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STEP UP AGRI-SPENDING, BOOST FARM INCOMES
What the article is about?
- Talks about India’s poor AOI, reduced spending on agriculture and the way ahead.
Syllabus: GS-III Government Budgeting,Issues Related To Farm Subsidies & MSP
AOI:
- Agriculture Orientation Index (AOI): an index developed as part of Goal 2 (Zero Hunger) of the 2030 Agenda for Sustainable Development in 2015.
- The Sustainable Development Goal (SDG) 2 emphasises an increase in investment in rural infrastructure, agricultural research and extension services, development of technology to enhance agricultural productivity and eradication of poverty in middle- and lower-income countries.
- The AOI measures the ratio between government spending towards the agricultural sector and the sector’s contribution to GDP.
- India holds only the 38th rank in the world, despite being an agrarian economy wherein a huge population is dependent on the agricultural sector for its livelihood, and despite being among the largest producers of several crops produced and consumed in the world.
- India’s AOI is one of the lowest in Asia and among several other middle-income and upper-income countries.
- In China, even with an average landholding size of 0.6 hectares, which is much lower than India’s average landholding size, the performance of the sector in terms of crop yield is much higher than India
Significant reduction in India’s Agri spending:
- Closer analysis of the budgetary allocation shows that there has been a drastic slashing of funds toward important schemes such as crop insurance and minimum support price (MSP).
- The allocation towards Market Intervention Scheme and Price Support Scheme (MIS-PSS) was only ₹1,500 crore.
- This is 62% less than the previous allocation of ₹3,959.61 crores in revised estimates (RE) of FY 2021-22.
- Similarly, the PM-AASHA experienced a significant reduction to only one crore as against the allocation of ₹400 crores in 2021-22.
- Both schemes are pertinent to ensure MSP-based procurement operations in the country, especially for pulses and oilseeds.
- Additionally, there is an overall reduction in ₹718.8 crores in total central schemes/projects, which may have serious implications for the performance of the sector.
- Allocation for rural development was 5.59% in the previous Budget and it has been reduced to 5.23%.
Way Ahead:
- The intensification in government spending towards the agricultural sector is the key to attaining the sustainable development goals of higher agricultural growth and farm income.
- The focus on the development of irrigation facilities, urban infrastructure and development of national highways must be complemented with an emphasis on the development of rural infrastructure and rural transportation facilities, along with an increase in the number of markets, as suggested by the National Commission on Farmers.
- These measures will play a crucial role in enhancing farmers’ access to markets and integrating small and marginal farmers into the agricultural supply chain to a greater extent.
