India’s poor AOI is a clear reminder of the need to achieve a key sustainable development goal of high agricultural growth.
While the overall budgetary allocation for the agriculture sector has marginally increased by 4.4% in the Union Budget 2022-23, the rate of growth is lower than the current inflation rate of 5.5%-6%. The Food and Agriculture Organization (FAO) of the United Nations (UN) reports for 2001 to 2019 show that, globally, India ranks among the top 10 countries in terms of government spending in agriculture, which accounts for nearly its total. 7.3% share. government spending. However, India lags behind several low-income countries such as Malawi (18%), Mali (12.4%), Bhutan (12%), Nepal (8%), as well as upper middle-income countries such as Guyana (10.3%). ) and China (9.6%).
India ranks low
The picture turns and looks gloomy when we look at the Agricultural Orientation Index (AOI) – an index that was developed in 2015 as part of Goal 2 (Zero Hunger) of the 2030 Agenda for Sustainable Development. Sustainable Development Goals (SDGs) 2 emphasizes increased investment in rural infrastructure, agricultural research and extension services, development of technology to increase agricultural productivity, and poverty alleviation in middle and low-income countries. AOI is calculated by dividing the agricultural share of government expenditure by the agricultural value added share of GDP. In other words, it measures the ratio between government spending towards the agriculture sector and the sector’s contribution to GDP. India’s index is one of the lowest, indicating that spending towards agriculture is not commensurate with the sector’s contribution to GDP.
Compare with Asia
Although AOI has shown improvement since the mid-2000s, as part of a general revival in many middle-income countries, India’s AOI (https://bit.ly/3rBSorH) is among the lowest in Asia and many others in middle-income and high-income countries. Asia as a whole performs much better, with relatively higher performances by East Asian countries. China has been performing remarkably well, with one index steadily improving and one crossing.
Similarly, in countries such as the Republic of Korea, the value of AOI has been greater than one and greater than two, respectively, since 2005-06. Low-income African countries like Zambia, despite being landlocked countries, have commendable spending in the agriculture sector. India ranks only 38th in the world despite being an agrarian economy, with a large population dependent on the agricultural sector for their livelihood, and being one of the largest producers of many crops produced and consumed in the world. in spite of.
Heavy spending on agriculture by East Asian countries is also reflected in their high crop yields. For example, the total grain yield in India is only 3,282 kg per hectare as compared to 4,225 kg per hectare in Asia. Within the Asian region, East Asia has the highest grain yield at 6,237 kg per hectare. In China, even with an average landholding size of 0.6 hectares, which is much lower than India’s average landholding size, the region’s performance in terms of crop yield is much higher than that of India. For example, the yield of cereals in China is 6,296 kg per hectare, the yield of pulses is 1,815 kg per hectare and the yield of vegetable crops is 25,546 kg per hectare; The respective figures for India are 3,282 kg, 704 kg and 15,451 kg respectively. Both India and China are among the world’s largest producers of wheat, rice, cotton and maize.
A closer look at the budgetary allocation for the agriculture sector reveals that there has been a severe shortage of funds for important schemes like crop insurance and minimum support price (MSP). Despite the overall increase in budgetary outlay, the allocation for Market Intervention Scheme and Price Support Scheme (MIS-PSS) was only ₹1,500 crore. This is 62% lower than the previous allocation of ₹3,959.61 crore in the Revised Estimates (RE) for FY 2021-22.
other important deductions
Similarly, the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-ASHA) experienced a significant shortfall of only one crore in 2021-22 against the allocation of ₹400 crore. It was allocated only ₹1 crore against the expenditure of ₹400 crore in the year 2021-22. Both the schemes are relevant to ensure MSP-based procurement operations in the country especially for pulses and oilseeds. In addition, the distribution of pulses to the states for welfare schemes has also been reduced to ₹9 crore from the allocated amount of ₹50 crore (Revised Estimate) for FY 2021-22 and ₹300 crore in the year 2021-22. In addition, there has been an overall shortfall of ₹718.8 crore in total central schemes/projects, which may have a serious impact on the performance of the sector.
While one can still argue that capital investment in agriculture is more important than price support programmes, there has been no significant and consistent increase in allocation for capital investment, especially in promoting rural infrastructure and marketing facilities. happened. The allocation for rural development was 5.59% in the last budget and has been reduced to 5.23%. Allocation of funds for schemes like Pradhan Mantri Kisan Samman Nidhi (PM Kisan), Pradhan Mantri Kisan Maandhan Yojana, although desirable, will not result in wealth generation in the long run.
measures to implement
Intensification of government spending towards the agriculture sector is the key to achieving the Sustainable Development Goals of high agricultural growth and farm incomes. Emphasis should be laid on development of rural infrastructure and rural transport facilities with focus on development of irrigation facilities, urban infrastructure and national highways, as well as increasing the number of markets, as suggested by the National Commission for Farmers has gone. , These measures will play an important role in increasing access to farmers’ markets and integrating small and marginal farmers into the agricultural supply chain to a greater extent.
Poornima Verma is a Faculty and Chairperson at the Institute of Agricultural Management, Indian Institute of Management Ahmedabad. Views expressed are personal
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