Farm group for scrapping MSP, removal of VAT on agri-exports

Agriculture experts, who met Finance Minister P Chidambaram as part of the pre-Budget consultations today, suggested that the government replace the current arrangement of the Minimum Support Price with a system of remunerative prices. They also suggested a participatory price insurance scheme.

The experts also sought the withdrawal of the income tax on marketing co-operatives, besides seeking fiscal sops for palm oil, bio-diesel, organic farming and contributions to a water resource development fund at the state level.

A suggestion to exempt agriculture exports from the value-added tax was also made to avoid delays in obtaining duty refunds.

During the two-hour meeting with Chidambaram, the representatives of the farm sector also asked for more funds for rural water management schemes, water storage pits, research and development in agriculture and concessional loans for the plantation sector.

The experts, researchers and representatives of agriculture commodity association bodies like those of tobacco growers said the National Rural Employment Guarantee Scheme should provide over 100 days of employment a year.

They said the scheme should be made universal instead of confining it to families below the poverty line. The experts also suggested devising a "self-selection scheme" with an appropriate wage rate.

On his part, the finance minister welcomed suggestions for accelerating agricultural growth in the country to make the sector more productive and competitive.

National Agricultural Cooperative Marketing Federation of India Chairman Ajit Kumar Singh later told reporters that he had proposed a Rs 500-crore revolving fund by the Food Corporation of India be established for expediting payment for purchasing oilseeds and pulses. This, it was claimed, would encourage the cultivation of these crops and help in the government's efforts to promote crop diversification.

National Bank for Agriculture and Rural Development (Nabard) Chairperson Ranjana Kumar said she had proposed a reduction in the interest rates on farm lending through co-operative banks.

She said Nabard was extending re-finance facilities at 5.5 per cent while some co-operative banks were extending loans at 11 per cent. "Some states have initiated steps which should result in lowering of interest rates, but that has to be the case across the country," Kumar said.

Suggestions for strengthening of co-operatives were also submitted in addition to proposals for promoting co-operatives in areas such as tourism.