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Budget 2022: plan to incentivize value addition in agri sector to enhance farmers’ income

Budget 2022 plan to incentivize value addition in agri sector to enhance farmers' income

The government is developing a plan to incentivize value addition in Agri, which can enhance farmers’ earnings, in order to ensure the sector’s development even after agricultural laws were repealed late last year.

According to officials, the strategy’s overall goal is to create backward links to the farm. The specifics are expected to be published in the budget on February 1st.

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‘The overall goal is to provide support for investments in order to develop value addition and backward linkages,’ a government official added.

Export Promotions Likely

‘This would also include export assistance to assist Indian farmers in establishing markets for their products,’ the official said. Additional transportation, marketing, and branding benefits for agricultural food exports are likely. Steps to improve the cooperative component are also expected, with the establishment of a new dedicated ministry.

In addition to the ₹10,900 crore production-linked incentive (PLI) plan for food processing, the government is considering additional incentives to encourage the development of essential storage and logistical infrastructure. The food processing sector’s gross value added (GVA) was ₹2.24 lakh crore in FY20, accounting for 1.7 percent of the total. The food processing sector’s GVA accounted for 11.38 percent of the GVA in the agricultural and allied sectors.

Global  mind set, Exports, Credit support, Cold storages

‘Value addition and farm produce exports can go a long way toward assuring more sustainable export growth, particularly if we can minimize our reliance on exports of water-guzzlers like rice,’ said Aditi Nayar, chief economist at ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited).

A comprehensive support strategy to help farmers relying on a single crop diversify their income through research and innovation, as well as credit support, is also being discussed, according to the official.

‘Policies must take priority activity that is driven by demand. More crucially, policies should now be developed with the concept of ‘global’ in mind for each agricultural commodity, rather than just regional or local’ said Sachchidanand Shukla, Mahindra & Mahindra’s chief economist.

He believes it is past time to connect the processing industry to retail, which would speed up farm-to-fork pathways and put more money in farmers’ pockets. He noted that the government ‘must also accelerate or incentivize investments in logistics, especially cold storages.’

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In 2015-16, Prime Minister Narendra Modi declared an objective of doubling farmers’ incomes by 2022-23, but the pandemic has made that goal impossible to achieve.

In the current fiscal year’s budget, Finance Minister Nirmala Sitharaman announced nine initiatives for the agriculture sector, including raising the farm loan target to ₹16.5 lakh crore.