Bharat Nirman

Union finance minister Pranab Mukherjee has been able to convey the impression that the agricultural sector was a key area of policy focus for his budget, but just about. He has chosen some good policies and programmes to boost agricultural development, but has done so in a half-hearted manner. Whether the agricultural sector actually benefits from his attention remains to be seen given that he has been niggardly in the allocation of financial resources. Most programmes have been allocated paltry sums of around Rs 300 crore each. These include integrated development of 60,000 pulse villages, promotion of oil palm, setting up of vegetable clusters, popularisation of millets, augmentation of fodder resources and national mission for protein supplements through development of livestock, dairy, piggery, goat rearing and fisheries. What impact a measly Rs 300 crore has on the livelihood of targeted beneficiaries numbering in millions can well be imagined. While the move to extend rice-based green revolution to the eastern region is laudable, the allocation of a mere Rs 400 crore for the effort is surprising. Considering the natural endowments of this tract — deep and fertile soil, copious water resources and plentiful sunlight — the region surely has the potential to steer the country towards the second green revolution, much the way the north-western region did earlier. But the proposed funding is inadequate, given that this sum is to be shared between as many as six eastern states, including big ones like West Bengal and Bihar.

For every good idea that the finance minister had, he seems to have had one bad idea as well. Thus, while he very correctly said that regulated mandis prevent retailers from integrating their enterprises with farmers for the benefit of both producers and consumers, he fell short of announcing either an incentive scheme for promotion of organised retail chains or allowing foreign direct investment in multi-brand retailing, nor did he propose some incentives scheme that would encourage state governments to pursue the reform of agricultural produce marketing Acts.

Similarly, while he took some helpful steps to enhance the flow of credit to agriculture, with the agricultural credit target raised by a whopping Rs 1 lakh crore to be pitched in at Rs 4,75,000 crore for next fiscal, he offered interest rates subvention, bringing down the effective rate of interest on agricultural credit to 4 per cent for those who repay loans on time. This is not a particularly good idea because it would encourage banks to lend more to the same group of non-defaulter farmers, generally large land holders, rather than roping in new borrowers, who may, actually, be in greater need of such credit.

In fertilisers too, the budget doles out sops such as infrastructure status and tax concessions for fresh capital investment, but these are unlikely to yield any result unless critical reforms, pending for long, are also carried out to inspire confidence among prospective investors about returns to investment in agriculture. The most important positive for agriculture in the budget is the emphasisplaced on rural infrastructure building. Thankfully, Mr Mukherjee has helped re-focus public attention on Bharat Nirman — the rural infrastructure initiative of the United Progressive Alliance government — rather than just on the rural employment guarantee programme. Bharat Nirman ought to be the real foundation for rural development.