Tamil Nadu to become third state to present separate agri budget on Aug 14

While experts are divided over the outcome; Andhra experience shows positive signs

On August 14, Tamil Nadu will will become the third state -- after Karnataka and Andhra Pradesh -- to have a separate agricultural budget. While experts believe that this is nothing more than a political move, data available from Andhra Pradesh indicates that such a move might actually boost the sector.

The tradition of having an exclusive budget for agriculture was started by Karnataka in 2011-12 in order to give a focused approach to the sector. Andhra Pradesh followed in 2013-14, terming it as a policy paper on agriculture. Though states like Telangana, Rajasthan and Bihar too had similar plans, they did not take off due to various legal and technical reasons.

Telangana had backed out of a plan of having a separate budget citing Rule 150 of the legislative guidelines which states that only receipts and expenditure were 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 does it mean for Tamil Nadu?

Tamil Nadu has already invited opinions from various farmer associations and industry bodies for its maiden agriculture Budget. “For Tamil Nadu, this will promote the new varieties of hybrid crops developed in the state. The move will also be helpful in addressing local issues like water management, farming techniques, post-harvest management, giving additional focus to the sector,” N Kumar, vice chancellor, 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 agriculture, while it has set an ambitious target of achieving 12.5 million metric tonnes of food grain production during 2021-22. Based on the latest data available with the Directorate of Economics and Statistics, out of the total 93,607 rural families in the state, about 32,443 or 34.7 per cent are dependent on agriculture. What is alarming for the economy of the state and what prompted the government to opt for a separate Budget to focus on the sector is the high rate of indebted agriculture households, which is 83 per cent, third only to Andhra Pradesh (93 per cent) and Telangana (89 per cent). (Agricultural Statistics 2020)

It is this higher percentage of indebted farmers in Andhra Pradesh, despite the state's separate budget, that is raising the eyebrows of experts. “It is more of 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 allied 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 the 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 Basic Prices (Base Year : 2011-12) 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 Ryuthu Swarajya Vedike, a grassroots farmers’ organisation, said that while it will help in garnering attention to the sector, unless agriculture budgets lead to enhanced public investment in the sector, there won’t be any tangible change on the ground.  

Agri statistics of Tamil Nadu

70%: State's population dependent on agriculture

35%:  Agricultural Households as percentage of rural households  

83%: Percentage of agriculture households indebted