, must fight it collectively”. The budget is not bad for the present situation. The target of the budget would be to create utility from every rupee, but it would be destructive if the money goes beyond the temperament of honesty. Control and management of the budget would be responsible for all.’

*The article is written by N Ram Singh

(Courtesy: The Sangai Express)

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