Ziraat Times Economic Analysis Team

Srinagar:  Agriculture sector in Jammu & Kashmir provides employment to about 65% of its population. Largest chunk of exports out of the total export kitty of J&K comes from this sector. The sector’s productivity (in terms of yield per hectare), however, remains one of the lowest in the country.

According to estimates, if yield per hectare is increased by 40% in high-value cash crops, the state’s Gross Domestic Product could
be raised by 25%. Correspondingly, at least an extra 70,000 decent jobs could be created as well. In this analysis Ziraat Times takes a look at the financial allocations made in the budget and what they could mean for the state.

In the just-approved State Budget for 2019-20, agriculture sector has not received the kind of attention it deserves.

Out of the total budget of Rs 89000 crore, the total allocation to the agriculture sector is Rs 2407 crore, which is 2.7% of the total
budget. Out of this, a major chunk – that is Rs 1531 crore – is the revenue expenditure, meaning a meagre Rs 876 crore (0.98%) will be to creating tangible assets and  providing state support to strengthening private economic activity.

Capital expenditure relates to the creation of assets. This corresponds to the investment outlay on the acquisition of permanent
assets like land, buildings, plant &machinery and all other physical infrastructure. Disbursements, which comprised of repayment of State public debt and loans and advances made by the State to the 20 various entities, are also taken as Capital Expenditure.

Although agriculture sector provides livelihood to around 60 percent of the population, the much lower state budgetary allocations to the sector do precious little to help strengthen the growth potential of the sector.

Worse, Rs 1531 crore (63.6% of the total expenditure on agriculture sector) will be actually be the revenue expenditure.

Revenue Expenditure covers all the routine administrative expenditure of the State, incurred salaries and wages, pension, interest payments, maintenance and repairs. Also, overheads like payment of rent, taxes and other establishment expenditure.

In terms of productivity or yield per hectare, agriculture sector, despite being the largest employer and the primary driver of Jammu and Kashmir’s economy continues to be one of the lowest in the country. Over the past decade alone, the sector’s contribution to the state’s Gross Domestic Product (GDP) has fallen by 8 percent.

The share of agriculture has dipped from 28 percent to 16 percent, while industries (secondary sector) has stayed stagnant around  43 percent and the share of services (tertiary sector) has gone up to 57 percent in the past ten years.

Agriculture, which has been categorised as the weakest contributor, provides employment to about 60 percent of the population, followed by the industries and services sectors. This has led to disparity between the average income of agriculturists and of non-agriculturists, which has been increasing since long and has made the major part of the population poorer.

“It is a point of concern,” the draft Srinagar Master Plan, while analysing the impact of horizontal growth urban growth on agriculture in Kashmir valley has observed.

“That the combined contribution from primary and secondary sectors is becoming less than the lone contribution from service sector, is a very unhealthy condition for sustaining growth in the long run”, the report further adds.

The decline has primarily been triggered by the conversion of agricultural land for non-agricultural purposes, the document says.
About 8.47 lakh hectare of agriculture land in 2005-06 has shrunk to 7.94 lakh hectare in 2015-16, as per the government figures.

A major casualty has been Kashmir’s staple food rice. Imports of rice from various Indian states have quadrupled in the past seven decades. About 21.70 percent is the deficit of rice production in the state at present.

Illiteracy, insufficient government support, unavailability of power, inadequate marketing facilities, and underpricing of agricultural products are the main reasons for the decline in agriculture sector, as per the draft master plan.

All these dampeners require significant public expenditure over a period of time to overcome some of the structural inadequacies in the entire supply chain of the agriculture system.

“The sector has not adopted modern technology and agricultural practices to a larger extent. Also decline in plan allocations
investment and investment credit are contributing factors,” the document adds.

The local production of foodgrains in the State does not keep pace with the growing requirements. The deficit is met by imports for meeting commitments under Targeted Public Distribution System, other welfare schemes and emergency relief measures.

During the year 2015-16 the import of foodgrains was recorded at 755.85 thousand metric tonnes, which was 0.12% less than the imports of 2014-15.

However, due to the implementation of “Mufti Mohammad Mohammad Sayeed Food Entitlement Scheme” w.e.f. from July 2016, the import of foodgrains during the year 2016-17 was recorded at 952.55 thousand metric tonnes, which was 26.02% more than previous year.

The import of foodgrains during the year 2017-18 upto October, 2017 has been recorded at 526.74 thousand metric tonnes.

Specific Budget initiatives in the Agriculture, Horticulture, Animal Sheep Husbandry Sectors

➢ Allocation to Agriculture Sector has been enhanced by Rs 20 crores over the past year.

What does this mean?

In percentage terms, this does not correspond to the growth in the agriculture sector, which hovers around 11-12 per cent annually.

 ➢ 50% subsidy proposed for all newly Controlled Atmospheric Stores which will be established in next financial year.

What does this mean?

Although in percentage terms, this is a good incentive, however, the problem is the quantum of funds available for this initiative.
Considering that there is a shortage of at least 80 per cent in Controlled Atmospheric Stores capacity in Kashmir region for apples
and other fruits, the quantum of funds to be made available for this sector has to be significantly enhanced.

➢ 50% subsidy for refrigerated vans for transportation of perishable vegetables/fruits

What does this mean?

This is a welcome move, and has been been appreciated by fruit and vegetable growers. What, however, will be  useful is generating greater awareness about this incentive for prospective entrepreneurs.

➢ Provision of Rs 9.18 crores to meet freight subsidy for transportation of cutflowers to promote flower cultivation in private sector.

What does this mean?

On the face of it, this, again, sounds a good move. However, flower cultivators are demanding a dedicated freight corridor for
transportation of cut flowers from Kashmir throughout the year. That is expected to significantly help in making cut flower business more viable and a round-the-year activity.

➢ Rs 20 crore to be used for creation of revolving fund for basmati rice, improvement of Chinnore seed farm , procurement of dual maze thrashers, purchase of vegetable seeds, mushroom cultivation, paddy thrashers, critical repairs of irrigation channels, vermicompost facilities, borewell lift irrigation facilities, cold storage etc.

What does this mean?

Although revolving fund for the development in these areas is, per se, not bad, the quantum of money dedicated for this is quite inadequate. That brings us to the basic question of inadequate capital component of the agriculture budget, while the revenue component eats up the major chunk of it.

 ➢ Rs 4 crore for feed procurement of Animal & Sheep Husbandry Department.

While this is good and highly needed, this, again, brings us to the basic question of inadequate capital component of the agriculture budget, while the revenue component eats up the major chunk of it.