In 1997, P Chidambaram raised the bar for future Budgets. Then, as now, he was a reformer in a government supported by the Left. Still, he dared to push a wide-ranging reform. Comparing today’s Budget with that eight years ago, two things stand out. First, the difference with 1997: there is a pronounced focus on equity, and agriculture, which has the potential for a widespread buy-in for economic growth and liberalisation. Second, the similarity with 1997: there’s innovation in approach, new ideas that we hope will create the dynamism in India’s food and agri-business sector.
The agricultural diversification and NHM should move us from the food-swelling FCI silos to cash crops, where India’s presence is limited. We hope that the details will be imaginative too, because a lot can be done. For example, we’ve done well in dairy, but could do more in other sectors like fishery and pulses.
Second, the specific initiative to rejuvenate segments within agri-business are welcome. Third, mention of the private sector in agri-marketing, along with the positive comments on FDI, should attract global food majors to India, improving not just investment jobs and farm-gate yields, but changing the profile of agriculture from being a drag on the economy to a growth engine. Again there is the caveat of APMC Acts that need state-level change.
Fourth, agri-credit has exceeded a high target. The thrust continues this year too. But we see fresh thinking too. Micro-credit gets not just more Nabard support, but a real change enabling NGOs to go for ECBs. Another hope that we share is the revival of co-operative banking. There is no reason why we can’t do it.
Finally, Bharat Nirman, the creation of rural infrastructure is long-due, and welcome. India’s gross irrigated area is still 40-45% of the cropped area. Adding 10 million hectares when about 110 million hectares are not irrigated will improve this statistic, but only scratch the surface. The direction is correct, but we, perennial optimists, hope for more speed.
The author is MD and CEO of Rabo India Finance
