The Hindu : National : No new allocation for farm sector

Online edition of India's National Newspaper
Friday, Jul 09, 2004

National

National

No new allocation for farm sector

By Gargi Parsai

NEW DELHI, JULY 8. Although the budget proposals for 2004-05 focus on boosting agricultural growth through diversification, development of agro-processing, enhancement of credit flow and investment, there is no new budgetary support to the sector. The 2004-05 budget outlay for the Department of Agriculture and Cooperation remains at Rs. 3014 crore made in the interim budget by the previous National Democratic Alliance (NDA) in February. There is no change either in the allocation for Animal Husbandry, Dairying and Education and Research over the interim budget.

The Finance Minister, P. Chidambaram, announced the setting up of a task force to examine the reforms required in the cooperative banking system including the appropriate regulatory regime. The task force will submit its report by October 31 this year. Obviously the Minister did not find merit in the recommendation of an earlier Capoor and Vikhle Committee which recommended revitalisation of the cooperative credit structure envisaging Rs. 15,000 crore to be shared between the Centre and the State on the condition that States amend cooperative laws and bring about transparency.

He also announced a proposal to launch a National Horticulture Mission to double horticulture production from the current level of 150 million tonnes to 300 million tonnes by 2011-12. Inviting States to join hands, he asked them to emulate the `Anand Milk Cooperative' model and establish a State-level cooperative society for promoting horticulture.

The Minister also declared initiation of a Weather Insurance Scheme on trial basis in 20 rain gauge stations in the current crop season. At the same time the pilot scheme insuring farm income (as opposed to crop) in 19 districts in 12 States during rabi 2003-04 would be extended through kharif, 2004 to assess its feasibility. Meanwhile, the National Agricultural Insurance Scheme which insures the yield or crop would be re-evaluated. The Government would facilitate farmers to diversify into oilseeds by promoting superior seed technology and through appropriate policy of price support. Last year India produced 25 million tonnes of oilseeds but also imported $ 2.5 billion worth edible oil.

The Minister admitted that the agriculture sector required "massive investments'' through credit-enabled private and enhanced public investment.

To double the flow of agriculture credit in three years, a policy for debt relief has been announced last month which entrusts implementation on public sector and private sector banks, the Regional Rural banks (RRBs) and the cooperative banks. Each RRB has a sponsor bank. Mr. Chidambaram said he would hold each sponsor bank responsible for the RRBs under its control.

"RRBs that adopt a new governance standard and that abide by the prudential regulations will qualify for receiving funds from the Government for their restructuring.''

Noting that India must become a single market for all products, particularly agricultural produce, he said the States must enact the model Agriculture Marketing Produce Act which had been circulated to States. So far, 10 States had initiated legal or administrative action for `direct marketing' and `contract farming' arrangements in line with the model laws. Observing that farm research and development was an area which deserved special attention, Mr. Chidambaram promised an increase over the allocation of Rs. 1,000 crore for 2004-05 for expanding research to new frontiers such as bio-technology, vaccines, diagnostics and special focus on farming in dryland and unirrigated areas. He pledged "necessary additional capital'' for reviving the Small Farmers Agri-business Consortium (SFAC) which became operational in 1998. The M.S. Swaminahan Research Foundation had identified 13 districts with huge potential for agri-businesses requiring investment of Rs. 170 crore.

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