The Government of India presented the Interim Budget 2024-25 in Parliament on 1 February, 2024. The Interim Union Budget laid a strong foundation by focusing on four major castes of the country and ‘Annadata’ (Farmer) is amongst one of them. Highlighting that the ‘A_nnadata_’s’ welfare is the highest priority of the Centre, The finance minister iterated that farmers’ empowerment and well-being will drive the country forward.

Towards this endeavour, the total allocation towards Agriculture and Allied Sectors has been kept Rs 1.3 lakh crore in 2024-25, an increase by approximately Rs 3,000 crore in comparison to the previous Budget. However, the sector’s share in the total union budget and in Gross Domestic Product (GDP) has declined since 2019-20 indicating that the sector has not received the required impetus commensurate to the growing economy.

Furthermore, similar to the previous years, around 55 per cent of the agriculture and allied sectors budget is directed towards two central sector schemes (100 per cent financed by the Union government) –PM Kisan Samman Nidhi Yojana (PM-KISAN), and Pradhan Mantri Fasal Bima Yojana (PMFBY) by the Union Government in the interim budget. However, this quantum does not seem to benefit a substantial contributor to the sectors, i.e. women farmers. As of December 2023, women farmers constitute only around 16 per cent and 25 per cent of the beneficiaries under PMFBY and PM-KISAN respectively.

Revamping of major schemes

During recent times, the Department of Agriculture and Farmers Welfare has initiated a major revamping of Centrally Sponsored Schemes (CSS) (financed by both Union and state governments) and all the schemes have been merged under either of the three umbrella schemes of Rashtriya Krishi Vikas Yojana, National Mission on Natural Farming and Krishionnati Yojana. It was assumed that the revamping of major schemes was done to increase the quantum of funds available to a basket of interventions rather than having a dozen schemes with a meagre outlay. The budgetary allocations for these centrally sponsored schemes have increased from 2019-20 to 2022-23, however, there is, on average, 36 per cent underutilisation of funds over time. Additionally, the consolidation of schemes has added to the imperviousness and made it difficult to identify allocation addressing particular issues in agriculture.

In the interim budget two new central sector schemes namely Blended Capital Support to finance Startups for agriculture and Rural Enterprise Relevant for Farm Produce Chain and NAMO DRONE DIDI, have been launched with the allocation of Rs 62.5 crore and Rs 500 crore respectively.

Complementarities of allied sectors

Allied sectors including animal husbandry, dairying and fisheries are increasingly recognised as emerging sectors in terms of performance relative to the core agriculture sector. With declining per capita land availability, these sectors hold potential to supplement the uncertain income from agricultural activity. Thus, in the interim budget speech emphasis has been laid on these sectors. Accordingly, the allocations to the departments of animal husbandry and dairying, and fisheries have increased from the last year’s budget, majorly because of an increase in budgetary allocation towards fisheries under the Pradhan Mantri Matsya Sampada Yojana.

One major development in the Animal Husbandry and Dairying sector is the conversion of two schemes, namely, Rashtriya Gokul Mission and Dairy Development scheme, from centrally sponsored to central sector schemes but there has been a decline in total allocations for these two schemes over the last year’s revised estimates. Due to this change like the scheme, the funds shall not be complemented with the state allocations and, given the absolute decline in the spending by the Union Government, the effective implementation of these schemes would be difficult.

Beyond allocations, utilisation needs attention

In the agriculture and allied sectors, it is also observed that from the planning stage to the actual utilisation of the available funds, there has been a significant variation in the allocation and release of funds. Budget allocations (BE) are always lower than the resources demanded by the respective departments themselves and there is a further decline in the revised estimates and actual expenditure incurred.

There could be multiple reasons for this underutilisation. One possible reason could be the change in the guidelines of CSS in releasing funds, especially after the introduction of a Single Nodal Account/ Agency. Up to 2020-21, the release of funds to the states for CSSs used to happen in two instalments (50 per cent each for two cropping seasons) but since 2021-22, funds have been released in four equal instalments with conditionalities attached in terms of matching contribution by the state governments and the level of utilization of previous instalments to receive subsequent instalments. Many of the states because of their poor fiscal position are unable to contribute their part, leading to the underutilisation of the budgeted amount. Other probable reasons include delays in releasing funds, inefficiencies in scheme implementation, lack of scrutiny of projects, etc.