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Special attention likely on agriculture, irrigation

By Gargi Parsai

NEW DELHI, FEB. 24. When the Finance Minister, P. Chidambaram, arrived in Krishi Bhavan earlier this month to discuss the coming budget with the Agriculture and Food Minister, Sharad Pawar, many took it as a signal that allocation to the agriculture sector with focus on horticulture, irrigation, wetland/dryland farming, insurance and to the Employment Guarantee Scheme will be the mainstay of the socio-economic aspect of the budget.

Although the proposed Rural Employment Guarantee Act, 2004, is before the Parliamentary Standing Committee of the Rural Development Ministry, annual allocation will be made in this budget for the scheme to provide unskilled wage employment for 100 days at statutory minimum wages to one adult member per rural poor family in 150 districts.

The assured employment will be for creation of durable assets as construction of roads or water tanks and so on. The outgo, in a full year for 150 districts, is estimated at around Rs. 9,800 crores, including foodgrains. States will identify the beneficiary households and submit the Perspective Plans for felt-needs by April.

Unemployment allowance

A significant component of the proposed Act is that if an identified beneficiary does not get work in 15 days, he/she will get `unemployment allowance.' Ultimately, the number of employment days, plus the unemployment allowance, will not exceed 100 days of assured work. At least 25 per cent of this will be paid in cash, while a part could be in terms of foodgrains.

Investment is also expected in the recently launched Rural Health Mission in a bid to invigorate the health delivery system, as well as for training in the panchayati raj institutions. The rural drinking water and sanitation sectors are also crying for budgetary support to enhance the coverage.

Along with this — despite widespread reservations — the shifting of subsidies from the farm sector to rural infrastructure may engage the attention of the Finance Minister. Although the food subsidy bill (different from farm subsidies) is as high as Rs. 25,900 crores, the latest moves of the Food Corporation of India to restructure its debt through bond issue, lowered bank interest rates, cuts in transit/storage losses and decentralised procurement of foodgrains (to make a total savings of Rs. 700 crores) may leave this area untouched for now.

However, the outgo under the Employment Guarantee Scheme and the Food-for-Work, in addition to the drought-related Sampooran Gramin Rozgar Yojna, is likely to impact the buffer norm for the Targetted Public Distribution System foodgrains in the central pool. Authoritative sources indicate that this will entail enhancing the buffer norms and subsequently the food subsidy bill.

In the agriculture sector, higher allocations are expected for horticulture, micro-irrigation, employment-generating dryland and wetland farming, fisheries (also to offset the losses in tsunami), privatised direct marketing through amendment of Agriculture Produce Marketing Committee Act, contract farming, bamboo cultivation, market-oriented farm research, Small Farmers Agribusiness Consortium, crop and livestock insurance and thrust for diversification to oilseeds and pulses. Biotechnology is also a sector that is getting to be an all-time favourite of the United Progressive Alliance Government.

Incentive for farmers

However, the Farmers Income Insurance Scheme, launched on a pilot basis in 15 districts of 12 States, did not get the budgetary push in the interim period that might signal its expansion. As against this, an improved National Agriculture Insurance Scheme, including Livestock Insurance, will receive attention with a multi-product cover to the farmer.

There might also be an incentive for farmers in the form of lower rate of interest on refinanced lending from NABARD, in keeping with the commitment to increase farm credit by 30 per cent in a fiscal.

Another favourite proposal of the Finance Minister, namely the `food stamp' or the `food coupon' scheme has been shot down by Chief Ministers as ``not practical'' at a meeting convened by the Ministry of Food and Public Distribution recently. Mr. Chidambaram, it is learnt, is still keen to push the idea on a ``pilot basis'' in West Bengal.

Water sector

As in the farm sector, the largesse in the water sector will also be coming to the ``reforming'' States. The States that recover Operation and Maintenance costs through raise in water tariff in the farm, industrial and domestic sectors will qualify for higher allocation.

There is also a move to make the Centre bear the entire cost of large projects under the Accelerated Irrigation Benefit Programme (AIBP) for the last-mile projects, mainly to clear the backlog. For this, the AIBP guidelines will be changed once again.

All in all, the agriculture, irrigation and rural infrastructure sectors could expect special attention in this year's budget linked to reforms and privatisation. What this will mean for the small and marginal farmers who are looking for debt-interest relief, higher limit in Kisan credit cards and remunerative returns, remains to be seen.

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