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India: Statement on Union Budget 2021 | All India Kisan Sabha (Feb 1, 2021)

4 February

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1 February 2021

All India Kisan Sabha

Statement on Union Budget 2021

Budget Betrays the Farmers’ Demands

The Union Government continues to peddle lies and brazen privatisation

The Union Financial Budget presented today in the Parliament for the year 2021-22 had almost nothing new to offer for Indian agriculture. It has completely disregarded the farmers protesting across the country demanding fair remuneration of their toil and labour. In 2020-21, the budgeted allocation for agriculture was Rs 134349 crore, which has fallen to Rs 122961 crore in 2021-22. There has been an overall reduction of 8 % in allocations towards agriculture even in nominal terms. While in 2019-20 and 2020-21, the procurement of rice and wheat was higher because the open market prices were too low and the government was forced to procure more grain although the procurement levels remained much less than the requirement and a vast majority of farmers ended up selling their produce at low prices. On the other hand, distribution of grains through the Public Distribution System (PDS) had to be raised in 2020-21 given the Covid situation. If we keep these aside, the spending for most schemes in agriculture declined in 2020-21, and shows no promise of rise in 2021-22. For instance, the PM-Kisan scheme was provided a budget allocation of Rs 75,000 crore in 2020-21, but the actual expenditure was only Rs 65,000 crore. This shows the hollowness of the government’s claim that it used the PM-Kisan scheme to help farmers during the lockdown period. Further, only Rs 65,000 crore has been allocated for 2021-22. Just to give another example, in the Pradhan Mantri Krishi Sinchai Yojana, the actual expenditure in 2019-20 was Rs 2700 crore and the budgeted expenditure for 2020-21 was Rs 4000 crore. But the actual expenditure in 2020-21 was Rs 2563 crore, which is lower than the actual expenditure in 2019-20.

The Finance Minister continued to state the falsehood that MSPs are already 50% above the cost of production. The truth is that the government considers the A2+FL cost as the cost of production and not the C2 cost as suggested by the Swaminathan Commission. It is also a fact that a majority of farmers in India are still outside the procurement network, and are denied access to MSPs. However, the government has announced no plan on how to expand the access of farmers to procurement or MSP. In fact, the Finance Minister has tried to mislead by comparing in her budget speech procurement of last year with procurement in 2013-14, when open market prices were higher than the MSP for many crops and farmers did not need to sell the produce to government agencies. The Finance Minister has herself stated that only 1.54 crore farmers benefited from MSPs for paddy and wheat in 2020-21. This is an admission that a vast majority of farmers have not benefited from the MSP-based procurement. In fact, its medium-term plan is to reduce procurement, which is visible through its insistence on implementing the three Farm Acts.

The rise in food subsidy is just illusory. The government has, over the past few years, failed to pay its dues to the FCI and was forcing the FCI to borrow high-interest loans from the NSSF. It is welcome that the budget has announced its intent of not burdening the FCI with loans, but it has remained silent on the past dues to be paid to the FCI. Unless these dues are paid, the financial viability of the FCI will remain stressed. It also remains to be seen whether the government would meet this obligation to the FCI in 2021-22.

The Budget provides a road plan for greater privatisation garbing it under monetisation. The privatisation of public infrastructure includes warehouses run by NAFED. This is in continuation with already existing agreements between the Food Corporation of India and Adani Logistics for building and managing silos. Further, the Union government has announced extension of the ‘Operation Greens’ scheme to 22 perishable commodities. The scheme provides credit subsidy to promote agri-logistics, which at present is largely controlled by large agro-based companies. The Union Budget therefore provides the vision of agri-business led infrastructure development.

The budget speech gave much emphasis on infrastructure development. This again was a hollow claim. The actual allocations for Pradhan Mantri Gram Sadak Yojana or the Pradhan Mantri Awas Yojana in rural areas are stagnant for about two years now, and receive no rise in allocations in the budget. With a focus on large scale infrastructure projects through private partnerships, the Budget maintains a dead silence on land acquisition and compensation. Large scale land acquisition of farm lands would be required for the highway projects that have been announced.

Considering the unemployment scenario in rural India, which was at 9 per cent even in December, 2020 according to the Centre for Monitoring Indian Economy (CMIE), it is inexcusable that the Finance Minister’s speech did not have a single mention of MGNREGS. The Scheme has proved to be an essential lifeline under Covid for the rural poor and returning migrants. The budgeted estimates under the scheme for 2021-22 have been slashed significantly by 34 per cent as compared to the revised estimates of 2020-21. In fact, if we compare the actual expenditure in 2019-20 (Rs 71686 crore) with the budgeted expenditure in 2021-22 (Rs 73000 crore), there is a fall in spending in real terms. The budget was a good opportunity for the government to raise the number of days of employment through MGNREGS to 150 days. The government has made it clear that it has no such intention. This will definitely have an impact on generation of employment days as well as creation of public infrastructure, and overall demand generation in the rural economy.

The budget has also given a raw deal to the livestock farmers of India. This shows the sheer doubletalk of a government, whose spokespersons praise the role of cattle as “gau-mata”. The actual spending for the Department of Animal Husbandry and Dairying was Rs 2706 crore in 2019-20. This fell to Rs 2630 crore in 2020-21. The budgeted allocation for 2021-22 is Rs 3057 crore, which is hardly a rise in real terms.

In sum, the government appears to be following a strategy of squeezing the peasantry. There are no major additional allocations in agriculture or major new schemes. The Covid lockdown period had seen the Indian peasant show stellar commitment to the maintenance of food security in the country. The government, however, has paid them nothing in return. A significant rise in allocations to agriculture was expected, but the government has disappointed the peasantry.

Hannan Mollah, General Secretary
Ashok Dhawale, President