Tamil Nadu to become third state to present separate agricultural Budget

Experts divided over the outcome, but Andhra experience shows encouraging signs

On Saturday, Tamil Nadu will become the third state after Karnataka and Andhra Pradesh to present a separate agricultural Budget. And though experts believe this is just a political move, data available from Andhra Pradesh indicates that it could actually boost the sector.

The tradition of having an exclusive Budget for agriculture was started by Karnataka in 2011-12, and was followed by the undivided Andhra Pradesh state in 2013-14. Both aimed to give greater focus to the sector. Though states like Telangana, Rajasthan, and Bihar, too, had similar plans, these did not take off because of various legal and technical reasons.

Telangana had backed out of such a plan citing Rule 150 of the legislative guidelines, which says only receipts and expenditure are treated as Budget. Telangana was of the view that other plans, programmes, and schemes would come under Bills and could not be treated as separate Budgets.

“Article 202 of the Constitution of India enables states to issue an estimated statement of receipts and expenditure for a financial year (commonly referred to as ‘Budget’ or ‘Annual Financial Statement’). Read in conjunction with List II entries (State), it is apparent that the Constitution confers wide ranging powers to states to make/amend laws on ‘agriculture’ related activities, including preparing roadmaps and taking actions aimed at achieving the projected revenue and expense figures,” said Purusharth Singh, partner, Dhir & Dhir Associates, when asked about the legal validity of such a move.

What this means for TN

Tamil Nadu has already invited opinions from various farmers’ associations and industry bodies for its maiden agricultural Budget. “For Tamil Nadu, this will promote the new varieties of hybrid crops developed in the state. The move will also help address local issues like water management, farming techniques, post-harvest management, giving additional focus to the sector,” N Kumar, vice-chancellor of Tamil Nadu Agricultural University, told Business Standard.

Based on the 2015-16 Agriculture Census, around 70 per cent of the state’s population is still dependent on the sector, while it has set an ambitious target of achieving 12.5 million metric tonnes of foodgrain production in 2021-22. According to the latest data available with the Directorate of Economics and Statistics, out of a total of 93,60,700 rural families in the state, about 32,44,300 or 34.7 per cent are dependent on agriculture. What is alarming for the state’s economy and what prompted the government to opt for a separate agricultural Budget is the high rate of indebtedness among agricultural households, which at 83 per cent is third only behind Andhra Pradesh (93 per cent) and Telangana (89 per cent). (Agricultural Statistics 2020)

It is because of this higher percentage of indebtedness in Andhra Pradesh, despite a separate Budget, that experts have questioned the effectiveness of such a move. “It is more a political move, unless there is a big jump in spending for the sector. What it does is that it consolidates all the spending made for agriculture and under various heads under one roof and then it obviously will show an inflated number,” said S Mahendra Dev, director and vice-chancellor of Mumbai-based Indira Gandhi Institute of Development Research (IGIDR).

Going by the sector’s contribution to the state’s economy, the Andhra experiment was a success story. The gross value added by economic activity in agriculture increased 52 per cent from Rs 52,569 crore in 2012-13 to Rs 79,980 crore in 2018-19, much more than the sector’s contribution nationally. During the same time, the GVA at constant price saw an increase of 28 per cent nationally from Rs 15.24 trillion to Rs 19.48 trillion.

Kiran Vissa, co-founder of Rythu Swarajya Vedike, a grassroots farmers’ organisation based in Andhra Pradesh and Telangana, said while the move will increase attention to the sector, unless agriculture Budgets lead to enhanced public investment, there won’t be any tangible change.