Union Budget 2008-09 - Comments on the agricultural sector

INDIAN UNION BUDGET (2008-09) (PART-01)

We start with our analysis of the Union Budget by doing the sectoral analysis of the most important sector in Indian context – Agriculture. Some may claim that agriculture has lost its importance over the years but the fact remains that more than 60% of the Indian population is still dependant on agriculture either directly or indirectly. With the focus on SELF RELIANCE & SUSTAINABILITY the Budget essentially considers the following problems & thereby increases allocations in the following-

Problems
Inefficient support systems
Low levels of technology & infrastructure
Marketing and warehousing bottlenecks
Low capital formation
Degradation of land and water resources

Increased Allocation For
Food storage and warehousing
Soil and water conservation
Agriculture research and education
Irrigation and flood control

The situation isn’t too promising as average yield per hectare in India (1.8 tonnes) is far lower than that of China (4.3 tonnes) and Japan (4.8 tonnes), surface water irrigation efficiency ranges b/w 25-40% in India; b/w 40-45% in Malaysia; and 50-60% in Japan. In the past three decades of Green Revolution, area under agriculture increased at 0.4% as compared to 3% increase in agricultural production. There have been stagnated yields and wide price fluctuations. There happens to be a strong relationship between per hectare yields of food grains and rural development.

ACTUAL PRODUCTION RELATIVE TO TARGETS (MISSING THE MARK)
CROP - AVERAGE (%)
Rice - 94.7
Wheat - 91.4
Coarse cereals - 94.6
Pulses - 87.7
Foodgrains - 93
Oilseeds - 85.3
Sugarcane - 98.7
Cotton - 93.7

The budget proposals relevant for the agricultural sector:
* National Commission on Agriculture has recommended market facilities for farmers within a radius of 5 km i.e. one market for every 80 sq km. Hence, density of markets/mandis needs to increase nearly five and half times
* Trading platforms like NCDEX, MCX needs further boost
* Cold storage units exist only in 9% of the regulated markets as of now

So, WHAT WOULD THE GOVERNMENT DO ABOUT THE ISSUES? Would it be only limited to policies, allocations, huge sums of money and no transparency??? Or is the condition going to improve. Would Indian agriculture really become SELF RELIANT & SUSTAINABLE??
These are some of the issues which need to be addressed, but at this point they don’t seem to be getting the attention they deserve. Probably one year from now (by the time of next budget) we might be in a situation to analyze these issues in greater depth and comment on-

“Whether promises would remain promises or this time the government would really make a difference.”

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For Team FINAX
Ashutosh Taparia