India's new government has targeted higher farm growth of 4 per cent this year by giving farmers a range of incentives and setting up new warehouses to cut wastage and improve the food-supply chain, Finance Minister Arun Jaitley said.
Farm output in India, world No. 2 producer and consumer of an array of agricultural goods, grew at 4.7 per cent in the fiscal year to March 2014 after monsoon rains boosted the harvest, up from nearly 3 per cent a year over the past decade.
Although agriculture's share in India's nearly $2 trillion dollar economy has steadily fallen to 14 per cent, the sector continues to employ more than half of its 1.2 billion people.
"We are committed to sustaining a growth of 4 per cent in agriculture and for this we will bring technology driven second Green Revolution with focus on higher productivity...," Jaitley said as he presented the 2014/15 Budget.
Farming was transformed by the introduction of high-yielding seeds, fertilisers and irrigation during the Green Revolution nearly 50 years ago, ending dependence on imports.
The government buys rice and wheat from farmers at a fixed price to build reserves and supply cheaper food to the poor, to protect farmers from distress sales and for emergencies. The agriculture ministry typically raises its grain price yearly.
As a result, India now has massive grain stocks but rising income and changing food habits in the country of 1.2 billion people have led to higher demand for protein-rich food.
To cut waste due to lack of storage, the government proposed spending Rs 50 billion ($830 million) on new warehouses.
"The announcement will allow farmers to store their produce for long periods, which will ensure that they get the correct prices for their produce," said Dinesh Shahra, chief of the biggest edible oil importer Ruchi Soya Industries Ltd
For this fiscal year, the government has increased its farm credit target at Rs 8 trillion against Rs 7 trillion last year.
Expressing concern over deteriorating soil health, Jaitley said his government would set up 100 mobile soil testing laboratories and give soil health cards to India's 263 million farmers, a pet project of Prime Minister Narendra Modi.
"There have also been growing concerns about the imbalance in the utilisation of different types of fertilisers resulting in deterioration of the soil," Jaitley said.
The government also proposed to dedicate Rs 5 billion to help curb price volatility which hurts farmers and consumers.
Addressing concern over monsoon rains, Jaitley said higher stocks at government warehouses would help meet any exigency.
On July 1, rice and wheat stocks at government warehouses were 21.2 million tonnes and 39.8 million tonnes respectively, substantially higher than government-set targets.
Annual monsoon rains, that water crops grown on half of India's total arable land, were 43 per cent below average since June 1 when the rainy season began.
To cool prices, the government could free up extra stocks in the open market, Jaitley said.