Tuesday, March 2, 2010


Budget time is eagerly awaited by all segments of the Indian Society hoping for freebies, subsidies and economic gains on one or the other form. The most recent budget that was presented in the Parliament is a mixed bag giving some thing to some and taking away some thing from others, thus not satisfying any one in the process. A cursory look at the massive document does not reveal any encouraging policy support to the food industry. That food processing sector rarely gets any priority or even mention in the budget has been a recurring phenomenon year after year and this time also same trend continued.

Mukherjee outlined a four-pronged strategy—easier access to farm loans, greater focus on food processing, cutting food wastage and increasing farm productivity. The moves come in the wake of the worst drought last year since 1972 that cut farm output by 16 per cent. Nearly 52 per cent of all Indians are dependent on agriculture and allied activities. The effects of the drought quietly showed up in the form of a supply crunch and surging food prices, the single biggest driver of inflation. The Budget aims to ease supply bottlenecks by removing service charges on movement of cereals and pulses. "This could have been extended to movement of fruits and vegetables as well," said Rakesh Bharti Mittal, who heads the Confederation of Indian Industry's farm council. The Budget, however, shies away from providing enough incentives for private investment in agriculture. "I am disappointed that there has been no focus to develop agricultural markets or boost private investment," farm economist Y.K. Alagh said. The Budget does, however, offer some sops such as waiving duties on import of farm machinery. But that may not be enough to pull the farm sector out of the 0.2 per cent negative growth rate. Another bad monsoon could badly hit the country's ability to feed its millions.

Pleadings during the last three decades to with draw all financial levies on processed foods have fallen on deaf years this year also. Except for platitudes GOI does not want any thing constructive to offer to the processing sector and still considers entire manufacturing sector as a cash cow! What the Minister means by declaring that GOI would "focus on food processing and cutting food wastage" is probably a pious declaration as no concrete steps to achieve the goals have been elucidated with any commitment. Probably allocating some funds to the toothless Ministry of Food Processing Industry as its annual budget seems to be the "action" envisaged by the Finance Minister! One can only pity the fate of food processing industry in the country which has been yearning for fiscal and policy supports from the state and central governments for decades, waiting like an "eternal bride" for good days ahead!


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