Budget 2023: Finance Minister Sitharaman launches fund to encourage agri startups, increases credit target to 20L cr

Budget 2023: Finance Minister Sitharaman launches fund to encourage agri startups, increases credit target to 20L cr

Synopsis

While the overall budget has grown at a compound annual growth rate (CAGR) of 11% in the past decade (fiscal 2013 to fiscal 2023), allocations to agriculture sector and rural development. have increased at a CAGR of ~12%.

Finance Minister Nirmala Sitharaman on Wednesday announced in her budget speech that an Agriculture Accelerator Fund will be set up to encourage agri-startups by young entrepreneurs.

The agri credit target was increased by 20 lakh crore by the finance minister.

Among other big ticket announcements, Finance Minister Nirmala Sitharaman in her Budget speech said the government will launch ‘Aatmanirbhar Clean Plant Programme’ to boost availability of disease-free, quality planting material for high value horticultural crops at an outlay of Rs 2,200 crore.

A new sub-scheme of Pradhan Mantri Matsya Sampada Yojana will be launched with targeted investment of Rs 6,000 crore to further enable activities of fishermen, fish vendors, and micro and small enterprises, improve value chain efficiencies, and expand the market, she said.

“The agriculture credit target will be increased to Rs 20 lakh crore with focus on animal husbandry, dairy and fisheries,” the FM said.

The government has been increasing the credit target for the farm sector every year.

“Finance Minister talks of setting up of Agriculture accelerated fund to promote Agri start-ups in rural India to improve farm productivity and farmers profitability. Measures to boost farm income in Union Budget 2023-24 is positive for farm mechanisation space with key beneficiaries being M&M and Escorts on the tractor front,” said ICICI Securities.

While the overall budget has grown at a compound annual growth rate (CAGR) of 11% in the past decade (fiscal 2013 to fiscal 2023), allocations to agriculture sector and rural development. have increased at a CAGR of ~12%.

“The budget focuses a lot on the supply and input side of the agricultural value chain. The increased availability of credit, facilitation of better-quality inputs through clean plant program, investments in digital infrastructure and skill development will all help in increasing farm level productivity by building awareness and facilitating better quality inputs. Finally, the agriculture accelerator announcement for promoting start-ups in ag-tech enterprises will help increase yield and productivity on the supply side while also enhancing price realisation for the farmer on the demand side through more efficient market linkages,” said Anand Ramanathan, Partner, Deloitte India.

productivity on the supply side while also enhancing price realisation for the farmer on the demand side through more efficient market linkages,” said Anand Ramanathan, Partner, Deloitte India.

Most recent budgets gave a short shrift to agriculture. Last year’s budget announcements for the sector were also seen as being high on policy rhetoric and low on real allocation.

In the previous budget, total allocation for the Ministry of Agriculture and Farmers’ Welfare was Rs 1.32 lakh crore. This was 0.7 per cent higher than a year earlier. In real terms, there was no raise in allocation for the sector.

Many of the farm sector’s legacy problems have continued to linger. One of the major issues pertains to government control, or lack of agri liberalisation — critical aspects such as input-output, marketing and distribution are controlled by the government.

Experts say there is a need to create farm employment opportunities and move towards commercialisation and diversification. Equally important are modern land records to undertake farm reforms.

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