Finance Minister Approves ₹1.52 Lakh Cr for Agriculture and Related Sectors

Today, the Finance Minister presented the Budget for 2024-25 which includes a boost for the agriculture and allied sectors with an allocation of ₹1.52 lakh crore. This funding is intended to address higher food inflation challenges and support the agriculture industry. The government plans to conduct a comprehensive review of the agricultural research system to improve productivity and develop climate-resilient crop varieties with domain experts ensuring the research is effective and relevant.

This investment is expected to benefit companies in the agriculture sector. For instance, Kaveri Seeds saw a notable increase in its share price, gaining 10.27% to reach ₹1068.00 per share on the Bombay Stock Exchange. Similarly, the share price of Escorts Kubota also rose slightly by 0.20%, standing at ₹4023.65 per share on BSE at the time of writing.

The Finance Minister announced several important initiatives to improve the agriculture sector. She announced that the government will introduce new high-yielding and climate-resilient varieties for 32 different crops to benefit farmers. Additionally, the government will conduct a thorough review of research to develop seeds that can withstand changing climate conditions. The Finance Minister also mentioned plans to digitize land records for 6cr farmers in collaboration with state governments within the next three years.

Economic Survey for 2023-24, presented on July 22, highlighted the critical need for extensive reforms in India's agricultural sector. It highlighted structural issues that could hinder economic growth such as challenges in controlling food price inflation, maintaining growth, improving price discovery, or the process of determining the price of a commodity through market interactions and dealing with the fragmentation of land.

Economic Survey 2023-24, led by Chief Economic Advisor V Anantha Nageswaran stresses the need for a balanced approach to encourage farmers to produce more while keeping food prices stable. It suggests that returning to traditional farming methods and making thoughtful policy decisions can increase the value of agricultural products, raise farmer’s incomes, create opportunities in food processing and exports, and make farming more appealing to urban youth. The survey highlights the importance of agriculture in India noting that the government heavily subsidizes water, electricity and fertilizers for farmers who also do not pay taxes on their income.

Economic Survey stressed the need for a balanced approach in incentivizing farmers to increase production while keeping food prices stable. The survey suggested that adopting traditional farming practices and better policies can add more value to agriculture, increase farmer’s incomes, create opportunities for food processing and exports, and make farming appealing and productive for urban youth in India. It emphasized that solving the current policy issues could turn these challenges into strengths and set an example for other countries.

Agriculture is crucial for India and the survey noted that farmers receive subsidies for water, electricity and fertilizers with water and electricity often provided for free and their incomes not taxed. Key issues identified include reducing hidden unemployment, encouraging crop diversity and improving overall efficiency in the sector.

The survey recommended various strategies to tackle these challenges such as upgrading agricultural technology, introducing new farming skills, enhancing agricultural marketing, stabilizing prices, adopting innovative farming methods and reducing waste by using fertilizers and water. Strengthening the connections between agriculture and industry was also highlighted. The survey acknowledged that recent government reforms have set the stage for continued growth and emphasized the need for grassroots reforms to sustain this growth until 2047 and beyond, ensuring it improves people's lives and meets their aspirations.