If Pranab Mukherjee’s earlier Budget focused on addressing the supply-side constraints in pulses, oilseeds and fodder, this year’s Budget was skewed towards solving some of the persistent bottlenecks in the agriculture sector — such as irrigation, seed development and poor post-harvest facilities — by roping in the support of the private sector.
Measures such as viability gap funding — a government funding system — in irrigation (dams, canals and embankments), terminal markets (also called as mandis), soil testing labs, common infrastructure in agriculture and in fertiliser and investment-linked tax deductions in cold chain facilities, warehouses and storages are all meant to ensure participation of private companies and funds in farming. The basic Customs duty on a host of agriculture, horticulture and agro-processing items has been slashed.
A separate state-owned company, to be called the Irrigation and Water Resources Finance Company, will start operations in 2012-13 to mobilise resources to fund micro-irrigation, contract farming, waste water management and sanitation. The public spending is directed more on micro-irrigation programmes (the allocation to Accelerated Irrigation Benefit Programme was raised by 13 per cent to Rs 14,242 crore), credit enhancement and agriculture research and development.
The budgetary support for the agriculture ministry was raised by 18 per cent to Rs 20,208 crore. The allocation for the ministry’s flagship programme, the Rashtriya Krishi Vikas Yojana, was enhanced by Rs 1,357 crore, with half of that going to the Bringing Green Revolution In Eastern India programme, which has significantly pushed up grain production in eastern states.
The Budget also announced a Rs 300-crore programme to provide irrigation in Vidarbha region ofMaharashtra.
Agriculture research and development got a big boost in the Budget with an allocation of Rs 200 crore as incentive for research and development in new seed varieties — both for institutions and teams. Seven major agriculture universities and institutes have been given grants to undertake research and development activities.
The target for farm credit has been hiked by a staggering 21 per cent to Rs 5,75,000 crore for 2012-13 as the disbursal this year is expected to be more than the target. Kisan credit cards are being restructured so that they can be used in ATMs.
The interest subvention on timely repayment of short-term crop loans has been kept at three per cent and extended to post-harvest loans, provided negotiable warehouse receipts are kept as collateral. “Interest rate subvention for post-harvest storage by small and marginal farmers is impracticable and will not give tangible relief to the farmer community as it is mainly the medium and large farmers who have agricultural surpluses,” saidSanjay Kaul,MDand CEO, National Collateral Management Services Ltd.
The basic Custom duty on sugar planters, rotary tillers, weeders has also been raised. A new national mission on food processing has been proposed, which will be started with the assistance of state governments.