India’s Agrarian Crisis and Budgetary Challenges

India’s agrarian crisis has reached alarming levels. Recent data marks increase in farmer suicides and a dismal ranking on the Global Hunger Index. The 2024 Union Budget saw cuts in food and fertilizer subsidies. Allocations for agriculture dropped sharply. As the 2025 budget approaches, farmers are protesting against the Draft National Policy Framework on Agricultural Marketing. They demand the implementation of a statutory minimum support price.

Context of the Agrarian Crisis

The agrarian crisis in India is marked by rising farmer suicides and increasing indebtedness. Between 2015 and 2022, over 100,000 farmers took their lives. The Global Hunger Index ranks India 105th out of 127 countries. This situation is exacerbated by inadequate government support and rising costs of production.

Budgetary Allocations and Subsidies

The 2024 Union Budget slashed food subsidies by ₹7,082 crore and fertilizer subsidies by ₹24,894 crore. Allocations for the flagship job guarantee scheme decreased to ₹86,000 crore. This reflects a declining commitment to agriculture, with allocations falling from 5.44% in 2019 to 3.15% in 2024.

Minimum Support Price (MSP) Issues

Farmers demand a statutory minimum support price at C2+50%. This means 1.5 times the cost of production. The non-implementation of this promise has led to widespread indebtedness and distress. Many farmers do not receive any MSP, leaving them vulnerable to exploitation by private traders.

Rising Costs of Production

The cost of agricultural inputs is increasing rapidly. Fertilisers, seeds, and other essentials are becoming more expensive. Farmers expect the government to control these costs to enable the implementation of a fair MSP.

Loan Waivers and Financial Relief

Farmers seek a comprehensive one-time loan waiver. The government has previously written off corporate loans. A fraction of these funds could alleviate farmer debts and reduce suicides.

Climate Change and Crop Insurance

Climate change poses a serious threat to agriculture. Farmers face frequent droughts and floods. A comprehensive crop insurance scheme is necessary. Current schemes often favour insurance companies rather than farmers.

Investment in Irrigation and Power

Public sector investment in irrigation and power has declined. Many irrigation projects remain incomplete. Completing these projects could improve yields and employment in agriculture. Steady electricity supply is also essential for farming.

Rural Job Guarantee Scheme Needs Expansion

The rural job guarantee scheme has been underfunded. The average workdays have decreased to 45. Increasing workdays to 200 and raising wages to ₹600 is crucial for rural workers. This will enhance their purchasing power.

Taxation and Resource Allocation

The government must consider imposing wealth and inheritance taxes. The number of billionaires in India has nearly doubled. Corporate tax reductions have led to revenue losses. Direct taxes should be increased while indirect taxes are reduced.

Questions for UPSC:

1. Discuss the implications of the declining agricultural allocations in India’s Union Budget on rural livelihoods.
2. Critically examine the effectiveness of the Minimum Support Price in addressing farmer distress in India.
3. What are the challenges posed by climate change to Indian agriculture? Discuss with examples.
4. Explain the role of taxation policies in addressing economic disparities in India. How can they be improved?

Answer Hints:

1. Discuss the implications of the declining agricultural allocations in India’s Union Budget on rural livelihoods.

1. Declining allocations lead to reduced support for farmers, increasing poverty levels in rural areas.
2. Less funding for subsidies results in higher input costs, making farming less viable.
3. Decreased investment in agricultural infrastructure affects productivity and market access.
4. Lower job guarantee scheme allocations diminish employment opportunities for rural workers.
5. This creates a cycle of indebtedness and farmer distress, exacerbating the agrarian crisis.

2. Critically examine the effectiveness of the Minimum Support Price in addressing farmer distress in India.

1. MSP is intended to provide a safety net for farmers, but many do not receive it.
2. Implementation of MSP at C2+50% is lacking, leading to widespread financial distress.
3. Farmers often rely on private traders who exploit them due to the absence of guaranteed prices.
4. MSP’s effectiveness is undermined by rising production costs and inadequate government enforcement.
5. Realizing the MSP promise is crucial for reducing farmer suicides and improving livelihoods.

3. What are the challenges posed by climate change to Indian agriculture? Discuss with examples.

1. Increased frequency of extreme weather events, such as droughts and floods, disrupts farming cycles.
2. Climate change leads to soil degradation and reduced water availability, threatening crop yields.
3. Unpredictable rainfall patterns make it difficult for farmers to plan planting and harvesting.
4. Examples include recent droughts in Maharashtra affecting cotton farmers and floods in Bihar impacting rice production.
5. Farmers need adaptation strategies, like crop insurance, to mitigate these risks effectively.

4. Explain the role of taxation policies in addressing economic disparities in India. How can they be improved?

1. Taxation policies can redistribute wealth and reduce inequality through progressive taxation.
2. Currently, corporate tax cuts contribute to widening economic disparities and reduced public revenue.
3. Wealth and inheritance taxes could be imposed to target the growing number of billionaires.
4. Improving tax compliance and reducing evasion can increase government resources for social programs.
5. Direct taxes should be prioritized over indirect taxes to lessen the burden on the lower-income population.