The most visible impact of Budget 2012 is a surge in fertiliser stocks, swooshing up on finance minister Pranab Mukherjee’s promise to give the sector a big boost in the next five years. The fertiliser lobby has much to celebrate in terms of the agriculture budget. But what about the farmer?

On the face of it, the 18 percent enhanced outlay on agriculture including a Rs 100,000 crore increase in credit flow and 3 percent subvention on farm loans should be good news for the aam kisan. But by failing yet again to address the problem of high input cost of farming and low price of farm produce, it holds out little hope for him. Nor has there been any attempt to rationalise, rather than merely reduce, farm subsidies.

On March 1, the government had announced its intention to further cut fertiliser subsidies, particularly those on phosphatic and potash fertilisers. The 2011-12 fertiliser subsidy was budgeted at Rs 50,000 crore but the revised estimates may be anything from Rs 70,000 to Rs 90,000 crore. Already, farmers have been protesting against the continual hike in the price of DAP (di-ammonium phosphate) and MoP (Muriate of Postash).

To rein in prices of fertilisers, the FM correctly feels the need to reduce imports and build up domestic capacity. Urea units are to be encouraged to meet the demand for nitrogenous fertiliser through viability gap funding. For reducing import dependence for phosphatic fertilisers, he suggests promoting domestically produced Single Super Phosphate (SSP) rather than relying on imported Di-Ammonium Phosphate (the most popular fertiliser after urea). But many farmers believe that SSP induces soil hardness. Says Mukesh Muriah of Narsimhapur, “SSP is not used any more. It is inferior to DAP. Our soil became so hard due to SSP application that from 25 HP tractors, we started using 50 HP tractors”.

While this is good news for fertiliser companies, it brings no relief to the farmer. He will continue to face increased fertiliser prices and endure shortages. An attempt to reduce the farmers’ dependence on chemical fertilisers by promoting bio-manures would be a double whammy – cutting down on input costs while trimming the fertiliser subsidy. It’s difficult to understand why, when forward-thinking agricultural scientists now urge farmers to scale down chemical inputs and increase application of organic manures, the budget does not reflect this. It must be mentioned, in this context, that an enhanced allocation for animal husbandry is welcome as this will facilitate access to organic inputs.

Apart from fertilisers, the farmer also has to contend with higher seed, labour, pesticide and power costs. Increasing credit and allowing him to use the Kisan Credit Card at ATMs are welcome moves, but they are mere palliatives. The extent of farm loan default underlines how precarious the business of farming has become, as capacity for taking risk is nil. A single crop failure can drive a debt-ridden farmer to suicide.

From the budget, it is clear that the UPA is committed to the National Food Security Bill. The FM has made all the right noises: reforming the Public Distribution System to plug leaks and ensure delivery, expanding the procurement base for foodgrains, boosting farm productivity by enhancing credit flow to farmers and tackling child malnutrition. 

In the context of enhancing food availability to meet the demands of the food security scheme, the one visible success the government has enjoyed is the East India Green Revolution. Rice production in the region went up by 20 percent in the last two years. The allocation for this scheme has gone up 125 percent. However, this has only short-term viability, as the technologies used are capital and water intensive and environmentally unsafe.

To ensure better accessibility to food, the FM has laid a lot of stress on reforming the Public Distribution System (PDS) based on the Adhaar (UID) system. To improve absorption of food through better sanitation and hygiene, the existing schemes have been hiked 27 percent. Malnutrition is a focus area, with the Integrated Child Development Scheme getting 58 per cent more than last year.

The farmer’s biggest issue at the moment is procurement price. While the Minimum Support Price (MSP) for his produce has gone up substantially in the last decade, it has not kept pace with rising input costs. The primary reason is to keep the food subsidy bill in check — every time MSP goes up, so does the food subsidy bill. In 2011-12, Rs 60,000 crore was budgeted but with a revision in MSPs, it is likely to touch Rs 95,000 crore. Rather than relying on a calculation of MSP based on official figures rather than ground realities, the proposal for an Income Commission for farmers needs to be taken up seriously.

Ajay Jakher of the Bharat Krishak Samaj observed that the budget ought to “make agriculture a profitable profession and (promote) sustainable agriculture productivity increases”.

In the desperate search for a technological breakthrough, the FM has allocated substantial funds for the development of high-yield, resistant, seed varieties. Activists fear that the money will be used for research on genetically modified seeds, an untried and potentially harmful technology, simply because powerful lobbies control research facilities.

Another significant gap is the inadequate focus on water conservation and irrigation. While the government is setting up a company to promote micro-irrigation, the increasing water stress all over the country needs to be addressed far more comprehensively.

One last thing. The FM would do well to keep his fingers crossed. If agriculture must grow at 4 per cent to achieve overall growth targets, he can only hope that predictions of a weak monsoon prove false.