The Elephant Called Agriculture

The Union Budget 2015 wasn’t the big bang document for reforms as many expected. Yet the Finance Minister presented a vision document with a realistic timeline for changes to be rolled out. Key features such as the establishment of the Mudra Bank and the National Investment and Infrastructure Fund (NIIF) and the promise to rollout the GST by April, 2016 appear as solid plans to boost the economy. However in the 17,968 words and 44 page long document, only 342 words or 2 percent of the entire budget was devoted to Agriculture. Perhaps it is time for the Government to present a separate budget proposal for Agriculture.

As a tradition followed since the days of British Rule, the finances of the Railways has always been presented separately. It makes sense to still follow this tradition given the fact that even today the Indian Railways forms the largest enterprise in India (and the world). Thus keeping size in mind, it would be justified to separate the finances for Agriculture too, since this sector employs the largest workforce in the nation (55%). The Modi Government’s Budget lacked a roadmap for agriculture. A mere 2 percent mention reflects the attitude of the government towards agriculture in poor light.

What makes the lack of an Agricultural budget a matter of curiosity is the political weight this sector carries. Many elected leaders sitting in the Parliament have arrived at their respective position due to the support of rural India especially those employed in the agricultural sector. Promises of higher MSP, higher incomes, greater access to markets, increased livelihood and cheaper inputs form the bulk of campaign speeches of many. It is also surprising that the Prime Minister who in his ‘Gujarat Model’ incorporated the modernization of agriculture hasn’t done the same for the nation. Agriculture in Gujarat grew at 9-10% in the last decade under his tenure as CM.

At this point the lack of mention on Agricultural development in the Budget may spark a dangerous ideological war between so called the socialist, pro-poor and pro-farmer groups and ‘capitalist, pro-industrialist’ groups. However, having a separate budget could see the possibility of actually putting the terms ‘capitalist’ and ‘farmer’ in one phrase. For that a visionary document is needed with a specific roadmap and tangible financial resources to back it up. Mr. Jaitley in his speech mentioned only Credit, Markets, and Irrigation; three nevertheless very important factors to enhance agricultural growth, yet he kept it as vague as possible. Many would argue that a white paper entitled ‘Agricultural policy – 2015’ would suffice. However what is needed is a more expansive and detailed lengthy paper that is subject to debate and discussion in the Lok Sabha.

But coming out with a separate Budget for Agriculture isn’t enough. The implications of agriculture are immense. It is the source of livelihood for many in India and many of these people also comprise the poor of the same. With a majority in the Lok Sabha and the Government having no shackles bound to them that coalition politics often does, there needs to be a balanced proposal incorporating both welfare schemes and aggressive and ambitious plans to invest in Agriculture. The private sector is only encouraged to invest in Agriculture when it sees incentive in it. That incentive needs to be created through a budget proposal with promise by the government to invest heavily in research and development in agriculture. The target of 4% is a very meager target and the efforts to achieve even half of that are even more meager. The Prime Minister’s popularity among India Inc, is a boon. All that is needed is to come out with a more elaborate plan for agriculture and the private sector shall follow gladly.

However one hurdle that comes to having a separate budget document for Agriculture is the fact that it is a state subject. Given different states having fragile sentiments regarding agriculture, it would be a difficult task to move it to the Union List. But if the numbers in the Lok Sabha help, the incumbent government may find it plausible to incorporate Agriculture atleast into the concurrent list giving more power the center to pursue an aggressive agenda in accelerating the rate of the growth of Agriculture to 6% (a figure suggested by Mr. Ashok Gulati in a recent interview to NDTV).

Narendra Modi may have dubbed the lion in the room as ‘Make in India’ but he certainly cannot ignore the Elephant present in the same room that goes by the name of Agriculture.

(The writer is reading the M.Sc. in Agribusiness Economicsat the Gokhale Institute of Politics and Economics)