To boost farmers’ incomes, the Indian government is planning to incentivize value addition in agriculture. This is to ensure the development of the sector even after the withdrawal of farm laws late last year.
The comprehensive push of the strategy is to boost backward linkages to the farm. The details will come in the February 1 budget.
This will also involve support for exports to help Indian farmers establish markets for their products. Additional transport, marketing, and branding incentives for exports covering diverse farm produce are likely.
It is expected that in this budget cooperative segment will be also strengthened and have a new dedicated ministry in place. The government is also eyeing incentives over and above the ₹10,900 crore production-linked incentives (PLI) scheme for food processing to promote the creation of relevant storage and logistics infrastructure.
The gross value added (GVA) in the food processing sector was Rs. 2.24 lakh crore in FY20, contributing 1.7% of the total. The GVA in the food processing sector accounted for 11.38% of the GVA in agriculture and allied sectors. The government wants this share to rise.
ICRA chief economist Aditi Nayar said that the value addition and exports of farm produce can go a long way towards securing more sustainable export growth, especially if we can reduce our dependence on exports of water-guzzlers such as rice.
A comprehensive support plan to help with income diversification for farmer’s dependent on a single crop through assistance via research and development as well as credit support is also under discussion.
Sachchidanand Shukla, chief economist, Mahindra & Mahindra Policies, stated that it is a must to prioritize demand-driven activity. More importantly, the policies should now be made keeping in mind the word “global” for each agricultural commodity and not just regional or local. He said it was time the processing industry was linked to retail, which would quicken farm-to-fork channels and put more money in farmers’ pockets.
The government “must also hasten or incentivise investments in logistics, including cold storage,” he added. PM Modi had set a target of doubling farmers’ incomes by 2022–23 in 2015–16, but the pandemic has made reaching that goal difficult. In the budget for the current fiscal year, finance minister Nirmala Sitharaman announced nine measures for the agriculture sector that included raising the farm credit target to 16.5 lakh crores.