The interim budget is likely to be focused on agriculture to boost demand

- After the Gaza-Israel war, disturbances in the Night Sea have disrupted the country's export statistics

On February 1, the government will present a vote-on account instead of a full-scale budget for the next financial year due to the Lok Sabha elections and will seek parliamentary approval for four months of expenditure. The new government to be formed after the elections will present a full-scale budget around June. There will be no change in the tax system in vote on account but the efforts of the government to provide support to industries by announcing measures that increase consumption demand in the country will be necessary. When the survey reports are coming out that the present government will come back to power after the 2024 Lok Sabha elections, it is believed that the government will present proposals in the budget to advance its agenda for economic development.

The country's economy is resilient, but food inflation and rural development are becoming concerns for the government. Especially when there is a war-like situation prevailing in the world at many levels, the concern of the government has increased. Following the Israel-Gaza unrest, the current Houthi crisis has made it difficult for the government to conduct import-export trade.

Not only has many exporters been forced to halt the export of their goods due to the Red Sea crisis, the increase in export costs has resulted in a preliminary estimate of a $30 billion hit to the country's total exports in the current financial year. If the crisis continues, it is not ruled out that challenges to exports will continue in the next financial year as well. A preliminary estimate by a research firm for developing countries said exports would be 6.70 percent lower than last year's $451 billion due to the crisis. The government has not yet issued an official estimate of how much the country's exports will be affected in the current financial year due to the Houthi crisis. Importers-exporters are also renegotiating their orders as freight rates rise.

About 12 percent of global trade is carried through the night sea, which has been affected by the Israel-Hamas war. Through the Suez Canal located in the Red Sea, India exports many goods to Europe including food products, electronic goods, apparel, while imports mainly include crude oil. India's agricultural exports to Europe stood at $2.28 billion in the April-November period of the current financial year. The government wants to ensure that the impact of the Red Sea crisis is limited to exports of agricultural commodities so that agricultural incomes do not fall. Keeping this fact in mind, the budget is showing the possibility of declaring subsidies for exports, especially agricultural exports. In FY 2024, the growth rate of the country's agriculture sector is estimated to be at a seven-year low of 1.80 percent. This assumption has been made in the first advance estimate of the National Statistical Office. The importance of agriculture sector in the economic growth rate of the country remains significant. Although the growth rate figures are not clear yet as they are based on five to six months of conditions, the real picture will be clear after February, say agriculture experts.

The growth rate of agriculture sector in FY 2024 was expected to be around 3 to 3.50 percent but the picture in the first estimate looks disappointing. The production of most of the kharif crops has been declining since the monsoon was weak and erratic last year. Since fifty percent of the population of the country is involved in agriculture and its allied sector, the development of agriculture sector becomes important. The impact of low income in the agricultural sector is not often felt in most sectors. In order to increase the consumption demand, it is necessary to keep the level of agricultural income high.

The rural economy depends on the performance of the agricultural sector and how much money is placed in the hands of the farmers. To alleviate any crisis at home which is suffered by the export of agricultural commodities. In order to control rising prices in the domestic market, the government has been forced to take several measures, including banning the export of various agricultural commodities. Even now, such restrictions are seen on wheat, rice and sugar. Due to this kind of uncertainty, India's credibility in the export market is not only damaged, but also the farmers have trouble harvesting, which directly affects their income.

In order to sustain the increase in agricultural exports, it is necessary to formulate an effective agricultural export policy along with the increase in agricultural production. Continuity in exports will be maintained only when domestic supply is not disrupted and capacity is created to meet demand in the export market. For this there is a need to create technology-based production capacity that can increase the production of good quality agricultural products and remain competitive in the global market.

During the corona epidemic, most of the industries of the country were in recession while the performance of the agricultural sector was quite commendable. While most of the sectors achieved a negative growth rate, the agriculture sector showed a growth rate of more than 3.50 percent. If the overall growth rate of the country is to be taken to a strong position, it is necessary to increase the growth rate of agriculture. The budget proposal to increase the use of hi-tech in the agriculture sector along with several measures to double the income of the farmers could prove to be the right step for the transformation of the agriculture sector.