Irrigation, critical food items, supply-side issues get attention
A 2.6 per cent increase in Plan outlay, programmes to improve production of palm oil, vegetables, millets, pulses, fodder and tax concessions on cold chains and storage equipment are some measures announced in the Budget as the government’s response to address the supply-side constraints contributing to higher food inflation.
The minister announced schemes to enhance production of critical food items and also proposed to incentivise farmers who repaid loans on time, by giving an additional interest subvention of one percentage point. Thus, bringing the effective interest on crop loan for such farmers to four per cent.
Banks have been asked to step up direct lending to small and marginal farmers to meet the enhanced farm credit flow target of Rs 475,000 crore for 2011-2012, about Rs 100,000 crore more from last year. The capital base of the National Bank for Agriculture and Rural Development is to be strengthened, by infusing Rs 3,000 crore to enable it to refinance short-term crop loans of cooperative credit institutions and regional rural banks at concessional rates.
The central plan outlay for agriculture and allied sectors has been stepped up to Rs 14,744 crore in 2011-2012 from the revised budget estimate of Rs 14,362 crore in 2010-2011. The Plan outlay for irrigation and flood control has been increased by 36.8 per cent to Rs 565 crore from Rs 413 crore. The outlay for the ministry of agriculture has, however, been cut by 2.75 per cent to Rs 13,662 crore in 2011-2012, from the 2010-2011 revised estimate of Rs 14,040 crore.
To further encourage states to allocate more funds for agriculture over and above their baseline expenditure on farming, an additional sum of Rs 1,105 crore has been proposed for the Rashtriya Krishi Vikas Yojana. This includes Rs 300 crore for promoting pulses production in 60,000 villages, another Rs 300 crore to bring 60,000 hectares under oil palm cultivation and Rs 400 crore for continuing with an initiative to usher a green revolution in eastern Indian states.
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Additionally, the Budget also proposed Rs 300 crore for enhancing production of millet in 1,000 compact blocks in arid and semi-arid regions. And, an equal amount for launching a national mission for protein supplements, to increase production of fish, eggs and chicken and for improving production of milk.
To bring down the wide gap between farm gate and retail prices, accentuated by lack of storage infrastructure, it is proposed to extend the viability gap funding facility to capital investment in creation of modern storage capacity. Cold chains and post-harvest storage have been given the status of an infrastructure sub-sector.
Fertiliser companies will get the benefit of investment-linked deductions as availed by other sectors.