Major Cutbacks in Farm Subsidies in Budget After Farm Law Showdown with Farmers

by GoNews Desk 5 months ago Views 1854

Farmers Subsidies Budget 2022 MSP
Following a major agitation by farmers of North Indian states which led to a meek repeal of 3 controversial Farm Laws, the government has decided to slash subsidies in a major way to perhaps teach them a lesson. The Budget Papers reveal that compared to revised estimates of last year, Fertiliser Subsidy has been slashed by 24%, Food Subsidy given for procurement of agricultural produce at Minimum Support Price (MSP) has been cut by 27.7% and Petroleum Subsidy which is used by a large number of farmers who consume diesel has been reduced by 10.8%. 


Agriculture sector has logged a growth of 3.9% in India’s GDP numbers and it is the only sector which has produced consistent growth while the rest of the economy has witnessed a negative impact of the Covid19 Pandemic.

While the Budget speech of Finance Minister Nirmala Sitharaman was dotted by encouraging words for the “hard working” farmers, the net outcome of her allocations could further anger the farming community which has been agitating for a better remuneration of their toils. The largest union of farmers the Sanyukt Kisan Morcha (SKM) had warned that if the government does not bring in a legal framework for MSP, they may take to the streets again, now they see the MSP allocation cuts as a red rag to their agitation.

A close look at the Budget papers reveals that in 2020-21 when the Pandemic hit India, the government had spent Rs 5.41 lakh crore on Food Subsidy, Rs 1.27 lakh crore on Fertiliser Subsidy and Rs 38455 criore on Petroleum subsidy. All three were reduced massively in Budget 21-22 estimates but finally the figures were revised on the higher side. But the Budget presented today estimates a lower allocation for all three major subsidies even compared to the estimates of the previous year. (The finance minister in her speech quoted a figure of Rs 2.37 lakh crore for MSP procurement which is not reflected in the Budget papers) 

Though there is a 2.7% increase in the budget for Agriculture and Allied Activities in the proposals, the enhanced Rs 3,757 crore allocations pale in comparison to what the farmers are losing on Food Subsidy alone- a whopping Rs 79,638 crore. 

GoNews had reported earlier that the finance minister is facing a massive challenge on farm subsidies bill as it had written off the debts of Food Corporation of India in preparation of introducing the now defunct Farm Bills. The total subsidy cutbacks to the tune of Rs 1,15,242 crore can be seen in the enhancement of transport sector allocations.

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