Union Budget 2023: Benefits for Agriculture Startups
Startups are one of the major pillars which can aid an economy to develop and gain the growth to the fullest potential.
Being in the finance sector Kanakkupillai, has embarked the growth of multiple start-ups starting from the planning of strategies to the registration of the entity.
Despite the fact that agriculture generates 16percent of India’s GDP and employs more than 40 percent of the Indian workforce, agriculture’s contribution in the Indian economy has dropped over time.
For many years, budgets focused on increasing farmer income and credit availability. However, in last year’s budget, the emphasis was switched to technological adoption and public-private partnerships as answers for increasing farmer income and agricultural yield.
Here’s a look at what the Union Budget 2023 (FY 2023-24), announced in Parliament by Finance Minister Nirmala Sitharaman, has to offer India’s agriculture industry.
Notably, this is the final complete budget of Prime Minister Narendra Modi’s second term, and it arrives amid a backdrop of global geopolitical concern and rising inflation.
Agricultural financing and credit
Agriculture and its affiliated sectors are India’s main source of income. However, access to financing has been difficult for this industry. To address this, the finance minister declared that the lending goal will be boosted to INR 20 lakh crore, an increase of more than 10 percent, with a concentration on:
- animal husbandry,
- dairy, and
- fisheries majorly.
Aiding animal husbandry and fishing
A new sub-scheme under the PM Matsya Sampada Yojana with a target investment of INR 6,000 crore has been announced. This sub-scheme will allow all the:
- fish dealers, and
- allied small enterprises;
to engage in activities while also expanding their markets.
Adoption of a value-chain and cluster-based strategy
The government intends to use the PPP strategy to implement a cluster-based value chain to increase the production of extra-long staple cotton. This would necessitate coordination among:
- states, and
- industries for
the supply of input / extension services / market connections.
A global centre for millets
We are the world’s top millet producer and second-largest exporter. This year, India is in the forefront of popularising the practise in order to promote:
- food security, and
- farmer welfare.
According to the budget, the Indian Institute of Millet Research in Hyderabad would be transformed into a centre of excellence for exchanging best practises, research, and technology at the worldwide level in order to make India a global centre for Shree Anna Research.
Furthermore, the government intends to encourage one crore farmers to practise natural farming. Sitharaman emphasised the PM-PRANAM initiative, which would be introduced to incentivise states and union territories to adopt alternative fertilisers, hence promoting green farming:
Planting material free of disease:
The finance minister also launched the Atmanirbhar Clean Plant Programme, which would invest INR 2,200 crores to increase the availability of disease-free quality planting material for high-value horticulture crops.
Creating storage capacity:
To assist farmers, the government intends to build vast decentralised storage capacity.
Cooperative society formation:
According to Sitharaman, a national cooperative database is being developed to map cooperative groups. The measure is likely to aid in the execution of the proposed national cooperative programme, particularly for dairy and fisheries.
Digitization and Agritech
The Union Budget 2022 paved the way for Agritech entrepreneurs. This year has also seen several announcements in this regard.
Fund for Agriculture Acceleration
Agri-startups will be encouraged through the creation of an Agriculture Accelerator Fund. The fund’s goal will be to provide farmers with creative and cheap solutions to their problems. It will also introduce cutting-edge technologies to improve agricultural operations and boost production and profitability, was stated by the Finance Minister.
Public digital infrastructure
According to the finance minister, a digital public infrastructure would be established as an:
- open-standard, and
- interoperable public benefit
This budget has both hits and misses for agriculture which are further discussed here.
Overall, agriculture experts have praised the budget for its emphasis on farmers. The Centre has maintained its significant focus on boosting farmer incomes in the Union Budget 2023. The specific arrangements for strengthening high-value crops and related sub-sectors with considerable budgetary investment are much appreciated. The enhanced agricultural loan objective and the government’s commitment to developing storage facilities closer to the farm gate would also help farmers to be more self-sufficient in the long run was stated by an industrial expert.
Agritech has been one of India’s least financed sectors. However, the financial environment has recently improved significantly, particularly in light of the sector’s resiliency throughout the epidemic. According to IBEF, agritech financing was INR 245.2 million in 2019 and is expected to grow at a CAGR of 90% to INR 889 million by 2021.
As a result, industry stakeholders appreciate the establishment of the Agriculture Accelerator Fund. They anticipate that this will increase investment in agritech. Provision for agri accelerator will surely promote interest in investment in agri tech and in general in agribusinesses.
The accelerator will assist in working on novel concepts and may assist in packaged food, which would not only increase production but also farmer income, founder of Green Portfolio which is a SEBI certified portfolio management service provider.
The startup ecosystem has long sought funding assistance for agribusinesses. And this is a good and unique approach by the Indian government is how some of the other industrial experts are seeing the same.
The introduction of a nationwide joint database is also viewed favourably. According to NCUI data, the country has over 8.6 lakh cooperatives, including approximately 63,000 active primary agricultural cooperatives (PACs).
The emphasis on improved administration of co-operatives and producer collectives would help farmers realise higher prices for their goods,” said Anand Ramanathan, Partner at Deloitte India.
The implementation of the ‘Digital Public Infrastructure for Agriculture’ has also been well applauded.
It enables and democratises the Indian agro ecosystem (startups, enterprises, farmers, and so on) to work more jointly and collaboratively to discover farmer-centric solutions. We are also sure that the Union Budget 2023 would provide momentum for increased usage of technology and data in Indian agriculture.
He also believes that the attempt to establish laboratories to create apps for precision farming and other applications utilising 5G technology may help bring predictability to farming operations.
What is lacking here?
While the overall budget appears to be beneficial for the industry, as they say, the devil is always in the details. Experts believe that the budget overlooked several critical issues, such as rural logistics.
The government has declared the implementation of a cluster-based value chain strategy through PPPs, which will effect:
- input supplies,
- extension services, and
- market linkages.
However, the government should have focused on the downstream route for the distribution of critical agricultural goods in the most distant places.
As a result, rural logistics must be improved so that important commodities like:
- crop protection, and
- fertilisers can be supplied to farmers more quickly.
In addition, the budget excluded minimum support price or MSP and urea fertilisers. However, there was no mention of the minimum support price (MSP), which was expected to be comparable to what was stated in the budget for 2022. Second, in order to boost yield, the government often prioritises Urea fertilisers and subsidies for the same. The focus of the 2023 budget was on balancing and eventually reducing chemical consumption, moving to sustainable practises, and enhancing productivity.