Ever since the Modi government came to power in 2014, agriculture has been one of its key focus areas. It ought to be considering the fact that 60% of the country's population is dependent on farming and allied sectors for livelihood.
Coming soon after the demonetisation exercise that invariably impacted all sectors of the country's economy including agriculture, the Union Budget 2017 has raised expectations of favourable and scalable policies that can provide the much needed healing balm for the agriculture sector.
While overall agricultural output was expected to grow at 4% this fiscal, demonetisation is likely to dent that forecast by the industry pundits.
Almost every week, we hear the Prime Minister say something about agricultural productivity enhancement from different platforms. Keeping in mind the huge dependence of the sector on cash transactions and demonetisation-led slowdown of the industry, the Prime Minister, in his New Year Eve speech, talked about giving certain concessions and incentives to farmers.
It is hoped that the Government will follow it up with further concessions and incentives for the agriculture sector in general, and the agro-input industry, in particular, in the coming Budget.
Economic pundits are already forecasting a budget that will provide a greater push towards a cashless economy by incentivizing digital payments, but when it comes to the agriculture sector, the Union Budget 2017 should come up with much more significant initiatives and renewed focus on innovation and effective utilization of resources.
Here is our wishlist for Budget 2017:
"First and foremost, to bridge the huge gap between input costs of farming and profits earned, the Budget should provide value-added, profit-linked incentives for farmers and agricultural input providers.
"While digital transactions should undoubtedly make lives easier for the Indian farmer in purchasing seeds, fertilizers and agrochemicals, we recommend and the waiving of the 60-day interest on credit for farmers and transformation of Kisan Credit Cards to RuPay credit cards to smoothen operational issues in agriculture and related sectors.
"Financial support is very important for farmers to increase cost to benefit ratios. Easy post-harvest credit flow to farmers can make their lives easier. Concessional HYV seeds and fertilizers must be provided to raise profitability of the farmer in far-flung villages. Even more important is enabling Indian agrochemical companies to get quick registration and patents of their products for the benefit of Indian farmer. The Budget should discuss concrete steps to facilitate this.
"The Modi government has already promised to take the profitability threshold of Indian agriculture to above 45% in the next few years and double agricultural production by 2020. To implement this, the margin and horizon of the Central Plan Outlay for Agriculture and theKrishonnati Yojanaand penetration of the already existing Crop Insurance Policy should be extended.
"In the agrochemical sector, producing world-class end products and new-age formulations is only possible through research intensification. Agriculture in our country presently needs to take significant strides towards R&D to improve agricultural expertise and enhance productivity.
The finance minister should come out with nationwide policy framework for promoting R&D in agriculture.Taking a leaf out of the UK government's initiative, the coming Budget could announce some incentives for organizations directly or indirectly engaged in the R&D or in supporting research in agriculture. Announcing some tax relief for corporateswho spend or sponsor farmer education efforts at the grassroot level could be useful.
To boost agricultural growth, tax benefits and incentives for stakeholders ofthe agro-input industry would be in order. To help the farmer achieve greater productivity, the government should reduce excise duty and other taxes which are applicable in the way from farm to fork. In fact, reduction in excise duty on agrochemicals, tractors and other farm equipment would also be in line with the Modi government's commitment to help boost agriculture.
"Multinationals introducing new products inthe market command a higher price, which has to be borne by needy farmers. The Finance Minister should do well to consider cutting production costs for domestic manufacturers, inthis year's Budget. Subsidy also needs to be included for users and buyers of fertilizers, tractors, etc. to encourage their use. This in turn, will lead to a wide spectrum of application and ease of acceptance of new-age equipment and agrochemicals and fertilizers.
By Ankur Aggarwal, Managing Director, Crystal Crop Protection