Economic Stimulus Package 3.0 (Agriculture Sector)

Economic Stimulus Package 3.0 by FM Nirmala Sitharaman (May 15, 2020)

Introduction

Finance Minister Nirmala Sitharaman, on May 15 announced Economic Stimulus Package 3.0 – the third tranche of stimulus measures, with a key focus on Agriculture sector and allied economic activities. The 11 measures announced under the third tranche will support the rural economy, farmers, fishermen, the animal husbandry and dairy sectors.

In the first set of measures, on May 13, 2020, the Finance Minister made 16 key announcements, which focused on benefits for MSMEs, NBFCs, Tax measures and support for the Employee’s Provident Fund (EPF).

While, the second tranches of measures announced on May 14, 2020, focused on Migrant workers, Farmers, Street vendors and Self-employed people.

Economic Stimulus Package 3.0 by FM Nirmala Sitharaman (May 15, 2020)

• Finance Minister’s third tranche of economic measures mainly aimed at boosting agriculture and allied economic activities affected by Coronavirus crisis.
• In this third set of stimulus package, FM announced total 11 measures :
  • 8 measures are related to strengthening Infrastructure
  • The remaining 3 measures are related to the Governance and Administrative Reforms
• The key highlights of these 11 measures under FM’s Economic Stimulus Package 3.0 are summarized as follows :

Announcements Related to Infrastructure & Capacity Building

1. Rs.1 Lakh Cr for Farm Infrastructure Fund

• A fund worth Rs.1 Lakh Cr will be set up “immediately” to strengthen farm-gate infrastructure and aggregators like Farmers’ Producers Organisation, agricultural entrepreneurs and primary agriculture cooperative societies.
• The Finance Minister said investment in long-term Agriculture Infrastructure had been lacking. And this fund would aid development of “financially viable post-harvest management and infrastructure”.

2. Rs.10,000 Cr for Micro Food Enterprises (MFEs)

• Finance Minister announced a scheme worth Rs.10,000 Cr for formalisation of Micro Food Enterprises (MFEs).
• As mentioned by FM, Unorganised MFEs need technical upgradation to attain food safety standards and build their brands. So, this scheme will help two lakh units reach their goals.
• The scheme will follow a cluster-based approach, with expected outcomes to include improved health and safety standards and increased incomes.

3. Rs.20,000 Cr for Fishermen under Pradhan Mantri Matsya Sampada Yojana

• Through Pradhan Mantri Matsya Sampada Yojana, Rs.20,000 Cr will be made available for Fishermen, where :
  1. Rs.11,000 Cr is for activities in inland and marine fisheries and aquaculture
  2. Rs.9,000 Cr is for development of harbours, markets and cold chain management.
• This will lead to additional fish production of around 70 lakh tonnes over the next five years, while also employing more than 55 lakh people. Here, the Government is focusing on empowerment rather than giving entitlements.

4. National Animal Disease Control Programme 

• The National Animal Disease Control Programme has been launched with an outlay of Rs.13,343 Cr for 100% vaccination of cattle, buffalo, sheep, and goat and pig populations against foot and mouth disease (FMD) and brucellosis.
• Nearly 53 crore animals in India and foot-and-mouth disease has to be eradicated. 

5. Animal Husbandry Infrastructure Development Fund of Rs.15,000 Cr

An Animal Husbandry Infrastructure Development Fund worth Rs.15,000 Cr will be set up to support private investment in dairy processing and manufacture of cattle feed.

6. Rs.4,000 Cr for Promotion of Herbal Cultivation

• For the promotion of herbal cultivation, Rs.4,000 Cr to be allocated.
• The National Medicinal Plants Board has supported cultivation of medicinal plants in 2.25 lakh hectares, with a total of 10,00,000 hectares to be covered by 2022.
• This will include 800 hectares along the Ganga. This will lead to Rs 5,000 crore in income for farmers.

7. Rs.500 Cr for Beekeeping Initiatives

• For beekeeping initiatives, Rs.500 Cr is being allocated.
• The scheme will cater to infrastructure related to beekeeping development centres and the collection, storage and marketing of produce.
• This will lead to increased income for around 2 Lakh beekeepers in rural India and improved quality of honey.
• In India, wax for all purposes are being imported. This can be stopped through this initiative.

8. Rs.500 Cr for ‘From TOP to TOTAL’ Scheme

• Earlier, the scheme – Operation Greens had been intended for Tomatoes, Onions and Potatoes (TOP), but will now include all fruits and vegetables (TOTAL).
• Rs.500 crores will be set aside for vegetable and fruit supply chains disrupted by the coronavirus lockdown. Thus, Rs.500 Cr is allocated for ‘From TOP to TOTAL’ scheme.
• Key features include 50% subsidy on transport from surplus to deficient markets and an equal subsidy for storage facilities. This will be a six-month pilot project to be expanded on evaluation.

Governance and Administrative Reforms

9. Amendment of the Essential Commodities Act 

• Government will amend the Essential Commodities Act to enable better price realisation for farmers and to make agriculture sector competitive.
• Agriculture food stuffs including cereals, edible oils, oil-seeds, pulses, onion, and potato to be deregulated.
• Stock limit to be imposed under very exceptional circumstances like national calamities, famine with surge in prices.
• No such stock limit shall apply to processors or value chain participants, subject to their installed capacity or to any exporter subject to the export demand.

10. Implementation of Law to bring about Agriculture Marketing Reforms

• A law will be implemented to bring about agriculture marketing reforms to help farmers access adequate choices to :
  1. Sell their produce at attractive prices
  2. Remove barriers to inter-state trade
  3. Framework for e-trading of agricultural produce
• These reforms will remove issues related to free flow of produce between different states as envisaged by the “one nation, one market” policy.
• Farmers are currently bound to sell produce only to licensees in the Agricultural Produce Market Committee (APMC).

11. Creating a Facilitative Legal Framework for Farmers

A facilitative legal framework will be created to enable farmers to engage with processors, aggregators, large retailers, exporters in a fair and transparent manner.

Conclusion

• These announcements under Economic Stimulus Package 3.0 pertaining to the agriculture sector and allied economic activities are intended to strengthen the value chain and infrastructure.
• The government’s thinking is long-term in improving the economic fundamentals in providing key support which can improve the supply chain, reduce wastage and better price realizations.
• This will help in the creation of employment and lead to long term demand creation.