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Sunday, March 19, 2023

Budget 2023-24 and agriculture

The overall Union budget has grown at a compound annual growth rate (CAGR) of 11 per cent in the past decade, whereas allocations to agriculture sector and rural development have increased at a CAGR of ~12 per cent in the same period.

However, a closer scrutiny of the actual numbers shows there has only been a marginal increase of 4.7 per cent in the overall allocation — to Rs 1,15,531.79 crore in financial year (FY) 2023-24 from Rs 1,10,254.53 crore in the Revised Estimates (RE) of FY 2022-23. While the agriculture sector got 3.36 per cent of the total allocation last year, this time it was reduced to just 2.7 per cent of the total budget.

In 2017 Niti Aayog set a target to double the farmers’ income by 2022. But this did not get a mention in the Budget speech of the FM on 1 st February, 2023. The average monthly income per agricultural household which was Rs.6,426 in 2014 increased to Rs. 10,218 in 2019. (Source: NSS Report No. 576 SAS (70th Round -2013) and NSS Report No. 587, SAS (77th Round-2019), MoSPI.). The NABARD All India Rural Financial Inclusion Survey (NAFIS) shows that average agriculture household income was a Rs 8,931 per month in 2016-17. Therefore, we have a long way to go in order to ensure doubling the farmers’ income, having missed the 2022 target obviously. In this context we need to admit that Covid had impacted the economy and agriculture sector is no exception.

The agriculture credit target has been increased to Rs 20 lakh crore in budget 2023 (from Rs 18 lakh crore last year) with a focus on animal husbandry, dairies, and fisheries. This is expected be initiated by computerisation of 63,000 primary agricultural credit societies with an investment of Rs 2,516 crore to increase their outreach.

An agricultural accelerator fund of Rs. 500 Crores will be allocated over a period of five years to encourage the start-ups by entrepreneurs in rural areas so as to bring modern technology to transform agricultural practices and enhance Bharat’s agri production. The fund is to catalyse start-up interest in the sector. There are more than two thousand agricultural startups and the government is aiming to increase it to ten thousand through this initiative.

An Agriculture Infrastructure Fund (AIF) already exists for creation of post-harvest management infrastructure and community farm assets with the scheme duration from FY 2020 to FY 2032, with an envisaged outlay of Rs. 1 Lakh Crs to be disbursed by FY 2025-26. (In the FY 2022-23, out of the proposed allocation of Rs 500 crore, actual revised estimates were Rs 150 crore for AIF).

Rs 2 lakh crore for the year 2023-24 will be released by the center under “PM Garib Kalyan Anna Yojana” which will aim to supply free food grains for one year to all Antyodaya and priority households.

Adopted in Union Budget 2017-18, Mission Antyodaya is a convergence and accountability framework aiming to bring optimum use and management of resources allocated by 27 Ministries / Department of the Government of Bharat under various programmes for the development of rural areas. It is envisaged as state-led initiative with Gram Panchayats as focal points of convergence efforts to transform the lives and livelihoods of the rural poor.  Mission Antyodaya is a mission mode project envisaged by the Ministry of Rural Development.

The scheme “Pradhan Mantri Matsya Sampada Yojana (PMMSY)” was launched by the Department of Fisheries; Ministry of Fisheries, Animal Husbandry, and Dairying; to bring about ecologically healthy, economically viable, and socially inclusive development of the fisheries sector of Bharat. PMMSY aims to bring about Blue Revolution through sustainable and responsible development of the fisheries sector in Bharat at a total investment of Rs. 20,050 crore for holistic development of the fisheries sector including the welfare of fishers covering the period FY 2020-21 to FY 2024-25. In the Union Budget 2023-24, a new sub-scheme under the PMMSY has been announced with an investment of Rs.6,000 crore to enable activities of fish vendors, fishermen, and micro and small enterprises for improving value chain efficiencies and expanding the market.

PM Pranam is to be launched to incentivize states and UTs to promote alternative fertilizers and balanced use of chemical fertilizers.

PM PRANAM, stands for PM Promotion of Alternate Nutrients for Agriculture Management Yojana. The basic objective of the scheme is to incentivise the farmers to reduce the overall consumption of fertilisers by incentivising the states through the creation of a proper environment. This scheme aims to reduce overall expenditure on chemical fertilisers, which is expected to increase to Rs 2.25 lakh crore in 2022-2023 (39% higher than the 2021 figure of Rs 1.62 lakh crore).

This scheme does not earmark specific outlay but tries to use the “savings of existing fertiliser subsidy” for financing this scheme run by the Department of Fertilisers. Such savings of existing fertiliser subsidy is expected to accrue through rationalisation of the usage of fertilisers by promoting alternative nutrients. As per the scheme guidelines, 50% of the subsidy savings will be passed to the state as a grant. 

70% of such funds disbursed to the states can be utilised for the purpose of capacity expansion in the area of creating alternative fertilisers and alternate fertiliser production units at the village, block and district levels. The remaining 30% of grant money can be utilised for encouraging farmers, panchayats, farmer producer organisations and self-help groups that are involved in the reduction of fertiliser use and awareness generation.

Incidentally, the fertiliser subsidy has also been cut by 22.2 per cent in FY 23-24 due to a drop in global rates. The fertiliser subsidy in budget 2023-24 is Rs. 1,75,099 Crs as against Rs. 2,25,220 Cr in 2022-23 (revised estimates).

In line with the objectives of the International Year of Millet 2023, FM Nirmala Sitharaman said in her budget 2023-24 speech the Indian Institute of Millet Research in Hyderabad will be supported as the “center of excellence.” Incidentally Bharat is the second largest exporter of millet in the world.

The government will launch the Atmanirbhar Clean Plant Programme to improve the availability of disease-free quality planting material for high-value horticultural crops at an outlay of Rs 2,200 crore.

Ken-Betwa River linking project (KBLP) with an estimated cost of Rs.44,000 Crs gets Rs. 1,100 Crs in Budget 2023-24. The total amount spent on the project till 31.12.2022 is Rs. 7,665 crore, including Rs. 5,038.28 crore from the Central grant and Rs. 2,626.70 crore from the State budget. It is estimated that around 9 lakh farmers will benefit from the Ken-Betwa River linking project. It is a project proposed to transfer excess water from the River Ken to the Betwa basin through the use of a concrete canal.

The project aims to provide irrigation to the Bundelkhand region, which is one of the worst drought-affected areas in Bharat. The beneficiary states are Madhya Pradesh and Uttar Pradesh. This project will meet the irrigation purposes, drinking water, and electricity needs of 6 districts in both states. The proposed concrete canal would be 221 km long. It will pass through Jhansi, Banda, and Mahoba districts of UP and Chhatarpur, Panna, and Tikamgarh districts of MP. Implementation of KBLP will be undertaken jointly (by Centre and states) through a Special Purpose Vehicle (SPV) i.e., Ken-Betwa Link Project Authority (KBLPA). 

A Provision of Rs 450 crore has been made for the Digital Agriculture Mission in the budget 2023-24 to take forward the initiatives on digital agriculture.

Rs. 60,000 Crores provided for PM Kisan (Pradhan Mantri Kisan Samman Nidhi) and Rs.23,000 Crores towards Kisan Credit Card.

Budget also contains a provision of Rs.955 Crores for the formation of new FPOs during the year 2023-24.

Market Intervention Scheme and Price Support Scheme (MIS-PSS) allocation is reduced to Rs 1 lakh from Rs 1,500 crore and the PM-AASHA scheme also saw a reduction to Rs 1 lakh from Rs 1 crore, both the schemes witnessing close to 100 percent cut. In the budget documents under the statement of resources of public enterprises in FY2022-23, the Food Corporation of India (FCI) is projected to borrow Rs 15,000 crore from other sources whereas, for FY 2023-24, this amount has been increased to Rs 1.05 lakh crore. It is possible that FCI may resort to market borrowings to the tune of Rs.1.05 lakh Crore to bridge the gap in the event of shortfall in the budgetary allocation for food subsidy during the FY 2023-24.

Overall, it appears that the union government is focusing on digital interventions in agriculture to improve the market efficiency, provide virtual market linkage to the farmers, enhance the yield through rationalisation of the usage of fertilisers by promoting alternative nutrients, encourage more agri startups and allow greater participation of private sector in agriculture in collaboration with the government. However, there is a lot more to be done in the areas of providing direct market access to the farmers through forward integration from farm to markets by strengthening the supply chain and enhancing the incomes of the farmers i.e., doubling their incomes, to be more precise.


  1. https://www.agriinfra.dac.gov.in/.
  2. https://pib.gov.in/Pressreleaseshare.aspx?PRID=1539485.
  3. https://pib.gov.in/PressReleasePage.aspx?PRID=1753856.
  4. https://www.nabard.org/news-article.aspx?id=25&cid=552&NID=178.
  5. https://www.indiabudget.gov.in/.

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Dr. B.N.V. Parthasarathi
Dr. B.N.V. Parthasarathi
Ex- Senior Banker, Financial and Management Consultant and Visiting faculty at premier B Schools and Universities. Areas of Specialization & Teaching interests - Banking, Finance, Entrepreneurship, Economics, Global Business & Behavioural Sciences. Qualification- M.Com., M.B.A., A.I.I.B.F., PhD. Experience- 25 years of banking and 16 years of teaching, research and consulting. 200 plus national and international publications on various topics like- banking, global trade, economy, public finance, public policy and spirituality. One book in English “In Search of Eternal Truth”, two books in Telugu and 38 short stories 50 articles and 2 novels published in Telugu. Email id: [email protected]


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