According to the analytics firm CareEdge, the current budgeting exercise is also confronted by economic headwinds such as the deceleration in the global economy, pressures in the agriculture sector, and strains on the rural economy. The agriculture sector has grappled with immediate challenges such as adverse weather conditions, the impact of climate change, and inflationary pressures. So , the Union Budget for 2023-24, the finance minister allocated ₹1.25 lakh crore to Ministry of Agriculture and Farmers’ Welfare, including Agricultural Education and Research. In this regard, here’s what leading industry leaders expect from the upcoming Interim Budget 2024 in order to strengthen India’s agriculture sector :
1. Agri-credit target
The government is likely to announce a substantial increase in the agricultural credit target to ₹22-25 lakh crore for the next fiscal and ensure every eligible farmer has access to institutional credit. The government’s agri-credit target is ₹20 lakh crore for the ongoing fiscal. Director General of industry body CII Chandrajit Banerjee said agriculture and rural segments should be a key priority to drive inclusive growth in the interim Budget.
2. Fertiliser Subsidy
CII has also suggested that the food and fertiliser subsidies, which constitute the bulk of the subsidies, should be rationalised by better targeting and efficient utilisation without impacting the deserving beneficiaries. With economic growth and declining poverty, it is important to use more current data for better targeting. The Ministry of Consumer Affairs, Food, and Public Distribution has forecasted a food subsidy expenditure of $26.52 billion for FY25, indicating a 10 per cent rise from the anticipated allocation of nearly $24.11 billion in FY24.
3. Inclusion of agri residues in priority lending
Ashvin Patil, Founder and Director of Biofuels Junction believes that the inclusion and recognition of those working with agri-residues as feedstock for biofuels in the priority sector lending mandate in the budget can help open up significant financing opportunities for smaller players in the industry and rural entrepreneurs. Currently, aspects like tractor financing are part of priority sector lending, which benefits from lower interest rates. “It would not only provide financial impetus to emerging sectors within agriculture but also align with broader goals of sustainability and innovation in agricultural practices. It will also encourage farmers to refrain from stubble burning and contribute to the growing biofuel industry, creating a sustainable cycle of waste-to-wealth,” added Patil.
4.Tax rebate for R&D spends
Previously, there was a 200 percent tax rebate for in-house Research & Development spends, which meant that businesses had the incentive to dedicate more of their funds on research which is vital in the introduction of more resilient varieties to farmers. As of 2016-17, this has been reduced to 100 percent.