The agriculture sector was the top priority for government ahead of the Union Budget, 2018. Finance Minister, Mr. Arun Jaitley have said that the country’s economic growth is not ‘justifiable and equitable’ unless the benefits are ‘clear and evident’ in the farm sector.
According to the latest data released by Central Statistics Office (CSO), farm and allied sector’s growth has slowed down to 2.1 percent in the current fiscal year from 4.9% in the preceding year. A major part of the population in India is dependent on agri-sector production.
Government ensures adequate growth in the farming sector while profit reaches farmers as visible in the announcements made during the Budget Speech by Finance Minister. While announcing new projects, he also lent enhanced support to the existing schemes by investing Rs. 14.34 lakh crore in the sector.
Funds for agriculture market
An increase in agricultural credit was announced to Rs. 11 lakh crore. Also, Rs. 2000 crore were assigned for development and upgradation of infrastructure for rural agriculture markets. Finance Minister also announced a provision of Rs. 500 crore for ‘Operation Green’ to promote agriculture logistics.
Besides setting up of a Rs. 10,000 crore fund for development of fisheries and animal husbandry, Rs. 2600 crore were allocated to ensure irrigation facilities. With such a large pool of funds proposed to amplify farming and agriculture, it is expected to encourage the agriculturists to avail business loans with affirmative impact on the agri-businesses sector.
Tax benefits for FPCs
The Budget proposed 100% exemption of tax under Section 80P for companies who derive profit directly from members engaged in primary agricultural activities. Similar benefits are extended to Farm Production Companies (FPC) having a total turnover of up to Rs. 100 crore.
This would have a direct impact on Agro-based companies who purchase their products directly from farmers. Apart from strengthening farmers, it will boost these farm production companies to invest heavily in inventory and invigorate the business. This move is expected to complement the decision to boost up the flow of capital into the Agri sector.
Boost export of agriculture commodities
The country’s agricultural exports account for around 30 billion USD at present. The government sets a target to alleviate the exports of agri-products to as high as 100 billion USD. A proposal was also passed to promote facilities at 42 food parks.
The announcement is significant for export businesses that deal in agriculture commodities like tea, coffee, fruits, and vegetables. The commerce ministry is working on a comprehensive policy to improve logistics for export of these products.
According to industrialists, the budget will reinforce rural consumption by reducing price pressures. It will benefit all sectors like transport, automobiles, food etc. and will boost businesses that deal in agriculture commodities. Tax exemption for farm production companies will increase their investible surplus.