Farmers’ Protests: What Can We Expect From Narendra Modi Government's Budget?

Farmers have decided to continue their protests despite the Supreme Court’s decision to form an expert committee to re-look at the three contentious farm laws. This may propel the Narendra Modi-led government to present an extremely farmer-friendly Budget in 2021.

According to experts, enhanced cash benefits, clarifications related to MSPs (minimum support prices) for crops, new schemes to help the croppers, and changes in existing credit mechanisms may form crucial ingredients of the forthcoming Budget.

For example, the amount of Rs 6,000 per year, which is transferred in the bank accounts of the millions of agriculture beneficiaries, may be increased this year. Since Finance Minister Nirmala Sitharaman is committed to a higher fiscal deficit -- given the pandemic impact -- she can easily hike it beyond the Rs 1.54 lakh crore allocations in 2020-21.

Since December 2018, when the cash benefit scheme was introduced, sections of the farm community have claimed that the amount is too meagre for cropping purposes. Media reports indicate that on an average Rs 3,000-3,500 per acre is needed for a single paddy crop, and another Rs 2,000-2,500 for the wheat one.

For farmers, whose acreage is higher, Rs 6,000 a year is too less, and needs to be hiked immediately. A higher benefit will also imply that most farmers will be able to get out of the debt tentacles, which is one of the foremost reasons for their distress.

A major issue in the ongoing farmers’ protests is MSPs. The demand is to legitimize it through an act of Parliament. Although central MSP is an executive decision, the finance minister may evolve a mechanism to indicate that it will continue without any hiccups. This may assuage the hurt feelings of the farmers, who feel that the MSP regime may be withdrawn once corporate mandis are allowed to function.

Over the past few months, the government has aggressively purchased the farmers' produce under MSPs. In the case of cotton, the state-owned Cotton Corporation of India, made record purchases, which were way higher than the previous season. The same was the case with paddy, where the highest procurement under MSP was in Punjab.

In addition, Sitharaman is likely to announce a slew of new schemes to help the farmers, especially in the procurement of the necessary ingredients like seeds and fertilizers, as also tweak and improve the existing formal credit mechanisms. The banking system, and other allied institutions like NABARD may be activated further.