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With boost for agri, industry positive about impact of Union Budget 2020
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Tuesday, 04 February, 2020, 08 : 00 AM [IST]
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Ashwani Maindola, New Delhi
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The Union Budget for fiscal 2020-21 appears to have hit the right notes for the agriculture sector with the Finance Minister Nirmala Sitharaman announcing slew of measures that will ensure never-before growth of the sector. Overall a 16-point agenda has been set for the agriculture sector from providing credits to warehousing and transportation of the perishables through air route.
The experts have also reacted positively to these announcements. President of All India Food Processors’ Association (AIFPA), Dr S Jindal, welcomed the Budget announcements and called the Budget beneficial for the agriculture sector and rural economy.
He said, “However, the Budget didn’t touch processing and packaging part of the agriculture economy but otherwise, the steps announced in the Budget are certainly encouraging, particularly related to supply chain, warehousing, aquaculture, and the idea to quickly transport the perishables to the selling points.”
Dr Jindal added that these measures for agriculture would eventually help the food processing sector.
Prabhat Chaturvedi, CEO, Netafim Agricultural Financing Agency Pvt. Ltd. (NAFA), explained that starting her speech about aspirations and hopes of India, the Finance Minister first addressed the aspirations of rural India, rolling out a 16-point program and reiterating the aim of doubling farmers’ income, that indicates the priority this government gives to agriculture and rural sectors.
“Her statement, NBFCs and co-operative banks are active in agriculture lending and the government recognises that” and the announcement that NABARD Refinance Scheme will be expanded to include agri-focussed NBFCs (like us) and co-operative banks, is specially heartening for us.”
He analysed that government’s target to cover 1 crore hectare land in five years will be closer to getting realised by increased allocation on irrigation and by focussed target on top 100 water-stressed districts across India. Last years’ achievement of 1.1 million hectare coverage under micro-irrigation is also a testimony to that.
He said that the model acts for land-leasing and contract farming will help large-scale profitable farming, encouraging small farmers also to come together and organise in the form of Farmer Producer Organisations (FPOs), while NABARD initiative to create an e-portal of geo-tagged, WDRA-compliant warehouses, integrated with eNAM, is a welcome step, which will help in better prices as well as warehouse-receipt financing for farmers.
Further, the “one product, one district” focus coupled with supply-chain reforms announced, in form of Kisan-trains and Krishi-Udaan flights, will help in reducing wastages and in better remuneration to farmers growing fruits, vegetables, milk and other perishable products, especially from far-flung areas like North-Eastern States.
“Increasing the agri credit target to Rs 15 lakh crore is a welcome step, but agri credit is not only highly skewed in terms of regional distribution (as pointed out in Economic Survey), but also highly skewed towards only Working Capital Loans (KCC) to farmers, the emphasis on long-term loans to farmers need to increase which will improve farm-infrastructure and will lead to capital formation at farm level,” said Chaturvedi.
He added that doubling of milk processing capacity will support the milk prices. The milk production that was growing at 4% CAGR around five years back, has started growing at 6+% CAGR for last few years, hence it’s very important to support the milk prices for better remuneration to farmers.
Simon George, president, Cargill India, said, "Budget with “Aspirational India,” “Economic Development” and “Caring Society” themes is balanced in its approach and would give a necessary boost to the economy.
In a statement, George said that the government reiterated its commitment to doubling the farmer’s income by 2022, and announced a 16-point action plan to boost agriculture and farmers welfare, and Cargill India is committed to contributing towards the goal.
He said, “Agriculture being the backbone of the nation it would be significant to see how the government would push the Krishi Udaan on not just national but international routes and enabling agri and farmers to be part of the global value chains, providing enormous value addition for farmers and the economy. In order to sustain a national cold supply chain for perishables, government announced that Indian Railways will implement Kisan Rail, which will be undertaken through the PPP model for rapid transport of perishable goods. Mapping and geo-tagging of agri-warehousing and setting up warehousing at the taluk level along with integrating warehousing receipts with the e-NAM will provide a great boost to the sector.”
He added that agriculture amalgamated with rural development will see an allocation of Rs 2.83 lakh crore. This Budget allocation will aid in enhancing productivity, improving the income of the farmers with access to markets that would eventually help in reducing farm distress; helping the sector to achieve the aspirational growth rate. With the renewed focus on job opportunities specifically for the rural youth, the Budget ensures to boost the marine fishery for creating an optimistic future with a business outlook as well. On the other hand, teaching entrepreneurial skills to the youth is required in understanding what the potential markets holds for the farm sector.
“Government’s initiative to encourage the states to adopt the three central model laws on agricultural land leasing, agricultural produce & livestock marketing and contract farming should go a long way to get these laws implemented on ground. The government’s plan to boost horticulture at the district level would surely result in a focussed approach and the strengthening of Jaivik Kheti through incorporation of digital platforms is a much awaited reform. Renewable energy is the future and now the farmers can avail the technological advancement for their livelihood through establishing of solar grids and pumps. There is a need to educate the farmers to use the required technology to show desirable results," said George.
Some industry reaction
The budget lays down the roadmap for exports in medium- to long-term basis: Sharad Kumar Saraf, president, Federation of Indian Export Organisations- FIEO, said that the Union budget has attempted at structural changes in agriculture, horticulture and pisciculture, through 16 Action Points, to make India a major player in agro and allied sectors exports in medium to long-term basis besides simultaneously doubling our farmers income.
He said that the scheme of Nirvik will ease the lending process and enhance the availability of credit to exporters. Under the scheme, the insurance over guarantee will now cover upto 90% of the principal and interest both on pre & post shipment credit. The ECGC currently provides such guarantee only upto 60% of the loss to the banks. The premium for the coverage will also get reduced thereby benefiting the MSME exporters. This in turn is expected to enhance accessibility and affordability of credit to exporters, besides, less provision requirement and liquidity due to quick settlement of claim ensuring availability of adequate working capital to the export sector. Looking into the rising uncertainties and slowdown, the scheme is most timely as credit defaults are set to rise in such challenging times.
Budget 2020 empowers India, Industry and individuals: FICCI
Commenting on the Union Budget 2020-21, Dr Sangita Reddy, president, FICCI, said, “Given the constraints that the Finance Minister was facing, the Budget has been a significant balancing act between the need for growth and fiscal prudence. The government has done a commendable job and the various measures announced will strengthen India, individuals and industry. By invoking the deviation clause in FRBM Act and relaxing the fiscal deficit to 3.8 per cent in the current year and targeting 3.5 per cent in the next year, the government has underscored its resolve to support the economy at a time when it needs a fiscal boost. This was FICCI’s key suggestion to the government and through this we expect more money will be left in the hands of the people that will spur consumption and industrial growth. Much of this money will go towards capital expenditure in infrastructure and agriculture sector – two areas that can have the maximum growth enhancing impact.”
D Narain, senior Bayer representative, South Asia, and managing director & CEO, Bayer CropScience Limited, said, “We welcome the continuing emphasis on agriculture and healthcare in the Union Budget. These sectors are foundational to both welfare and the economy.
The focus on irrigation, warehousing, crop insurance and credit availability will go a long way to increase farm profitability in India and improve the lives of significant number of farmers. The allocation of Rs 69,000 crore for the healthcare sector too is a commendable step.
“We remain confident that with a supportive policy environment, all stakeholders can work together towards effective implementation of the initiatives outlined.”
Krish Iyer, president & CEO, Walmart India, stated, “The Budget 2020 would lead to creation of a new aspirational India, anchored around agriculture, health and education. This Budget, seeks to strengthen grassroots of the economy with its positive push towards creation of a strong agriculture infrastructure, which will give a big push to India’s rural sector. The rate cuts in the personal income tax rates would increase disposable income in the hands of the Indian middle class which will enhance consumption through improved purchasing power. These two positive budgetary intervention together would drive a strong demand growth that drives the Indian economy in turn. This is a Budget that unveils the roadmap to Prime Minister’s vision of $5 trillion economy by 2024-25 by reinvigorating the hopes of both urban and rural consumers.”
Gaurav Dewan, COO and business head, Travel Food Services, ''The government's focus on development is clear and reinforced with the allocation of additional funds to the airport, railway and the highway sectors. This will boost business and leisure travel thereby generating employment, connectivity and overall economic development of catchment areas. This commitment towards tourism sector through allocation of Rs 2,500 crore, infusion of Rs 1.7 lakh crore in infrastructure sector, doubling of aircraft fleet and enhanced focus on cultural tourism among other aspects, is bound to create a multiplier effect on inbound traffic to India, thereby propelling the travel retail economy to further growth. With digitisation and infusion of positive funds in the economy, we look forward to rubber hitting the road in the days to come.''
The CII president stated that Budget sets the stage for economic revival while maintaining fiscal balance. The Finance Minister does a tight rope walk while adding pace to reforms and sending positive sentiment to industry.
“The Finance Minister had an extremely tight rope to walk, balancing a severely constrained fiscal space with the need for higher government expenditure for boosting investments and consumption. She has done that well in addressing the key priorities while being within the bounds of the Fiscal Responsibility and Budget Management (FRBM) Act,” said Vikram Kirloskar, president, CII.
He added that the announcements related to agriculture, specially encouraging states who adopt model laws, will pave the way for adoption of the much needed agri reforms, leading to better returns for the farmers as well as enhanced private sector engagement with agriculture.
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