The 2009-10 budget was presented in a scenario of decelerating agricultural growth, rising food prices and growing uncertainty due to delayed monsoon. The agricultural growth has dipped to a low of 1.6% during 2008-09 compared to a high of 4.9% during 2007-08. Performance of food grains, oil seeds, sugar and cotton was very dismal during 2008-09 compared to 2007-08. This has led to rising wholesale prices of food commodities. The scenario in ensuing year is not too bright as the delayed and below normal monsoon would adversely affect agricultural production. Such a scenario warranted for more thrust to agriculture sector with respect to budget allocations and new programs. On this count the budget has not included adequate provisions for ensuring a four percent growth in agricultural sector. On the other hand, the focus of this budget is more towards creating relatively more demand in rural area through expanding the existing programs. To accelerate agricultural growth, credit sector received highest priority in the budget.
Augmenting credit outflow and ensuring cheaper loans to farmers are welcome provisions, which are expected to increase lending in agriculture sector and encourage timely repayment.
Other components for augmenting agricultural production are related with ‘nutrient link fertilizer subsidy’, and higher allocation to ‘accelerated irrigation benefit scheme’ and to the Bharat Nirman program.
But both water and power sectors, need to be reformed for improving their efficiency and governance through public-private partnership. Mere allocation of higher resources to these sectors may not commensurate in increasing agricultural production.
Both these sectors need a medium- and long-term strategy for their efficient utilisation in agricultural sector.
To promote private sector investment and reduce wastage, this budget has given tax incentives for setting-up and operating cold chains, warehousing facilities and storing agricultural produce. This will attract agri-corporate sector to invest in developing value chains to reduce wastage of perishable commodities and increasing storage capacity of agri-commodities. Similarly, excise duties are reduced for wool waste and cotton waste from 15% to 10%.
The budget is more biased towards inclusive growth through strengthening existing social safety net programmes like NREGA ad proposed National Food Security Act.
Growing fertilizer and food subsidies are fattening non-plan expenditure and adding to the fiscal deficit. This is a matter of serious concern, especially at a time when economic recession may mar the investment opportunities. Both fertilizer and food sectors need overall reform by evolving more innovative institutional...
