Agriculture reform at heart of Pranab’s budget

NEW DELHI - Laying stress on agriculture, central to the country’s growth, the government Monday announced a slew of measures, including Rs.1 lakh crore more farm credit at subsidised rates, removal of production and distribution bottlenecks in food items, and a second green revolution in the east.

“Agriculture development is central to our growth strategy. Measures taken during the current year have started attracting private investment in agriculture and agro processing activities, this process has to be deepened further,” said Finance Minister Pranab Mukherjee Monday while presenting the 2011-12 budget in the Lok Sabha.

To boost the growth of farm sector, the government has raised the target of credit flow to farmers to Rs.4.75 lakh crore in fiscal 2011-12 as against Rs.3.75 lakh crore in the current financial year, he said.

Banks have been asked to step up direct lending for agriculture and credit to small and marginal farmers, Mukherjee said.

The farm credits will be heavily subsidiesed and the rate of interest will be 4 percent per annum.

The government is providing subsidised credit to farmers under interest subvention scheme. Under this, short term crop loans are given to farmers at an annual interest rate of 7 percent.

In the current financial year the government is providing additional 2 percent interest subvention to those farmers who repay their crop loans on time.

The finance minister said the government would provide 3 percent additional subvention in fiscal 2011-12 to bring down the effective rate of interest to 4 percent.

Farm sector is estimated to grow 5.4 percent in the current fiscal against a 0.4 percent growth in the previous fiscal.

High farm output and better marketing system is crucially important for controlling prices of food items.

Food inflation moved up to 11.49 percent for the week ended Feb 12 as compared with 11.05 percent in the previous week. The barometer for measuring food prices has remained in high double-digits for most part of 2010-11.

The annual inflation based on wholesale prices stood at 8.23 percent in January.

“In the budget for 2010-11, I had delineated a four-pronged strategy covering agricultural production, reduction in wastage of produce, credit support to farmers and a thrust to the food processing sector. These initiatives have started showing results but there are other issues in our food economy that require attention,” Mukherjee said while presenting his sixth budget.

On price rise, the finance minister said recent spurt in food prices was driven by increase in the prices of items like fruits and vegetables, milk, meat, poultry and fish, which account for more than 70 percent of the wholesale price index (WPI) basket for primary food items.

“Removal of production and distribution bottlenecks for these items will be the focus of my attention this year. I propose to make allocations for these schemes under the ongoing Rashtriya Krishi Vikas Yojana for an early take-off.”

The total allocation for the Rashtriya Krishi Vikas Yojana is increased to Rs.7,860 crore from Rs.6,755 crore in the current fiscal.

Murkherjee said the government would now promote a second green revolution in the eastern part of the country, push organic farming and would develop 15 more mega food parks to strengthen food security.

To improve the marketing system, the finance minister urged state governments to review and enforce a reformed Agriculture Produce Marketing Act urgently.