(The Gist of Kurukshetra) Boost to Agriculture Industry in the Budget [MARCH-2018]

(The Gist of Kurukshetra) Boost to Agriculture Industry in the Budget

[MARCH-2018]

Boost to Agriculture Industry in the Budget:

The agricultural models differ across developed an developing countries. Developed countries have carried out the parallel reforms in agriculture as well as industrial sector. Those practices have brought out more market related activities, helped in resource allocation and put forth enormous scope for farmers to the incentivize for efficiency and productivity. However, same has been found missing in developing economies. initially the lower level of urbanization and industrialization could not motivate the farmers for commercialization of the agriculture industry, but now a country like India has maintained high economic growth much driven by services, the developments give a motivation to develop healthy agriculture markets to ensure a remunerative price to agricultural produce. As per the World Bank estimates, lndia is going to experience the urbanization with much faster rate as half of the population would be residing in urban areas by 2050 and the agricultural workforce ratio would also drop to 25.7 per cent by 2050 from 58.2 per cent in 2001.‘ This gives an indication that the off-farm activities are going to take significant place and in this regard, the move towards agro processing industries in the recent budget have much potential to absorb the manpower into agriculture industry.

On the ground of market access to agriculture produce, lndia has witnessed the setting up of Agricultural Produce Market Committees (APMCs), but in real, practices related to cartels of licensed traders eventually leading to oligopolistic market power are yet to make the farmers to reap the benefits amid growing income through services driven economy, rather cartels have shared the fruits by extracting large commissions. It is pointed out that farmers get one fourth price of what the final consumers are paying. Now the manufacturing revival and service dominance are giving an indication of indirect support to agriculture sector. The growing demand in the economy can be fulfilled with sustained agriculture production. Recent budget has considered much scope for agricultural produce to make them more marketable. The allocation for food processing has been doubled to Rs. 1400 crores in Budgets-2018. Also, the landmark initiative of establishing Specialized Agro Processing Financial Institutions will remove the financial hurdles for establishing food processing industries. These institutions are going to help financially in terms of timely and affordable credit access to the food processing projects which require intense capital and having long gestation period. The possible implications will be towards improved share of food processing in national output as well as in total exports. In fact, the promotion of food processing industry will pave the way for product standardization, better access of external market, appropriate demand projections for agricultural produce, employment creation, waste reduction, etc.

International experiences boast that improved agriculture is attributed to various factors such as input assistance, technology development and industrialization of agriculture. Only a few countries have turned their agriculture into a growth industry and a kind of movement from rural policy to commercial policy. India is also considering to make the agriculture products more market oriented through setting up of Farmers Producers Organisation (FPOs), agri-Iogistics, processing facilities and professional management under ’Operation Greens’. The FPOs have been incentivized to allow 100% tax deduction to the profits (FPO having annual turnover up to Rs 100 crore) for a period of five years from 2018-19 fiscal. Overall, this is good Budget for the farm sector, rural economy and Micro and MSMEs. The proposal to increase agriculture credit by 10 lakh to Rs.11 lakh crore and host of other polices along with allocation for rural economy would revive demand and create opportunities for MSME sector, crucial for jobs and growth. Budget-2018 has taken a few big steps to for MSMEs like cutting corporate tax rate to 25 per cent with annual turnover up to Rs 250 crore, providing an additional Rs 3,794 crore for MSM Es for credit and comprehensive package with allocation of Rs 7,148 crore compared for MSMEs in textile sector. These would certainly help MSMEs. The Budget-2018 has certainly delivered when it comes to giving a boost to MSMEs and agriculture.

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Courtesy: Kurukshetra