The Hindu Business Line : Focus on improving economic viability of farming

Business Daily from THE HINDU group of publications Thursday, Mar 01, 2007 ePaper

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Agri-Biz & Commodities - Budget
Focus on improving economic viability of farming

CROP LOANS: The two per cent interest subvention scheme for short-term crop loans will continue in 2007-08.

I shall now take up our main challenge: agriculture. I may recall the words of Jawaharlal Nehru, who said "Everything else can wait, but not agriculture".

The draft National Policy for Farmers submitted by the National Commission on Farmers is under consideration. Meanwhile, I have a number of proposals to improve the economic viability of farming and ensure that farmers earn a minimum net income.

Farm credit

Farm credit continues to grow at a satisfactory pace. The goal of doubling farm credit in three years was achieved in two years. The target of Rs 1,75,000 crore set for 2006-07 will be exceeded comfortably and is likely to reach Rs 1,90,000 crore. This year, until December 2006, 53.37 lakh new farmers were brought into the institutional credit system. For 2007-08, I propose to fix a target of Rs 2,25,000 crore as farm credit and an addition of 50 lakh new farmers to the banking system.

Short-term crop loans

The two per cent interest subvention scheme for short-term crop loans will continue in 2007-08, and I am making a provision of Rs 1,677 crore for that purpose.

A special plan is being implemented over a period of three years in 31 distressed districts in four States of the country involving a total amount of Rs 16,979 crore. Of this, about Rs 12,400 crore will be on water-related schemes. In order to provide subsidiary income to the farmer, the special plan includes a scheme for induction of high yielding milch animals and related activities. I propose to provide Rs 153 crore for this scheme.

Panel appointed

The Government had appointed a Committee under Dr R. Radhakrishna to examine all aspects of agricultural indebtedness. The Committee has held wide ranging consultations across the country and is in the process of finalising its recommendations. The Government will act on the report as soon as it is received.

The Government is concerned about the stagnation in the production and productivity of pulses. A critical deficiency is the availability and quality of certified seeds. I, therefore, propose to expand the integrated oilseeds, oil palm, pulses and maize development programme. There will be a sharper focus on scaling up the production of breeder, foundation and certified seeds. The Indian Institute of Pulses Research (IIPR), Kanpur, the National and State level seeds corporations, agricultural universities, ICAR centres, Kribhco, IFFCO and NAFED as well as large private sector companies will be invited to submit plans to scale up the production of seeds.

The Government will fund the expansion of IIPR, Kanpur, and offer the other producers a capital grant or concessional financing in order to double the production of certified seeds within a period of three years.

Special tea fund

A Special Purpose Tea Fund has been launched for re-plantation and rejuvenation of tea. The Government will soon put in place similar financial mechanisms for coffee, rubber, spices, cashew and coconut.

The Accelerated Irrigation Benefit Programme (AIBP) has been revamped in order to complete more irrigation projects in the quickest possible time. 35 projects are likely to be completed in 2006-07 and additional irrigation potential of 9 lakh hectares will be created.

As against an outlay of Rs 7,121 crore in 2006-07, the outlay for 2007-08 will be increased to Rs 11,000 crore. Of this, the grant component to State Governments will be Rs 3,580 crore, an increase from Rs 2,350 crore.

The National Rainfed Area Authority was established a few months ago to coordinate all schemes relating to watershed development and other aspects of land use. I propose to allocate Rs 100 crore for the new Rainfed Area Development Programme.

Water bodies restoration

Honourable Members will recall that, in March 2005, a pilot project to repair, renovate and restore water bodies was launched in 13 States. I am happy to inform the House that the World Bank has signed a loan agreement with Tamil Nadu for Rs 2,182 crore to restore 5,763 water bodies having a command area of 4 lakh hectares. An agreement for Andhra Pradesh is expected to be concluded in March 2007 and will cover 3,000 water bodies with a command area of 2.5 lakh hectares. Preparation of similar projects for Karnataka, Orissa and West Bengal are at different stages and at least two more agreements are likely to be concluded before June 2007. I would urge other State Governments to come forward with proposals so that the whole country can be covered within the next two years.

Depletion of ground water has assumed grave proportions. The Central Ground Water Board has identified 1,065 assessment blocks in the country as 'over-exploited' or 'critical'. Over 80 per cent of these blocks are in 100 districts in seven States. The strategy for ground water recharge is to divert rainwater into 'dug wells'. Each structure will cost about Rs 4,000.

The requirement is seven million structures, including about two million structures on land belonging to small and marginal farmers. I propose to provide 100 per cent subsidy to small and marginal farmers and 50 per cent subsidy to other farmers. Ministry of Water Resources will finalise the scheme shortly.

In anticipation, I intend to transfer a sum of Rs 1,800 crore to Nabard. The amount will be held in escrow and will be disbursed through the lead bank of the district concerned to the beneficiaries.

With minimum instruction and training, our farmers will easily absorb good water management practices. I, therefore, propose that the Indian Council of Agricultural Research (ICAR) may set up one teaching-cum-demonstration model of water harvesting in each of 32 selected State Agricultural Universities and ICAR institutes. Each institution will train 100 trainers and 1,000 farmers every year in two-week and one-week programmes respectively. Based on estimates of recurring costs, I intend to provide an interest free loan of Rs.3 crore to each institution to create a corpus fund.

The yield from the fund will be used for implementing the training programme. The total cost is estimated at Rs.100 crore.

The green revolution of the 1960s was brought about by thousands of agricultural extension workers who worked side by side with our farmers under a programme called Training and Visit (T&V). Sadly, the extension system seems to have collapsed. In order to revive extension work, the Ministry of Agriculture will, in consultation with State Governments, draw up a new programme that will replicate T&V with suitable changes.

The Agriculture Technology Management Agency (ATMA) that is now in place in 262 districts will be extended to another 300 districts in 2007-08.

I propose to enhance the provision for ATMA from Rs 50 crore to Rs 230 crore next year.