India announced a slew of measures on Monday, including a higher farm loan target and additional taxes, to boost agricultural infrastructure and crop production in the country.
The government will target to ensure farm loans worth 16.5 trillion rupees ($226 billion) in the next fiscal year, Finance Minister Nirmala Sitharaman said in her budget speech in parliament on Monday. That compares with 15 trillion rupees announced in 2020-21.
The minister also proposed to impose extra taxes on imports of some commodities, including edible oils, pulses, gold, silver and some alcoholic beverages to finance more infrastructure facilities in rural areas.
“There is an immediate need to improve agricultural infrastructure so that we produce more,” she said, but added that the additional tax won’t burden consumers.
The measures may provide some relief to cultivators, who have seen depressed crop prices due to bumper production following favorable rains. They come at a time when tens of thousands of farmers have been camping on the outskirts of the nation’s capital demanding that the Narendra Modi government roll back three new laws they say will hurt their incomes and make farming in India harder.
Enhanced farm loans are expected to give a boost to the rural economy, said Anand Ramanathan, a partner at Deloitte India. “This will not only help address issues related to low productivity in agriculture, but also have a ripple effect on other sectors such as agri-equipment manufacturers, agro-logistics and input providers,” he said.
The proposed budget measures assume significance as about 60% of India’s 1.3 billion people depend either directly for indirectly on agriculture, which accounts for 16% of its $2.8 trillion economy. The nation is the world’s top grower of cotton, the second-biggest producer of wheat, rice and sugar, and the largest importer of palm oil.
Production of monsoon-sown food grains is seen climbing to a record 144.52 million tons in 2020-21 from 143.38 million tons a year earlier, according to the farm ministry.