Budget 2019 expectations: Modi govt may provide several long term measures for agriculture sector, says SBI report

With the Union Budget 2019 presentation date inching closer, representatives of different sectors are waiting with bated breath to see it in their favour. But the agriculture sector is likely to get a major focus as the majority of the polulation still resides in villages and agriculture and agri-related jobs are the bedrock of their existence. SBI's research report Ecowrap, which was released on Friday, expects a plethora of measures for the agriculture sector in the coming budget to achieve the government's objective of doubling farm income by 2022. The report authored by Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, has suggested its key agenda for the agricultural sector.

According to the SBI report, "The coming budget could have a plethora of measures for the agriculture sector. We believe, the following measures could be emulated for the long term benefits for the sector."

1. Financial institutions and government can lend their helping hands to the farmers by providing market support starting from cultivation to sales. In this context, the Supplyco model as currently prevalent in Kerala could be effectively remodelled so as to transfer maximum benefits to consumers and farmers in the entire crop to cash cycle.

2. Capital formation in agriculture has significantly stagnated. A trend reversal will achieve the objective of doubling farm income by 2022. This can be achieved by providing an incentive to agri term loans for investment purpose through an enabling mechanism of either interest subvention or a credit guarantee fund.

3. Fasal Bima Yojana /PMFBY currently cover mainly cover 3 types of crops, namely food crops (cereals, Millets, & Pulses), Oilseeds, annual commercial/horticulture crops. These crops cover only 30% of the total crop loans given by banks. Government should cover all types of crops under PMFBY, which will help banks to manage the risks.

4. The government must develop efficient global value chains and liberalise land lease markets across all states, which should encourage contract farming on a medium to long-term basis. 

5. The income support to the farmers should be provided in higher magnitude for a prolonged period, at least for five years.