Union Budget 2024-25 Highlights & Implications for NABARD PDF

DEAR Union Budget 2024-25: Highlights and Implications for NABARD ---------------------------------- Union Budget 2024-25 - Major Highlights ❖ Priority areas identified to improve productivity and resilience of agricultural sector: (a) transforming agricultural...

DEAR Union Budget 2024-25: Highlights and Implications for NABARD ---------------------------------- Union Budget 2024-25 - Major Highlights ❖ Priority areas identified to improve productivity and resilience of agricultural sector: (a) transforming agricultural research (b) release of new varieties (c) natural farming (d) mission for pulses and oilseeds (e) vegetable production and supply chains (f) digital public infrastructure for agriculture (g) shrimp production and export. ❖ Rs 1.52 lakh crore allocated to the agriculture and allied sectors and Rs 2.66 lakh crore has been allocated for rural development. ❖ 109 varieties of 32 high-yielding and climate-friendly crops will be released for cultivation by farmers. ❖ To increase productivity as well as reduce input costs, one crore farmers will be linked to natural farming in the next two years. Further, 10,000 need-based bio-input resource centres will be established. ❖ To bolster vegetable supply chains, the budget proposes the creation of large-scale production clusters near major consumption centres. These clusters are intended to enhance the efficiency of vegetable production and distribution. ❖ Budget focusses on development of digital public infrastructure, a digital crop survey for Kharif crops will be conducted in 400 districts. This survey will integrate data from six crore farmers into national registries, streamlining access to agricultural services. ❖ A network of nucleus breeding centres for shrimp broodstocks will be established, with funding for shrimp farming and exports facilitated through NABARD. This initiative is expected to boost the shrimp farming industry and its export potential. ❖ Pradhan Mantri Janjati Unnat Gram Abhiyan will be launched to improve the socio-economic condition of tribal communities. 1 DEAR Major Macro-economic and Sectoral Implications of Relevance to NABARD 1. Fiscal Consolidation would lower the cost of capital in the economy– Fiscal deficit as percentage of GDP for 2023-24 at 5.6 % is lower than budget estimates of 5.9%; for 2024-25 the budget estimate is 4.9 % (as against 5.1% in the interim budget), implying a consolidation of 1 percentage point in just one year. Coupled with the commitment to lower fiscal deficit to less than 4.5% of GDP in 2025-26 and the impact of capital inflows following bond index inclusion, 10-year G-sec yields are expected to remain below 7 per cent. The fiscal consolidation roadmap may also create space for easing monetary policy by the RBI. In case of a cut in Fed funds rate by the US FED, capital inflows to India may further increase. NABARD may keep in perspective the expected change in cost of funds in the markets ahead, and plan its market borrowings and pricing of lending accordingly. (High food inflation is the major factor in delaying softer cost of funds in the economy and if food prices moderate in August/September, 10- year G-sec yields may drop to below 6.9%). 2. Sustained thrust on capex to support growth – Capital expenditure as % of GDP at 3.4 per cent of GDP (for FY 25), through multiplier effect, will remain a key growth driver. The budget encourages states to provide support of similar scale for infrastructure and makes a provision of Rs. 1.5 lakh crore for long-term interest free loans for the current year also to support the states in their resource allocation. Through the Accelerated Irrigation Benefit Programme and other sources, the Central Government will provide financial support for projects with estimated cost of Rs. 11,500 crore to Bihar for projects such as the Kosi-Mechi intra-state link and 20 other ongoing and new schemes including barrages, river pollution abatement and irrigation projects. A plan, Purvodaya, is being formulated for the all-round development of the eastern region of the country covering Bihar, Jharkhand, West Bengal, Odisha and it would cover infrastructure as a major focus area. To Andhra Pradesh, resources will also be provided for essential infrastructure such as water, power, railways and roads in Kopparthy node on the Vishakhapatnam-Chennai Industrial Corridor and Orvakal node on Hyderabad-Bengaluru Industrial Corridor1. NABARD may explore opportunities for business expansion in these states and ways to contribute to the development of these regions. 1. The central government will also facilitate special financial support through multilateral development agencies. In the current financial year Rs. 15,000 crore will be arranged, with additional amounts in future years. 2 DEAR 3. Revamp the cooperative structure for promoting rural development - The government will bring out a National Cooperation Policy for systematic, orderly and all-round development of the cooperative sector. Fast-tracking growth of rural economy and generation of employment opportunities on a large scale will be the policy goal. NABARD may identify areas where the cooperative structure could expand on the basis of its innate comparative advantages, what policy support may be required under the new National Cooperation Policy, and what more NABARD could do both at the formulation and implementation stages of the new policy. Some areas which were highlighted by Hon’ble Cooperation Minister, GoI during National Conference on Cooperatives in year 2021 were related to; Setting up of Cooperatives on Agro- processing by rural youth Revival of Defunct and loss-making PACs 4. Budgetary allocations for agriculture not fully in sync with plans announced for raising productivity and resilience of the sector – The share of agriculture and allied activities in total budgeted expenditure has been retained at the last year’s level (3.15 % in FY 25 versus 3.13 % in FY 24), and YoY growth in budgeted expenditure for the sector is pegged at about 8 per cent (as against 7.3% for total expenditure) (Table 1). Moreover, it is not clearly specified how the new schemes announced will be funded and implemented ( pl see annexure-1). Nevertheless, NABARD may have to plan its actions in the following two areas: Table 1: Budget Provisions for Agriculture and Allied Activities (Rs. Crore) 2022-23 2023-24 2024-25 (Actuals) (Revised (Budgeted) Estimates) Agriculture and Allied 125875 140533 151851 Activities Of which: 99877.01 116788.9 122528.77 (a) Department of Agriculture and Farmers Welfare (b) Department of 8399.72 9327.66 9353.70 Agricultural Research and Education 1294.38 1701.00 2616.44 3 DEAR (c)Department of Fisheries (d)Department of 2315.61 3913.93 4521.24 Animal Husbandry and Dairying (i) Vegetable production & Supply Chains – As announced in the budget, large scale clusters for vegetable production will be developed closer to major consumption centres, by promoting Farmer-Producer Organizations (FPOs), cooperatives and start-ups for vegetable supply chains including for collection, storage, and marketing. For formation and promotion of 10,000 FPOs, an allocation of Rs. 581.67 crore has been made (as against Rs. 450 crore in FY 24). Allocation for Agriculture Infrastructure Fund (AIF) has been retained at Rs. 600 crore, as in last year. NABARD may consider launching a new scheme of its own for strengthening the supply chain for vegetables, by directly engaging with FPOs (with an annual target for number of FPOs), cooperatives and agri start-ups. Vegetable nurseries may be developed in association with existing Centre of Excellence on Vegetables (Set up in various States) Or under LEDP/MEDP nursery may be promoted (by using FSPF/ RIPF) in nearby villages of major consumption centres. (ii) Shrimp Production & Export - As announced in the budget, financial support would be provided for setting up a network of Nucleus Breeding Centres for Shrimp Broodstocks. Financing for shrimp farming, processing and export will be facilitated through NABARD. In the budget, against the head “Department of Agricultural Research and Education” an amount of Rs. 200.92 crore (revenue) expenditure has been budgeted for Fisheries and Aquaculture for Sustainable Development (as against NIL in the previous two years). The budget documents mention that “The provision is to implement research and academic programmes in fisheries and aquaculture. It also provides technical, training, analytical, advisory support and consultancy services in the field of fisheries resources assessment and management, standardization of aquaculture hatchery and grow-out culture technologies, responsible fishing system and species diversification and utilization of inland saline soils for aquaculture, fish health monitoring, etc”. For Fisheries and Aquaculture Infrastructure Development Fund (FIDF), an allocation of Rs. 30 crore has been made (as against Rs. 25 crore RE in 2023-24). Under allocations to the Department of Fisheries (in Table 1 above), funding support is also provided to Fisheries Institutes (Fisheries Survey of India, National Institute of Fisheries 4 DEAR Post Harvest Technology & Training, Central Institute of Coastal Engineering for fisheries, Central Institute for Fishermen Nautical Engineering & Training and Directorate of Aquatic Animal Health and Quarantine), Coastal Aquaculture Authority and National Fisheries Development Board, besides Pradhan Mantri Matsya Sampada Yojana ( PMMSY). Since the budget has specified that “financing will be facilitated through NABARD”, more clarity may be required on whether budgetary resources will be intermediated through NABARD or NABARD would have to use its own resources. It may be necessary to also assess the scale of financing that may be required, the time frame over which financing has to be provided, and the other partners (given the available institutional structure in the country for technology, innovation and dissemination) with whom consultation and collaboration by NABARD can ensure the success of the envisaged goal. A status note to be prepared on Potential of Shrimp Farming in different States ( as no of units on shrimp farming in Haryana, Punjab & Rajasthan have been set up) and potential of Nucleaus Breeding Centres, etc and their investment requirement may be assessed. 5. Digital public infrastructure for agriculture - The Digital Public Infrastructure (DPI) in agriculture aims to cover farmers and their land in 3 years. In the current year, digital crop survey for Kharif using the DPI will be taken up in 400 districts. The details of 6 crore farmers and their lands will be brought into the farmer and land registries. The issuance of Jan Samarth based Kisan Credit Cards will be enabled in 5 states. NABARD may participate as a partner in developing this infrastructure, as full access to the information on land and farmers will help in preparing credit plans in future and designing new schemes for the target groups. 6. Skilling the workforce to create employment opportunities – For raising participation of women in the workforce, the budget aims to organize women- specific skilling programmes, and promotion of market access for women SHG enterprises. 1,000 Industrial Training Institutes are likely to be upgraded for this purpose. NABARD may explore a scheme for skilling women in SHG enterprises, through partnership with some relevant training institutes. Besides the current focus on financial literacy, adding a new dimension aimed at skilling for enhancing quality of employment/ employment generation would also be consistent with the development priorities. 5 DEAR 7. Other measures announced 7.1. Transforming agriculture research - A comprehensive review of the agriculture research setup is being envisaged to bring the focus on raising productivity and developing climate resilient varieties. For tech-led transformation of Indian agriculture, this reform is necessary, but may be difficult to implement. As could be seen from the budgeted allocation for the Department of Agricultural Research and Education (for FY 25), Rs. 9934.59 crore is revenue expenditure and capital expenditure is only Rs. 6.5 crore. Out of total allocations, the share of ICAR is Rs. 6378.70 crore; central agricultural universities is Rs. 723.55 crore; Strengthening of Krishi Vigyan Kendras (KVKs) is Rs. 234.89 crore (as against NIL in recent years); Crop Science for Food and Nutritional Security is Rs 930.22 crore; Horticultural Science is Rs. 257.07 crore; etc. If applied research and their mass diffusion through KVKs (agri start-ups ) can be achieved (as in China), the goals of higher productivity and sustainability would be attainable. A stakeholder consultation meeting with major ICAR Institutes and SAUs may be organised to identify the climate resilient varieties and also to develop a plan for their seed development with the help of FPOs. 7.2. Natural Farming - In the next two years, 1 crore farmers across the country will be initiated into natural farming supported by certification and branding. Implementation will be through scientific institutions and willing gram panchayats. 10,000 need-based bio-input resource centres will be established. Rained areas may be identified where the usage of fertiliser and pesticides is minimal. These areas can be promoted for natural farming and certification. 7.3. MSME Units for Food Irradiation, Quality & Safety Testing -Financial support for setting up of 50 multi-product food irradiation units in the MSME sector will be provided. Setting up of 100 food quality and safety testing labs with NABL accreditation will be facilitated. 7.4. Water Supply and Sanitation - In partnership with the State Governments and Multilateral Development Banks we will promote water supply, sewage treatment and solid waste management projects and services for 100 large cities through bankable projects. These projects will also envisage use of treated water for irrigation and filling up of tanks in nearby areas. 6 DEAR Annexure I Outlay on Major Schemes of Relevance to NABARD: Agriculture Ministry Allocation: ₹1.52 lakh crore (Previous year: ₹1.32 lakh crore) Scheme-wise Allocations: Mahatma Gandhi National Rural Employment Guarantee Programme: ₹60,000 crore PM-Kisan: ₹75,000 crore Jal Jeevan Mission: ₹65,000 crore Pradhan Mantri Awas Yojana: ₹50,000 crore Swachh Bharat Mission: ₹25,000 crore (Amount in ₹ crore) Revised Budget (%) Change Actual Budget Estimates Estimates BE 2023-24 S.No. Schemes 2022- 2023- 2023- 2024- to BE 2024- 2023 2024 2024 2025 25 Central Sector Schemes Pradhan 1 Mantri Fasal 10296.03 13625 15000 14600 -2.67 Bima Yojana Modified Interest 2 Subvention 17997.88 23000 18500 22600 22.16 Scheme (MISS) Pradhan Mantri Annadata Aay 3 … 0.01 2200 6437.5 192.61 Sanrakshan Yojna (PM- AASHA) Distribution of Pulses to State / Union 4 166.21 800 446.3 300 -32.78 Territories for Welfare Schemes Pradhan Mantri Kisan 5 Samman 58253.82 60000 60000 60000 0.00 Nidhi (PM- Kisan) 7 DEAR Pradhan Mantri Kisan 6 12.5 100 138 100 -27.54 Man Dhan Yojana Formation and Promotion of 10,000 7 124.19 955 450 581.67 29.26 Farmer Producer Organizations (FPOs) Agriculture 8 Infrastructure 147.12 500 600 600 0.00 Fund (AIF) National Beekeeping 9 Honey … … 50 75 50.00 Mission (NBHM) Blended Capital Support to Finance Startups for Agriculture New 10 … … … 62.5 and Rural Provisioning Enterprise Relevant for Farm Produce Value Chain NAMO New 11 … … … 500 DRONE DIDI Provisioning Central Sector Expenditure Statutory and Regulatory Bodies Protection of Plant Varieties and 12 5.34 56.44 37.6 50 32.98 Farmers Rights Authority Total- 13 Autonomous 25.12 89.13 93 89.49 -3.77 Bodies Centrally Sponsored Schemes Rashtriya 14 Krishi Vikas 5247.43 7150.35 6150.35 7553 22.81 Yojn National 15 … 459 100 365.64 265.64 Mission on 8 DEAR Natural Farming Krishionnati 16 7066.47 6378.47 7447 16.75 Yojana Developmental Heads - Economic Services Total- 17 Economic 94168.58 95242.51 97389.5 100118.09 2.80 Services The budget continues to support the growth of the rural and agricultural sectors, with NABARD poised to play a central role in implementing and financing these initiatives. 9