Budget 2021: Experts seek incentives for organic farming, agri startups

Union Finance Minister Nirmala Sitharaman will present the Union Budget on February 1. The Budget will be crucial for the agriculture sector, given the ongoing farmers’ protests against the three farm laws that they say will lead to corporatisation of the sector.

Several experts are of the view that the government should provide additional funds and tax incentives in order to promote indigenous farm research, food processing and organic farming.

“Food processing industry has played an important role in better price realisation for the farmer and reducing the cost of intermediaries,” DCM Shriram Chairman and Senior MD Ajay Shriram told PTI.

“The budget must provide special incentives to food processing through incentives such as interest subvention, lower taxes, access to technology and so on,” he added.

Shriram also highlighted the benefit of direct benefit transfer (DBT) scheme.

He pointed at the PM-KISAN scheme, under which a financial benefit of Rs 6,000 per year is provided to the eligible beneficiary farmers. 

“Let the farmer decide how to judicially use the money. With the benefit of DBT, farmers can then buy better seed, use new-age fertilizers, optimize water usage and so on,” Shriram told PTI.

Stating that several startups are working in the agri domain, Shriram advocated for a policy that would encourage the growth of these companies. He said there has been a lack of any big breakthrough in indigenous agricultural research and development (R&D), in recent years. He attributed research crunch as the reason behind it.

“Two areas that need immediate attention are firstly linking agricultural research with industry requirements and secondly avoiding ideological resistance to new-age technologies such as GM crops,” Shriram told PTI.

Consulting firm Deloitte India was also of the view that more funds should be allocated for R&D. To reduce the import of cooking oils, domestic production of oilseeds should be promoted, the consulting firm told PTI.

Highlighting that livestock farming forms a major portion of the income of many farmers, Deloitte pointed out one of the major roadblocks for the development of this sector is the prevalence of various diseases.

“Supply of vaccines is not adequate to address the increasing demand. Funding for developing vaccines and creating necessary infrastructure would be required in this budget,” the consulting firm said.

Chirag Arora, Founder, Organisch Overseas, told PTI that the government should take steps to encourage farmers to adopt organic farming.

“The need of the hour is to encourage the private sector into space by offering tax incentives to startups venturing into this domain,” he said.

“It also needs to augment investment on the creation of cold-chains and increase storage capabilities,” Arora added.

In a pre-budget consultation with the Centre, last month, Bharat Krishak Samaj (BKS) advocated a balanced use of fertilisers. It asked the government to incentivise the same by increasing urea price and lowering rates of phosphatic and potassic (P&K) nutrients.

BKS Chairman Ajay Vir Jakhar sought a reduction in taxes on diesel and transport subsidy on fruits and vegetables and demanded tax on unhealthy foods. 

Jakhar suggested tripling investment for micro-irrigation and solar pumps for individual farmers. He also sought funds for the distribution of soil moisture measuring sensors.

The organisation advocated to “prioritise investment in human resources over infrastructure,” PTI reported.

“There are about 50% vacancies in agriculture research institutions across India. Target 2% expenditure on agri R&D of agriculture GDP over the next few years,” it said. 

The Pesticides Manufacturers and Formulators Association of India (PMFAI) has, however, asked the government to reduce the GST (Goods and Services Tax) from 18% to 5%, in line with other farm inputs such as seeds & fertilisers in the upcoming Budget, Krishi Jagran reported.

In order to safeguard the domestic agro-chemicals industry, it has asked the Centre to hike export benefits on pesticides from 2% to 13%. It has also sought a hike in import duty on pesticides.