The Hindu : No new sops for farm sector

Online edition of India's National Newspaper
Wednesday, Feb 04, 2004

National

National

No new sops for farm sector

By Gargi Parsai

NEW DELHI, FEB. 3. The interim budget presented by the Finance Minister, Jaswant Singh, today has attempted to propose immediate and short-term measures for long-pending demands in the agriculture and food sectors. Apart from the increase from 1.5 crore to 2 crore of the "poorest of the poor" beneficiaries under the Antyodaya Anna Yojna (AAY) from among the Below Povertyline Population (BPL), and the concrete outlay of Rs. 15,000 crores for cooperative banks to clean up their balance sheets, there are no new sops in the budget for the sector. The new AAY would be effective from April 1.

For long have States been demanding an increase in the beneficiaries under the AAY, especially as the foodgrain stocks have been much higher than the buffer norm. The demand has now been acceded to with an additional Rs. 1000 crore burden on the food subsidy bill. The subsidy component for AAY, under which wheat is sold at Rs. 2 per kg and rice at Rs. 3 per kg, is about Rs. 2000 crores in a financial year. The interim budget projects the food subsidy bill at Rs. 27,800 crores. The budget proposals have found no real solution to the problem of sugarcane farmers whose arrears have mounted to Rs. 2000 crores, or for that matter, the sugar industry which had sought a "bail out package" to pull it out of a crisis situation due to falling prices.

The industry is clamouring for exemption of excise duty for a year amounting to Rs. 500 crores. What Mr. Singh has announced is a package that will allow for "restructuring of loans" for the industry.

On the issue of interest on crop loan, the Finance Minister merely expressed the "confidence'' that following a reduction in the rate of interest by public sector banks to 9 per cent, other banks would follow suit. The demand, however, is for 4 to 6 per cent as even 9 per cent is high interest for farmers.

Banks have also been "advised'' to assess individual credit worthiness of a farmer and not insist on additional collateral through mortgage of the entire land-holding. As a principle, collateral security should be proportionate to the value of the loan.

A Committee under eminent farm economist, V.S. Vats, is to go into all issues relating to agriculture credit while keeping in mind Non-Performing Assets norms of banks and collateral security. Tea growers will get loans up to Rs. 2 lakhs at nine per cent interest rate, Mr. Singh said.

For the rest, the Finance Minister announced proposals to extend the ongoing Kisan Credit Card, Farm Income Insurance and Self-Help Group schemes. All farmers would be covered under the Kisan Credit Card scheme by December 31 and those who want, could have modified cards for use on ATM machines.

The Farm Income Insurance Scheme, which was introduced as a "pilot scheme" in 20 districts on the eve of the November Assembly elections in four States, is proposed to be extended to 100 districts from the coming kharif season. The scheme targets two important components of farmers' income — yield and price. The Self-Help Group scheme would be intensified in U.P., Rajasthan and Madhya Pradesh. There is a proposal for setting up a National Cattle Development Board — based on the recommendation of the Dharam Pal Commission on Cattle Development — though no budgetary provision was announced.

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