Budget 2023: What's In It For Farmers, Agritech Startups
Here is a look at what Union Budget 2023 (FY 2023-24), presented by Finance Minister Nirmala Sitharaman today in Parliament, has to offer to India's agriculture sector
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Even though agriculture contributes to 16.5 per cent of India's gross domestic product (GDP) and employs 43 per cent of the Indian workforce, agriculture's share in India's economy has declined over the years.
For many years, budgets focused on improving farmers' income and availability of credit. But, last year's budget shifted the focus to technological adoption and public-private partnerships as solutions to improving farmer incomes and crop productivity.
Here is a look at what Union Budget 2023 (FY 2023-24), presented by finance minister Nirmala Sitharaman today in Parliament, has to offer to India's agriculture sector.
Notably, this is the last full budget of the second term of Prime Minister Narendra Modi's government and comes against the backdrop of global geopolitical uncertainty and high inflation.
Agriculture and its allied sectors are the largest livelihood provider in India. However, access to credit has been tough for this sector. To resolve the same, the finance minister has announced that the credit target will be increased to INR 20 lakh crore, up 11.11 per cent with a focus on animal husbandry, dairy, and fisheries.
Supporting animal husbandry and fisheries
A new sub-scheme under the PM Matsya Sampada Yojana has been launched with a targeted investment of INR 6,000 crore. This sub-scheme will enable activities for fishermen, fish vendors, and small entrepreneurs while also helping them expand markets.
Adoption of a cluster-based and value-chain approach
To enhance the productivity of extra-long staple cotton, the government plans to adopt a cluster-based value chain through the PPP approach. This will mean collaboration between farmers, state, and industry for input supply, extension services and market linkages.
A global hub for millets
We are the largest producer and second-largest exporter of millet in the world. This year, India is at the forefront of popularising the same, to ensure nutrition, food security and the welfare of farmers.
The budget announced that to make India a global hub for Shree Anna Research, the Indian Institute of Millet Research in Hyderabad will be made into a center of excellence for sharing best practices, research and technology at the international level.
Further, the center plans to encourage one crore farmers to take up natural farming. Presenting her fifth straight budget, Sitharaman highlighted that the PM-PRANAM scheme will also be launched to incentivize states and union territories to use alternative fertilizers, in a boost to green farming.
Disease-free quality planting material: The finance minister also announced the Atmanirbhar Clean Plant Programme to improve the availability of disease-free quality planting material for high-value horticultural crops at an outlay of INR 2,200 crores.
Storage capacity creation: The government is planning to set up massive decentralized storage capacity to help farmers.
Formation of cooperative societies: Sitharaman said that a national cooperative database is being created to map cooperative societies. The move is expected to help in better implementation of the proposed national policy on cooperatives, especially for dairy and fisheries.
Agritech and digitization
The Union Budget 2022 set the ball rolling for the agritech startups. This year too, we saw some announcements made towards the same.
Agriculture Accelerator Fund
An Agriculture Accelerator Fund will be set up to encourage agri-startups by young entrepreneurs. "The fund will aim at bringing innovative and affordable solutions for challenges faced by the farmers. It will also bring in modern technologies to transform agricultural practices, and increase productivity, and profitability," she said.
Digital public infrastructure
The finance minister said that a digital public infrastructure will be set up as an "open-source, open-standard, and an interoperable public good."
This will include inclusive farmer-centric solutions through relevant information services for crop planning and help improved access to farm inputs, credit, and insurance, help for crop estimation, market intelligence, and support for growth of agritech industry and startups.
Hits and misses for agriculture this budget
Overall, agriculture experts have applauded the budget for being farmer-centric. "With the Union Budget 2023, the Centre has continued their strong focus on improving farmer incomes. The concrete provisions for boosting high-value crops and allied sub-sectors with significant budget outlay are most welcome. The increased agricultural credit target and the government's commitment to building storage facilities closer to the farm gate will also sustainably empower farmers," said Mark Kahn, managing partner, Omnivore.
Agritech has been one of the least funded sectors in India. However, lately, particularly after the resilience shown by the sector during the pandemic, the funding scenario has improved considerably. According to IBEF, agritech funding stood at $245.2 million in 2019 and increased at a CAGR of 90 per cent to $889 million as of 2021.
Thus, industry stakeholders welcome the introduction of the Agriculture Accelerator Fund. They expect this to boost investment in agritech. "Provision for agri accelerator will certainly help interest in investment in agri tech and in general in agribusinesses. The accelerator will help to work on innovative ideas and may help on packaged food, which will not only help in increasing productivity but also farmer income," said Divam Sharma, founder, Green Portfolio, a SEBI registered portfolio management service provider.
This capital support will help deepen the integration of agritech into the agricultural supply chain, said Siddarth Pai, founding partner, CFO, and ESG Officer, 3one4 Capital.
Funding support for agri businesses has been a long-pending demand of the startup ecosystem. "This is a welcome and innovative step by the Indian government, which will help accelerate the development of new technologies and innovative solutions addressing India's specific agricultural issues ranging from supply chain to credit availability and inclusion, said Parijat Jain, partner, Bain & Company.
The announcement of a national cooperative database is also being looked at as a positive move. According to NCUI data, there are about 8.6 lakh cooperatives in the country, of which active primary agricultural cooperatives (PACs) are about 63,000. "The focus on better management of co-operatives and producer collectives will help farmers in realizing better prices for their produce," said Anand Ramanathan, Partner, Deloitte India.
The introduction of the 'Digital Public Infrastructure for Agriculture' has also been welcomed by one and all. "It empowers and democratizes the Indian agri ecosystem (startups, businesses, farmers, etc) to work more collaboratively and find farmer-centric solutions together. We are also confident that this Union Budget 2023 lends an impetus for greater adoption of technology & data in Indian farming," said Shailendra Tiwari, founder, Fasal.
He also feels that the push to set up labs to develop apps using 5G for precision farming and other applications can help bring predictability to farming operations.
While overall the budget looks positive for the sector, as they say, the devil always lies in the details. The budget, experts feel, has also missed some important aspects such as rural logistics.
"The government has announced the adoption of a cluster-based value chain approach via PPPs which will impact input supplies, extension services, and market linkages. However, the government should have paid attention to the downstream channel concerning the distribution of essential agri products in the remotest areas. Therefore, rural logistics must be strengthened so that essential items such as seeds, crop protection, and fertilizers can be delivered to farmers at a faster rate," said Rajesh Ranjan, CEO, Krishify.
The budget also didn't include minimum support price (MSP) and Urea fertilizers. "There was no mention of minimum support price (MSP) which was expected to be similar to what was announced during the 2022 budget. Secondly, the government usually emphasizes Urea fertilizers and subsidies for the same - in order to increase yield. In the 2023 budget, the focus was on balancing and eventually rolling back the use of chemicals, transitioning towards sustainable practices, and increasing productivity," said Sreeram Ramdas, vice president, Green Portfolio.