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Pre-Budget Discussion, Finance Minister Meets Agriculturalists

By: EconomyWatch Date: 30 June 2010

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Union Finance Minister, Shri P. Chidambaram held a pre-Budget meeting with a group of eminent agriculturists and agricultural experts. Experts addressed the issues related to crop insurance, irrigation, water shed development, restoration of water bodies, agriculture extension, micro financing, agriculture marketing and contract farming. In a wide-ranging discussion, the following major suggestions were made by the various invitees:

Given over-dependence of agriculture on vagaries of nature, insurance based on “weather related parameters” should receive attention in the next year’s budget. Panchayats should be the unit of settlement in case of crop failures. Weather insurance premium should not range more than 3-5% of the sum assured.
The existing crop insurance scheme covers only five percent of the farmers and hence the scheme needs to be expanded based on international experience on crop/agriculture insurance.
Micro-infrastructure such as for irrigation under Bharat Nirman should be given benefits under Section 80 IA of the Income Tax Act.
“On Farm Research” for local customization should be treated as R&D in laboratories and similar benefits extended to such activities.
Agriculture extension services needs to be strengthened with minimum of costs and leakages and with adequate degree of decentralization.
Special Economic Zones (SEZ) should not be allowed to encroach agriculture lands.
Educated rural unemployed youths should be financed for enabling them to undertake dairying, poultry and service related activities.
Major and medium irrigation should be major component of agriculture package meant for the farmers of Vidarbha region where many farmers’ suicides took place.
Based on encouraging results of “sprinkler” and “drip irrigation” in Gujarat, these facilities should be extended to other areas and to various horticulture crops.
A “National Programme on Tissue Culture and Animal Husbandry” should be started.
Rain water-harvesting structures for all farmers with holding size less than 5 hectares should be covered under micro finance for agriculture sector.
More financial incentives for water management for crop protection in coastal areas and with a medium to long- term perspective should be considered.
Watershed programme is more than collecting rainwater and using it. International best practices such as “reverse pumping” should be considered through starting a “National Level Ground Water Re-charge Programme”.
The programme on restoration of water bodies should be strengthened and receive more priority than linking of rivers.
Contamination of ground water through over extraction and excessive use of nitrogenous fertilizers should be addressed through pilot projects and management intensive programmes. Such pilot projects can be financed by the Centre.
Reclamation of waste, barren and uncultivable land should receive priority.
Production and distribution of quality seeds based on local level research and technologies is the need of the hour. Direct fertilizer and irrigation subsidies may be reduced to release resources for providing subsidy to develop more productive varieties of seeds.
Transition from traditional foodgrains to horticulture is expensive and the Government should bear the cost of the transition to help the farmers as well as farming.
The Government should think of certain “fiscal instruments” to ensure that a part of the surplus generated by converting land use away from agriculture, is reinvested in the same area.
Farming should be viewed as an important component of agri-system, which involves farming, agro processing and retailing. Contract farming which successfully counters the problems created by small size/fragmented land holdings should be encouraged. More investments to ensure movement from cereals to non- cereals such milk, eggs, meat are also needed.
Food Corporation of India (FCI) should be asked to undertake minimum and not maximum procurement. For meeting the requirements of public distribution system, FCI can invite tenders and generate competition among private traders.
The second green revolution should be based on investments and technologies suitable for Bihar, West Bengal, Eastern UP and Eastern Madhya Pradesh. Capital subsidies are needed for spreading the benefits of green revolution in these areas.
Separate feeder lines for irrigation and village community should be considered.
National Net work of field, block, State and National level food testing laboratories based on multi agency collaborations and laboratory information management system is highly desirable. Each laboratory will make use of standardized reagents and controls, food specific protocols, electronic reporting and will upgrade the existing food quality and testing infrastructure in the country.