The Union Budget of 2016 has widely been publicised as a “pro-farmer” Budget.

An analysis by R. Ramakumar in the current issue of Frontline critically assesses the claim that farmers’ incomes will be doubled by 2022. Ramakumar shows that the prices of farm inputs such as fertilizers, pesticides, energy and fodder increased sharply after 2008-09 and particularly after 2011-12. On the other hand, the minimum support prices for most crops rose very little after 2011-12, indicating a stagnation or decline in farm profitability.

There is also a crisis in farm credit, with an increase in debt-asset ratios and an increasing dependence of farmers on private moneylenders. Public expenditure in research and extension remains low.

The current Budget seeks to reduce food and fertilizer subsidies. Ramakumar writes that withdrawal of these subsidies will adversely affect farm input-output price ratios and profitability. The promise of direct transfer of fertilizer subsidy without any implementation plan raises serious doubts regarding the success, or even the intent, of such policy. The increase in agricultural credit supply is also unlikely to provide much relief to farmers, as a large part of agricultural credit in recent years has been diverted to the corporate sector for agribusiness activity. The article also points out that the actual expenditure on agriculture has been below the amount budgeted in every year of the term of the current Finance Minister.

Ramakumar contends that it is unlikely that the current Budget will be able to address the growing agricultural distress, let alone bring prosperity to a large majority of farmers.

The editorial in the same issue of Frontline establishes the sleight of hand that is behind the claim of a (greater than) 100 per cent increase in the outlay for agriculture and farmers’ welfare and a 10 per cent increase in the allocation for MGNREGA. In both cases, real increases are substantially lower than the claim.

Links to the article and editorial are below:

http://www.frontline.in/cover-story/editorial-an-opportunity-missed/article8356005.ece
http://www.frontline.in/cover-story/seeds-of-distress/article8356028.ece