Budget 2023: Food and agribusiness is crucial to India’s growth; here’s what Nirmala Sitharaman should do

Agriculture and allied sectors are the mainstay for majority of the Indian population. With rising incomes, greater level of urbanization and changing consumption patterns there is a shift in demand towards more processed food. Agricultural today is slowly moving away from conventional farm produce to greater production of fruits, vegetables as well as dairy, poultry, meat, and fisheries. As per estimates, by 2030 Agri and allied sector has the potential to contribute over $800 billion in revenue with an investment of $272 billion. To promote investment, government has already announced several policies and schemes such as a Krishi UDAN 2.0 scheme (to incentivise movement of agri-produce by air transport), Production Linked Incentive (PLI) scheme (supporting food processing sector), single digital platform (for marketing-related services), etc. Government will have to support further augmentation of agri supply chain through infrastructure development, introduction of technological solutions as well as improve ease of doing business. Government can facilitate promotion of agri produce to create demand to increase farmer incomes. Policy thrust along with investment promotion are critical for transforming agriculture ecosystem. 

Key Asks from the Budget  

Some key expectations from the budget: 

#1 Support for Technology Development & Adoption 

Digital interventions through artificial intelligence (AI), machine learning (ML), remote sensing, big data, block chain, IoT, GIS technology and use of drones / robots have the potential to revolutionise the entire agri value chain through operational efficiencies. Currently, penetration of digital solutions, is at a nascent stage mainly due to high percentage of small landholdings as well as lack of farmer awareness. To propel digital adoption in the sector, the government has recently launched Digital Agriculture Mission (2021–2025). Government should focus on creating a robust ecosystem such as Agristack that will provide accurate farmer database, information related to government schemes / programmes, agri-logistics, and markets intelligence, advisory on a real time basis, data transparency and market linkages through platforms such as e-NAM. Government should look at strengthening FPOs for technology adoption to permeate at ground level. Government should incentive agri-tech start-ups through interest free loans, tax incentives.  

#2 Infrastructure development to improve agri supply chain  

Increased production of fruits, vegetables and processed food items especially in dairy, meat, frozen food, etc.  have resulted in greater need for agro-logistics.  Thus, the supply chains need to become more dynamic and agile. There is a need to develop an efficient network of modern processing, storage and distribution facilities for greater value addition and to minimise post-harvest losses. The government should develop policies to promote investments for development of agri-infrastructure such as micro cold storage, micro-irrigation, silo storage, agri-logistics, etc. Financial assistance through incentives, training, infrastructure, and marketing facilities should be provided to entrepreneurs for setting up businesses, such as, food processing and milk processing plants.  

#3 Ease of doing business 

With the growth in other allied sectors of agri such as fruits & vegetables, food processing, meat, poultry, fisheries, organic farming, floriculture, smart proteins, etc., it becomes essential for the government to make budgetary allocations to ensure on-ground implementation. In additions, appropriate monitoring, evaluation, and reporting structures should be developed to ensure transparency. Government should focus on creating a multi-lingual “one-stop-shop” for all approvals and clearances through refinement of single-window mechanisms across states. For boosting agri-exports, government should incentivize international tie-ups, educate the stakeholders on best practices in agriculture and manufacturing, latest international standards in quality and packaging, simplify documentation process, ensure implementation of requisite food safety and traceability norms by importing countries. 

#4 Improve market access  

To drive growth of the agriculture and allied sectors, it is also essential to focus on facilitating market linkages to lower input costs and better price realization for the farmers. It can be done through online portals/app such as the farm gate app developed by Madhya Pradesh government that provides information on prices, assured buy back for the farmers and a platform for the companies to buy the produce. Creating such e-mandis will facilitate online trade of agricultural produce. Setting up FPOs will also result in greater price realisations for farmers.  

India is expected to play an increasingly critical role in shaping the nutritional security agenda for the Indo-pacific. This presents an opportunity for the food processing sector to develop higher level of integration with countries in Gulf, South-East Asia, and Africa regions. Supply side policy interventions should be in sync with demand generation initiatives in target countries for both primary as well as processed food products from India. Government can strive for national / state level partnerships (Eg: Partnership between UAE and Madhya Pradesh as part of the I2U2 grouping) for specific crops/products that can help ensure stable demand and increase price realizations for farmers and other stakeholders in the agri ecosystem. 

Anand Ramanathan is a Partner with Deloitte India. Views expressed are personal. 

Also Read: Budget 2023: Strong global headwinds can threaten Indian economy; here’s what can be done

Also Read: India’s dream to become $5 trillion economy: Budget should focus on infrastructure push