It is expected that the center will focus on the agricultural economy in the 2021 budget because of the prolonged protest by the farmers where the unions demanded a separate act on the MSP and protested against the three agricultural laws and asked the government to withdraw them.
The only sector which emerged as a silver lining was the agricultural sector with a 3.4% growth while India’s GDP, in June quarter FY21, shrank by 23.9%.
Dr. Arun Singh Global, Chief Economist- Dun & Bradstreet, has anticipated that the government is looking forward to repeat their commitment on the continuation of the MSP system in the budget and would see for an increase in the MSP’s current scope.
The budget will also guarantee quantity for the obtaining under MSP according to a farmer’s viewpoint.
The government is looking forward to improve the productivity and create a reduction in post-harvest losses towards the agricultural sector, according to ICRA, a rating agency.
Another topics that would be taken up in the budgetary allocation are towards schemes for crop insurance, irrigation infrastructure schemes, soil health promotion, farm credit availability, and various other schemes.
Dr. Arun Singh has also suggested that the government should renovate their PMFBY scheme, Pradhan Mantri Fasal Bima Yojana and look into other structural and logistical obstacles to reverse the trends but in favor of the farmers.
The voluntary action for the farmers for the PMFBY scheme should be withdrawn because the scheme will reduce the Crop Insurance cover in the future.
In terms of cattle insurance, Jatin Singh, co-founder of Gram Cover, mentioned that they expect GST removal from the cattle insurance and various other microinsurance product in the budget 2021.
Removing the GST will bring down the cost of the insurance policy which will make it easy for the farmers and cattle owners to afford cattle.
The government will roll out their Direct Benefit Transfer, DBT, for fertilizers which will offer a direct subsidy transfer into the farmer’s account.
What is DBT (Direct Benefit Transfer)?
The government has decided to lower the import duties on raw materials like Ammonia and phosphoric acid which will improve the chances of competitiveness.
The industry specialists have cast around for a nominal custom duty reduction of 1% on the raw materials for the nonurea fertilizers.
An additional urea subsidy of ₹ 80,000 crores has been tried to obtain by the Fertilizer and Chemicals ministry in the union budget 2021.
The above urea subsidy is over and above the subsidy announced under Atamanirbhar Bharat for ₹ 65,000 crore in November 2020.
To grant additional subsidy to farmers, a Direct Benefit Transfer scheme has been opted by the government.
The government implemented the DBT scheme for subsidies on LPG for the amount will directly reach at genuine beneficiary.
The Centre is hence pondering over a proposal by the Fertilizer Ministry according to which the farmers would be the beneficiaries and would directly receive the amount to buy the fertilizers through their bank account by the PM Kisan scheme.
According to current practices the government has to transfer the subsidy amount to the fertilizer company which resulted in more formalities and the delayed payments to the farmers.
The proposal, submitted by Fertilizer Ministry in June 2020, has also been forwarded to the Finance ministry.
According to the Union Budget for session 2020-21, ₹71,309 crores has been allocated by the government towards the fertilizer subsidies and an additional ₹65,000 crore to clear the accumulated payments for the fertilizer companies that were a part of the Atamanirbhar Bharat relief package.
The expected range for the subsidy requirement for FY22 is between ₹ 85,000 to ₹90,000 crore, according to ICRA.
During The Covid-19 Situation
During the covid-19 period the Direct Benefit Transfer routewas one of the greatest help to the people because the money was directly sent to the genuine beneficiary’s account hence the government has considered the same for fertilizers subsidiaries.
Senior Finance ministry official said that the proposal of DBT is under consideration and can hence be announced in the upcoming budget.
The database of the PM Kisan scheme will be used for money transfer.