The Union Budget for 2024-25, presented by Finance Minister Nirmala Sitharaman, has introduced several measures that could potentially transform the agriculture sector. With a hefty allocation of ₹1.52 lakh crore for agriculture and allied sectors, the budget promises to boost productivity, sustainability, and resilience in Indian farming. However, when it comes to the agrotech sector, the budget is a mixed bag, raising questions about whether it truly meets the needs of a rapidly evolving industry. While the budget provides some promising initiatives, it also leaves significant gaps that could impede the sector’s potential to revolutionize Indian agriculture.
Digital Public Infrastructure: A Step Forward
One of the notable highlights of the budget is the emphasis on expanding Digital Public Infrastructure (DPI) for agriculture. By integrating 6 crore farmers and their lands into digital registries and conducting digital crop surveys across 400 districts, the government aims to enhance data-driven decision-making and transparency in agricultural practices. This move could benefit agrotech companies that provide digital solutions and services, offering them a robust platform to build upon. The adoption of digital crop surveys and Jan Samarth-based Kisan Credit Cards in five states also indicates a push towards modernizing agricultural credit systems, potentially reducing the financial burden on farmers and promoting financial inclusion.
However, while the expansion of DPI is a positive step, it raises concerns about the actual implementation and accessibility of these digital solutions in rural areas. The success of this initiative hinges on robust rural broadband connectivity and the digital literacy of farmers, areas where India still lags. Without addressing these foundational issues, the impact of digital infrastructure may be limited, potentially leaving behind a significant portion of the farming community.
Sustainable Farming: Promises and Pitfalls
The budget’s focus on promoting natural farming and sustainable practices is another commendable move. The plan to train 1 crore farmers in natural farming techniques and establish 10,000 bio-input resource centres aligns well with global trends towards sustainable agriculture. This initiative could open new markets for tech-driven organic farming solutions and support agrotech companies specializing in organic inputs and soil health management.
Yet, the transition to natural farming is fraught with challenges. Farmers accustomed to conventional practices may find it difficult to shift to natural methods without adequate support and incentives. The budget provides for certification and branding, but it lacks detailed provisions on how farmers will be educated and supported through this transition. Moreover, without substantial investment in research and extension services, the scalability and effectiveness of natural farming practices remain uncertain.
New Varieties of Crops: A Double-Edged Sword
The release of 109 high-yielding and climate-resilient crop varieties is a welcome move, addressing the critical issue of climate change’s impact on agriculture. Agrotech firms involved in genetic research and crop improvement can leverage these developments to offer advanced solutions tailored to the new varieties. This initiative underscores the government’s recognition of the need for resilient agricultural practices in the face of global climate challenges.
However, the budget’s emphasis on crop variety development brings to light a glaring omission: the lack of direct support for agrotech start-ups. While crop research is essential, fostering innovation through start-ups is equally crucial for holistic agricultural development. The budget misses an opportunity to provide targeted schemes, grants, or tax benefits for agrotech innovators, which could have significantly bolstered the sector’s growth. Without such incentives, the sector may struggle to attract the necessary investment and talent to drive cutting-edge research and development.
Distinguished Professor Ashok Gulati and ICRIER (Indian Council for Research on International Economic Relations) Consultant Purvi Thangaraj in their Op-Ed in The Indian Express argue that the neglect of agriculture R&D in the budget risks India’s food security and growth. They say:
Agriculture… raised hopes of a significant allocation for improving productivity and increasing climate resilience.
The best way to do that would have been to focus on agri-R&D. It’s well known that the marginal returns of investing in agri-R&D are over 10 times – in other words, an extra investment of 1,000 crore will mean Rs 10,000 crore in terms of agri-GDP. Such an investment could have pushed agriculture towards a higher growth trajectory. But, the budget expenditure numbers don’t give such an assurance. The Department of Agricultural Research and Education (DARE) has received Rs 99.4 billion, a marginal increase of just 0.7 per cent from Rs 98.8 billion (RE) in FY24. This is way below expectations, and in fact, in real terms, it is a climbdown.
Infrastructure for Technology Adoption: The Missing Link
A critical area where the budget falls short is in the provision of infrastructure for technology adoption. While the expansion of digital infrastructure is a positive move, the budget does not adequately address the need for physical infrastructure to support technology integration. Investments in rural broadband connectivity, tech-enabled warehouses, and smart logistics solutions are crucial for the seamless adoption of agrotech solutions in the farming ecosystem.
The absence of substantial investment in these areas could hinder the widespread adoption of agrotech innovations. For instance, without reliable internet access, digital platforms and tools remain inaccessible to many farmers. Similarly, the lack of tech-enabled storage and logistics infrastructure could lead to inefficiencies and post-harvest losses, negating the benefits of agrotech advancements.
Missed Opportunity for Transformation
While the 2024-25 budget provides a solid foundation for agriculture with several forward-looking initiatives, it falls short of fully harnessing the potential of the agrotech sector. The budget offers incremental benefits but lacks the transformative support needed to drive significant advancements. It leaves room for more robust and direct measures to propel the agrotech sector into a new era of innovation and growth.
The government’s intentions are clear, but the execution requires a more nuanced approach that prioritizes technological advancement and support for the agrotech ecosystem. The budget is not disappointing per se, but it leaves much to be desired. Future policies must bridge these gaps and provide the necessary impetus for agrotech to thrive and revolutionize Indian agriculture. Only then can India fully realize the promise of a technologically advanced, sustainable, and resilient agricultural sector.
