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Budget 2017: Pushing The Farm Economy On The Tech Path

06/02/2017 12:27 PM IST | Updated 06/02/2017 1:28 PM IST
Amit Dave / Reuters

Enhancing scale and improving efficiency of infrastructure and services delivery in rural areas has been accorded due importance in the Union budget 2017-18, along with a definitive move to transition the rural economy on a digital path. Asset creation under MNREGA (₹48,000 crore allocation), appropriate risk management mechanisms (50% coverage of crop insurance by 2019), coupled with better amenities for rural areas are some of the commendable initiatives addressed in the budget.

There is also a continued focus on sustainable and profitable agriculture as well. The provision for setting up of mini labs in all Krishi Vigyan Kendras (KVKs), 100% coverage for soil testing, creation of a long-term irrigation fund under NABARD and increased thrust on micro irrigation, robust irrigation assets creation under MGNREGA (using the best of geo tagging and remote space monitoring technology), amongst others, will significantly boost creation of productive rural assets.

Digitally inclusive markets

Extension of eNAM rollout to 585 agricultural produce market committees (APMCs) with support of ₹440 crore will augment mandi infrastructure and enable creation of a massive digital transaction platform. With an agri GDP of well over US$300 billion, this can potentially create the world's largest digital agri commodity spot transaction platform. Structural reforms on digital payments infrastructure and multiple initiatives on digitally enabled financial inclusion (including a strong mission to target ₹2500 crore digital transactions in 2017-18 through multiple payment platforms) will provide a boost for digitised financial inclusion (a sizable portion of these targeted transactions can potentially be mandi transactions for agri commodities).

Extension of eNAM rollout to 585 APMCs with support of ₹440 crore will augment mandi infrastructure and enable creation of a massive digital transaction platform.

Setting up of an expert committee to iron out the operational and legal framework, to actualise integration of electronic spot and derivatives markets will facilitate efficient price discovery and robust transaction effectiveness, thereby ensuring less price volatility and enhanced farmer incomes. Digital integration of all 63,000 Primary Agri Co-operative Society (PACS) with District Central Co-operative Banks (DCCBs) will also be a strong enabler for the above. Further, an enhanced focus on broadband connectivity through Bharatnet (1.5 lakh gram panchayats being linked digitally) will help facilitate digital inclusion.

Reaping the full benefits of diversified agriculture

While over two-thirds of Indian agriculture is diversified, the full benefits of diversification need to be reaped for sustainably enhancing farmer incomes. A strengthened advisory for amendment of APMC Acts in all states to enable de-notification of perishables will enable greater focus on processor anchored value chains, reduce price volatility, as well as ensure higher and more stable incomes for farmers in the long run. This will go a long way in integrating the farming community with the eNAM initiative also. The dairy sector has been identified as an important subsector to boost farmer incomes.

A second white revolution is underway through a renewed focus on milk collection and development of processing infrastructure by way of allocation of ₹8000 crore over three years for a newly conceptualised Dairy Processing Infrastructure Fund. There is already a fairly successful electronic spot platform for milk-based commodities which can seamlessly integrate with the dairy processing infrastructure leg.

Enabling infrastructure

In order to leverage the fullest benefits of eNAM, it is critical to spruce up the enabling infrastructure beyond the transactional domain of the electronic spot markets. Setting up of multimodal logistics parks to enable end-to-end logistics (villages to markets/ports), has the potential to create seamless and efficient integrated agri value chains.

Setting up of multimodal logistics parks to enable end-to-end logistics (villages to markets/ports), has the potential to create seamless and efficient integrated agri value chains.

A significant part of the record allocation of ₹2.4 lakh crores for air, road, water and air transport will result in substantial tangible benefits in this direction. For enhanced investments across agri value chains infrastructure, the easing of FDI norms, including an intent to phase out the Foreign Investment Promotion Board (FIPB), will be a great enabler for the development of the food processing sector. Doubling of the allocation to the PM MUDRA Yojana to ₹2.44 lakh crores, cash flow-based loans from SIDBI, coupled with income tax reduction for startups and MSMEs will go a long way in promoting primary and secondary processing units.

Conclusion

This budget has several bold initiatives to boost the rural economy and help catapult it on the digital path. The transition is indeed a progressive step and is the beginning of a journey to fully actualise the benefits of the best available technology to enhance farm incomes.

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