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Five ways Budget 2017 can facilitate farmers

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mark blake

Agriculture should be the focus of this year’s Budget, according to a Twitter poll conducted by the ministry of finance last week that saw some 66% of more than 21,400 respondents seeking a more agriculture-focused Budget. Not infrastructure. Not the services and manufacturing industries. But agriculture. Clearly, to enhance the ‘feel good’ factor, agriculture has to pick up. Demonetisation compelled farmers to move towards cashless payments and digitalisation. Now they need greater ‘ease of doing business’ to harness that momentum. Here are five steps the Narendra Modi government could take to make that possible.

1. Strengthen tenancy laws: Agriculture needs economies of scale. The average farm in the country is 1.15 hectares in size and will shrink further by 2020-21. According to the 2013 Situation Assessment Survey of Farmers/Agricultural Households, you can’t earn a living from a farm smaller than one hectare. To survive, majority farmers rent land. Farmland tenancy is illegal in most states. But unlike manufacturing, farmers can’t relocate to favourably inclined states. In the absence of a law, landowners don’t sign rent agreements and tenant farmers have no rights. Often, the owner leaves land fallow rather than be ‘grabbed’ by a tenant. Tenants don’t invest in the land due to uncertain tenure. A scarce resource is wasted. Legal tenancy will permit effective consolidation for farming without depriving landowners. Tenant farmers will qualify for bank loans. Digitisation of land records will further strengthen property rights and turn rural land into a bankable asset.

2. Liberalise input markets: Unlike manufacturing, farmers cannot freely import or adopt technology. Of the 140 million hectares of cultivated land, nearly 120 million hectares are degraded. Soil health cards will not lead to precision agriculture unless fertiliser, machinery and seed markets are willing to deliver the right input at the right time and the right price to the farmer.

 

 

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