The 2021-2022 Budget is indeed a bold one that aims for a bigger push towards growth and investment in the Agriculture sector. The focus shall remain on doubling farmers’ income i.e. doubling farmers’ income by 2022-23 and becoming a USD 5 trillion economy by 2024-25.
Many constructive government policies had already been implemented in 2020 and it was a clear message that further policy related implementations shall be done in line with the welfare of the Agriculture sector and farming community. The government has proposed fertilizer subsidy of Rs of 80,000 crores versus FY21 subsidy of Rs 134,793. The Agri Credit target has been increased to Rs 16.5 lakh crores.
Similarly there is provision of Agri infra and development cess on various Agri items, apart from hike in import duty on cotton. In response to recent agricultural reforms, there has been a significant change in the MSP regime as farmers can now be assured that they receive at least 1.5 times the cost of production across all commodities. The procurement has also continued to increase at a steady pace. This has resulted in substantial increase in payment to farmers.
Finance Minister Nirmala Sitharaman also spoke about establishment of seven textile parks across the country. This is a welcome move for the local textile industry growth, eventually supporting the consumption of cotton commodity. The Government will also focus towards strengthening of functioning of the APMC’s. All these announcements shall be influential in enabling an efficient market for agricultural commodities.
Therefore, we may see the constructive development of the spot as well as derivative markets of Agricultural commodities in terms of improving trade volumes, since chances of any abnormal price fluctuations have narrowed, and possibility of any sharp fall in prices has reduced. It will also imply that in 2021-2022 the bottom prices for most commodities may well remain above the base levels recorded during 2020-2021.
