New Delhi: The pre-budget Economic Survey on Monday called for urgent reforms in India’s agricultural sector, warning that the structural issues could impede the country’s overall economic growth trajectory. The survey, tabled in Parliament by Finance Minister Nirmala Sitharaman, highlighted the untapped potential of the Indian agriculture sector compared to other economies. Chief Economic Advisor V Anantha Nageswaran called for a pan-India dialogue on the agriculture sector.
Structural transformation needed for agricultural sector
The survey, presented ahead of the annual budget, emphasised that India has yet to fully leverage its agricultural sector for economic growth and job creation, unlike East Asian economies and Western developed nations. “Indian agriculture is not in a crisis now but requires a serious structural transformation because climate change and water criticality loom large in the times to come,” the survey stated.
The CEA advocated for a reassessment of existing policies, despite current government subsidies and support measures for farmers. “The payoff will be immense if we untie the knots that bedevil farm sector policies,” Nageswaran said in the survey’s preface.
What are the key challenges identified in Economic Survey?
While the government provides substantial support to farmers through subsidies on water, electricity, and fertilizers, along with income tax exemptions and minimum support prices, there is room for improvement in policy implementation, he added. The survey identified several key challenges, including balancing growth with food inflation management, improving price discovery, and addressing land fragmentation.
To address these challenges, the survey recommends multi-pronged reforms, which include: upgrading agricultural technology, enhancing marketing avenues, adopting farming innovations, reducing input wastage, and improving the agriculture-industry linkages.
The document stressed the need to shift focus from basic food security to nutritional security, aligning with a ‘demand-driven food system’ that is both nutritious and environmentally sustainable.
The survey suggested that policymakers must strike a delicate balance between incentivizing farmers to increase production and keeping food prices within acceptable limits. “This dual objective requires careful policy interventions.” The survey also emphasized the need for a farmer-friendly policy framework to ensure markets function in farmers’ interests.
It recommended avoiding bans on futures or options markets at the first sign of price spikes; invoking bans only under exceptional circumstances; re-examining the inflation-targeting framework; increasing the total net irrigated area, and aligning farming practices with climate considerations.
Survey highlighted the potential of agriculture
Looking ahead to 2047, the survey highlighted the potential of agriculture and allied sectors (horticulture, livestock, fisheries, dairy, and food processing) for sustained employment generation. “To sustain growth for nearly a generation up to 2047 or more and to ensure that it makes people’s lives better and fulfills their aspirations, bottom-up reforms are necessary,” it noted. It suggested that India may need to reconsider the traditional development model of transitioning from agriculture to industry and services.
Budget 2024: The CEA advocated for a reassessment of existing policies, despite current government subsidies and support measures for farmers. Economy Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
