Union Budget 2022: Agriculture start-ups, rural enterprise, food processing & allied sectors get a further push

Today, the union finance minister, Nirmala Sitharaman, presented her fourth union budget in Lok-Sabha. Several commentators have been dubbing it the "second pandemic budget" and were expecting major announcements to mend widening inequalities and high unemployment, primarily because of the pressure of key state elections lined up down the year. The finance minister undoubtedly has the unenviable task of balancing our finances when the global economies are already impacted adversely by an unprecedented and unpredictable crisis of the Covid pandemic. However, the union government seems to be in a mood to build on indicators of economic recovery as presented in the Economic survey unveiled yesterday. It is keeping its focus firmly on the future of India, from India at 75 to India at 100.

The biggest push is visible in infrastructure development - roads, railways, airports, ports, mass transport, waterways, and logistics infra under the banner of PM Gati Shakti Initiatives. The finance minister (FM) announced that the national highways network would be extended by 25,000 kilometers in 2022-23 for faster movement of people and goods, which is expected to impact the perishable food and other agriproducts industry positively. There is a target to develop 100 cargo terminals under the PM Gati Shakti scheme. The FM proposed that the Indian Railways develop new products and logistic services for farmers and micro, small and medium enterprises (MSME). She further presented the concept of 'One Station One Product', where the goal is to use the wide network of Indian railways to bolster the supply chain of local products by making each railway station a promotional hub to showcase a destination for a local product. This is expected to help farmers and agri-enterprises by bringing efficiency in logistics and visibility of products.

The FM said that the Production-Linked Incentive (PLI) schemes have received tremendous response and there is a potential of creating 60 Lakh new job in the manufacturing sector in India. The PLI schemes have received investment intentions worth Rs 30 lakh crore. The scheme covers key sectors like pharmaceuticals, medical devices, large-scale electronics manufacturing, food products, and solar EV modules.

Under the glare of big announcements related to futuristic technologies such as 5G or Digital Rupee, some of the key announcements related to the primary sector seem to be getting less coverage. Such as the Government's resolve to give post-harvest support for enhancing consumption of millet products internationally in 2023, which has been announced as the International Year of Millets.

The Government plans to build a fund to finance agriculture start-ups and rural enterprises relevant to the farm produce value chain. The activities of such start-ups will include inter-area support for farmer-producer organizations (FPOs), machinery for farmers on a rental basis at the farm level, and technology including invitee base, she added.

The Government is continuing its efforts to reduce dependence on imported edible oils. The FM declared that a rationalized and comprehensive scheme to increase domestic production of oilseeds would be implemented. The FM also said that the Government would soon bring policies and laws to promote agroforestry and private forestry.

Union Budget 2022 reactions from the F&B industry

Britannia Industries

Varun Berry, managing director, Britannia Industries, comments on Union Budget 2022, "The Union Budget 2022 has focused on recovery and growth of the economy in continuation of last year's budget. The announcement of increasing the capital expenditure target by 35.4 percent in FY23 is laudable as it will provide a multiplier effect on the economy. The continued expansion of highways and establishment of new cargo terminals in three years as part of PM Gati Shakti plan will enhance the competitiveness of Indian industry. It will lower the cost of transportation and enable better connectivity between production and consumption markets, both domestic and global. The budget will enhance rural income and revive demand for rural consumption by putting more money in the hands of farmers. The continuation of Rs 2.37 lakh crore provision towards minimum support price (MSP) to farmers will support rural buoyancy."

Parle Products

Mayank Shah, senior category head at Parle Products, says, "First of all, putting money in the hands of consumers really helps, so they go out and buy products. So that was more on the front of ensuring that the demand remained robust given that we have gone through two years of pandemic. That was something that industry expected, either by tax cut, or by increasing the slabs tax brackets, or probably increasing the standard deduction limit. Those were the things that we expected but not much has been done there."

"However, on the second front of job creation, the Government has done a lot. The budget talks about seven engines driven by PM GatiShakti that will definitely boost employment and increase the number of jobs. The budget also talked about 60 new jobs to be created in the next five years. That is relatively a longer process compared to the first expectation, which was putting money in the hands of consumers, which would have yielded immediate results. A 20,000 crore boost in transportation infrastructure will definitely help in terms of job creation going forward."

"Another thing the Government would have ensured on the rural front was increased allocation to MGNREGA or direct benefit transfer. In Fact they chose the other way. In terms of rural demand, when you're talking about putting money in the hands of rural consumers by increased MSP and increased MSP allocation, it is also going to have an impact on the inflation because if you increase the MSP, that eventually is going to increase the cost of agri products, primary inputs in food processing. So procurement is going to be increased. The current challenge ahead of most FMCG companies, which is managing inflation, would probably be aggravated, so I consider it neutral. Probably placing this money in the hands of consumers through MGNREGA or DBT would have ensured demand to remain robust."

UFlex

Rajesh Bhatia, Group President (Finance & Accounts) & CFO at UFlex comments on the union budget 2022, "The 2022 budget echoes India's mission to becoming Atmanirbhar Bharat which is encouraging for organizations like ours that have always been at the forefront to highlight Indian talent and generate growth for the economy from international markets through our businesses and manufacturing plants abroad. The measures that will be undertaken hereon will be beneficial for our economy in the long term and help the growth of the manufacturing sector in India. By incentivizing exports, India is enabling expansion in the export sector and promoting locally produced and sourced components which is a positive step forward."

Cosmo Films

Neeraj Jain, CFO, Cosmo Films, comments, "We welcome the comprehensive budget announced by the Honorable Finance Minister to support the Indian economy. The Union Budget 2022 comes with a promise for the overall growth and revival of the economy. This year's budget demonstrates the commitment by the Government to strengthen infrastructure and employment creation. An increase in CAPEX expenditure to 7.5 lakhs cr from Rs 5.54 lakhs will boost economic growth and is very positive. Target fiscal deficit for FY 22-23 at 6.4% of GDP is also aligned with the larger goal of economic growth without much impacting the financials. We are also eagerly looking forward to new legislation on SEZ units to simplify the SEZ operations."

AGI glaspac

Rajesh Khosla, president and CEO, AGI glaspac expresses his view on the budget 2022, "The Indian Government this year has presented a growth-oriented budget with a special focus on boosting manufacturing sector to create massive employment opportunities and to maintain India's status as world's fastest-growing economy. The concessional corporate tax for newly incorporated manufacturing companies is a positive move towards promoting the Make in India initiative. This will encourage new manufacturing industries and increase private investment in this industry. The PLI Scheme (Production Linked Incentive scheme) in 14 sectors to create 6 million jobs can be predicted to improve the performance of the manufacturing industries in the country by 4X in the next four quarters. We congratulate FM, Nirmala Sitharaman for presenting a budget that has laid a roadmap for the economic revival of India - despite the pandemic crisis."

BL Agro

Ghanshyam Khandelwal, chairman, BL Agro, says, "The budget was as expected. We didn't anticipate the industry to take centre stage because several schemes for the FMCG sector have already been implemented in recent years. However, the mention of a rationalized strategy to improve domestic oilseed production and minimize reliance on imports was welcomed. A more promising statement was the package that centers on farmers adopting appropriate fruits and vegetables and proper harvesting practices. The move will go a long way towards uplifting the food processing sector."

Cornitos

Vikram Agarwal, managing director, Cornitos, says, "The Union Budget 2022-23 is a progressive budget, our Government is concentrating on infrastructure, employment generation, and future developments. This appears to be a growth-oriented budget as efforts are being made to reduce compliance burdens and improve ease of doing business. The Budget has given an extension of the ECLGS Scheme which would provide much-needed help to the MSME sector especially the hospitality and related food processing segments. The past few years have been tumultuous for the hospitality segment and I am hopeful that this initiative gives the industry a much-needed boost."

WayCool Foods & Products

Karthik Jayaraman, managing director, WayCool Foods & Products, says, "Hon. Finance Minister, today, in her FY 23 Budget has announced several major policy interventions that direct capital, both public and private, towards sunrise sectors, such as agritech, drone-tech, and climate smart technology, as well as towards strengthening core infrastructure that impacts logistics, including food logistics. The Government has also underlined its focus on sustainability by doubling down on natural farming and regenerative agriculture."

"This triple barreled approach lays the foundation to building the next generation of food supply chains in India, leapfrogging other countries in the use of technology. It will help propel our core sectors such as food and agriculture, energy and other spaces firmly into the 21st century, and sends out a very bold signal to the world, that the world's largest democracy is also demonstrating that it is the world's most forward thinking democracy. It also sends a signal to private capital, nudging private capitalists to focus on sectors of substance, rather than froth."

"The Government has also ensured there is a policy continuity and a roadmap for the farm sector, the foundations for which were already laid in last year's budget. The thrust to use technology and diversify farming activities will ensure farming as a profession remains sustainable and attractive. With emphasis also being laid on the roadmap of making end to end supply chains more efficient and reducing costs in the farming sector which currently acts as a big impediment."

Leads Connect Services

Navneet Ravikar, chairman & managing director, Leads Connect Services - agritech company, comments, "Knowing that agriculture is the backbone of our economy, it's revitalizing to see that the budget prioritized agritech, especially with the push on DeepTech like AI and geospatial systems. They will go a long way towards making the industry sustainable and bringing it into the 21st century."

"A more positive aspect was monitoring agriculture with Kisan Drones as well as digitizing land records. They will be the biggest leap towards the adoption of technology, bringing change at a national level. Another much-welcomed part of the budget was the promotion of chemical-free and natural farming in the country. Taken together, all these measures will drive the sector and get the ball rolling towards higher growth."

"I also expect the effort to increase the production of oilseeds will provide states like UP with high impetus, which, in turn, will help increase farmers' income. This, along with the announcement of public-private partnership (PPP) to deliver emerging digital services to farmers, will truly bring a ground-level change to agriculture, not only modernizing it but creating plenty of employment opportunities."

Sid's Farm

Kishore Indukuri, founder & MD, Sid's Farm, says, "We at Sid's Farm welcome the initiatives for farmers in the Union Budget of 2022. As a boost to our vision of natural farming, the Government has announced promotion of chemical-free natural farming throughout the country. The Government will launch a scheme of PPP mode with the involvement of public sector research and extension institutions along with private agritech players and stakeholders of agri value chains, is also an encouraging step towards creating efficient building blocks and greater reach. All in all, a good budget for the agri sector."

Bikanervala Foods

Manish Aggarwal, director, Bikano, Bikanervala Foods, says, "FM Nirmala Sitharaman's Union Budget 2022-23 is a strong one that takes a future-ready strong pro-technology, pro-business and green energy stand and estimates India's GDP to grow at about 9.2%, the highest among all great economies. It leverages the nation's sturdy present position and aims to expand it at an extremely macro level. The Gati Shakti masterplan shows a constructive plan to remedy the nation's world-class infrastructure needs. The PLI Scheme to generate at least 60 lakh new jobs over five years is another welcome move after a couple of challenging economic years. The ramp-up of capital expenditure by 35.40% to Rs 7.50 lakh crore as well as the upgrade to the credit guarantee trust for micro and small enterprises with the necessary fund injection, adding approximately an additional Rs 2 lakh crore in MSME's bounty, are signs of the government loosening their purse strings for the needy sector.

Regarding Agriculture, the government is opening channels to boost chemical-free natural farming and leverage Kisan drones towards crop assessment, digitizing land records, and disseminating pesticides. The Rs 2.37-lakh crore worth of MSP direct payments set aside for wheat and paddy farmers is a much-needed aid for farmers.

The launch of urban sector development plans for CoEs with an outlay of 250 crore, formulation of battery swapping policy, et al are definitive moves on the part of the government towards progress in every direction and across all mediums. The 'One Nation, One Registration' is a dream come true for business people, while the directive to the private sector to seek sustainable business models for battery and energy as a service is a clear step in the green energy direction. The directive to connect MSMEs such as Udyam, eShram, NCS & Aseem portals will widen their scope much further and leverage them as portals with live organic databases providing G-C, B-C & B-B services such as credit facilitation, enhancing entrepreneurial opportunities."

Supreme Superfoods

According to S.N. Rao, managing director, Supreem Super Foods, the Budget 2022 seems to have a drive towards infrastructure growth, digitization, and skilling which will influence retail on the go. He says, "The Union Budget 2022 - 23 paves the road map to the development of the economy in the long run. The declaration of 2022-23 as the "International Year of Millets" has come to us as a big bright sunshine of hope. This year's plan of encouraging millet production with higher emphasis on exports and reduced import dependency will propel our industry into a much more stable path after a period of struggle."

"Another big boost for MSMEs in general is the extension of the Emergency Credit Line Guarantee Scheme for another year. Moreover, reduction in corporate taxes will also help drive up our economic output."

"While there might not be a direct benefit to the sector, announcements towards the development of digital infrastructure and the digital economy at large will provide great impetus towards the growth of the retail sector. With heavy focus on expansion of highways and logistics, it will help boost supply - chain support towards the sector as well."