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Indian Budget 2007-08- Full Text of Budget Speech

IV. AGRICULTURE


43. I shall now take up our main challenge: agriculture. I may recall the words of Jawaharlal Nehru, who said "Everything else can wait, but not agriculture".

44. The draft National Policy for Farmers submitted by the National Commission on Farmers is under consideration. Meanwhile, I have a number of proposals to improve the economic viability of farming and ensure that farmers earn a minimum net income.

Farm Credit

45. Farm credit continues to grow at a satisfactory pace. The goal of doubling farm credit in three years was achieved in two years. The target of Rs.175,000 crore set for 2006-07 will be exceeded comfortably and is likely to reach Rs.190,000 crore. This year, until December 2006, 53.37 lakh new farmers were brought into the institutional credit system. For 2007-08, I propose to fix a target of Rs.225,000 crore as farm credit and an addition of 50 lakh new farmers to the banking system.

46. The two per cent interest subvention scheme for short-term crop loans will continue in 2007-08, and I am making a provision of Rs.1,677 crore for that purpose.

47. A special plan is being implemented over a period of three years in 31 especially distressed districts in four States of the country involving a total amount of Rs.16,979 crore. Of this, about Rs.12,400 crore will be on water related schemes. In order to provide subsidiary income to the farmer, the special plan includes a scheme for induction of high yielding milch animals and related activities. I propose to provide Rs.153 crore for this scheme.

Agricultural Indebtedness

48. Government had appointed a Committee under Dr. R. Radhakrishna to examine all aspects of agricultural indebtedness. The Committee has held wide ranging consultations across the country and is in the process of finalising its recommendations. Government will act on the report as soon as it is received.

A Mission for Pulses

49. Government is concerned about the stagnation in the production and productivity of pulses. A critical deficiency is the availability and quality of certified seeds. I therefore propose to expand the Integrated Oilseeds, Oil palm, Pulses and Maize Development programme. There will be a sharper focus on scaling up the production of breeder, foundation and certified seeds. The Indian Institute of Pulses Research (IIPR), Kanpur, the National and State level seeds corporations, agricultural universities, ICAR centres, KRIBHCO, IFFCO and NAFED as well as large private sector companies will be invited to submit plans to scale up the production of seeds. Government will fund the expansion of IIPR, Kanpur, and offer the other producers a capital grant or concessional financing in order to double the production of certified seeds within a period of three years.

Plantation Sector

50. A Special Purpose Tea Fund has been launched for re-plantation and rejuvenation of tea. Government will soon put in place similar financial mechanisms for coffee, rubber, spices, cashew and coconut.

Accelerated Irrigation Benefit Programme

51. The Accelerated Irrigation Benefit Programme (AIBP) has been revamped in order to complete more irrigation projects in the quickest possible time. 35 projects are likely to be completed in 2006-07 and additional irrigation potential of 900,000 hectares will be created. As against an outlay of Rs.7,121 crore in 2006-07, the outlay for 2007-08 will be increased to Rs.11,000 crore. Of this, the grant component to State Governments will be Rs.3,580 crore, an increase from Rs.2,350 crore.

Rainfed Area Development Programme

52. The National Rainfed Area Authority was established a few months ago to coordinate all schemes relating to watershed development and other aspects of land use. I propose to allocate Rs.100 crore for the new Rainfed Area Development Programme.

Water Resources Management: Restoring Water Bodies

53. Honourable Members will recall that, in March 2005, a pilot project to repair, renovate and restore water bodies was launched in 13 States. I am happy to inform the House that the World Bank has signed a loan agreement with Tamil Nadu for Rs.2,182 crore to restore 5,763 water bodies having a command area of 400,000 hectares. An agreement for Andhra Pradesh is expected to be concluded in March 2007 and will cover 3,000 water bodies with a command area of 250,000 hectares. Preparation of similar projects for Karnataka, Orissa and West Bengal are at different stages and at least two more agreements are likely to be concluded before June 2007. I would urge other State Governments to come forward with proposals so that the whole country can be covered within the next two years.

Ground Water Recharge

54. Depletion of ground water has assumed grave proportions. The Central Ground Water Board has identified 1,065 assessment blocks in the country as 'over-exploited' or 'critical'. Over 80 per cent of these blocks are in 100 districts in seven States. The strategy for ground water recharge is to divert rain water into 'dug wells'. Each structure will cost about Rs.4,000. The requirement is seven million structures, including about two million structures on land belonging to small and marginal farmers. I propose to provide 100 per cent subsidy to small and marginal farmers and 50 per cent subsidy to other farmers. Ministry of Water Resources will finalise the scheme shortly. In anticipation, I intend to transfer a sum of Rs.1,800 crore to NABARD. The amount will be held in escrow and will be disbursed through the lead bank of the district concerned to the beneficiaries.

Training of Farmers

55. With minimum instruction and training, our farmers will easily absorb good water management practices. I therefore propose that the Indian Council of Agricultural Research (ICAR) may set up one teaching-cum-demonstration model of water harvesting in each of 32 selected State Agricultural Universities and ICAR institutes. Each institution will train 100 trainers and 1,000 farmers every year in two-week and one-week programmes respectively. Based on estimates of recurring costs, I intend to provide an interest free loan of Rs.3 crore to each institution to create a corpus fund. The yield from the fund will be used for implementing the training programme. The total cost is estimated at Rs.100 crore.

Extension System

56. The green revolution of the 1960s was brought about by thousands of agricultural extension workers who worked side by side with our farmers under a programme called Training and Visit (T&V). Sadly, the extension system seems to have collapsed. In order to revive extension work, the Ministry of Agriculture will, in consultation with State Governments, draw up a new programme that will replicate T&V with suitable changes.

57. The Agriculture Technology Management Agency (ATMA) that is now in place in 262 districts will be extended to another 300 districts in 2007-08. I propose to enhance the provision for ATMA from Rs.50 crore to Rs.230 crore next year.

Fertiliser subsidies

58. I had budgeted Rs.17,253 crore for fertiliser subsidies in 2006-07. According to Revised Estimates, this will rise to Rs.22,452 crore, and there is a demand for more money. While fertilisers should indeed be subsidised, we must find an alternative method of delivering the subsidy directly to the farmer. The fertiliser industry has agreed to work with the Department of Fertilisers to conduct a study and find a solution. Based on the report, Government intends to implement a pilot programme in at least one district in each State in 2007-08.

Agricultural Insurance

59. The National Agricultural Insurance Scheme (NAIS) will be continued in its present form for Kharif and Rabi 2007-08. I propose to make a provision of Rs.500 crore for the scheme.

60. Agricultural Insurance Corporation (AIC) has been running a pilot weather insurance scheme since Kharif 2004 and it appears to be a more promising risk mitigation scheme. Hence, Government will ask AIC to start a weather based crop insurance scheme on a pilot basis in two or three States, in consultation with the State Governments concerned, as an alternative to the NAIS. The scheme will be operated on an actuarial basis with an element of subsidy. I intend to allocate Rs.100 crore for this purpose in 2007-08.

National Bank for Agriculture and Rural Development (NABARD)

61. NABARD provides refinance to cooperative institutions. As the volume of farm credit increases and the Vaidyanathan Committee recommendations for reform of rural credit cooperatives are implemented, the demand for refinance will increase. In order to augment its resources, I propose to allow NABARD to issue rural bonds to the extent of Rs.5,000 crore. These bonds will be guaranteed by the Government and will be eligible for suitable tax exemption.

Rural Infrastructure Development Fund

62. The Rural Infrastructure Development Fund (RIDF) continues to sanction and disburse funds to State Governments. In 2006-07, out of a corpus of Rs.10,000 crore, NABARD has so far issued sanctions for Rs.8,440 crore and will achieve its target. Keeping in view the growing demand for these funds, I propose to raise the corpus of RIDF-XIII in 2007-08 to Rs.12,000 crore. I would urge State Governments to use these funds primarily in the distressed districts of the State.

63. A separate window for rural roads under RIDF was opened with Rs.4,000 crore. Against this, projects for Rs.2,311 crore have been sanctioned in 2006-07. I propose to continue the separate window under RIDF-XIII in 2007-08 with a corpus of Rs.4,000 crore.

Social Security

64. One of the commitments made in the NCMP is that Government will introduce a social security scheme for unorganised workers. A committee chaired by Dr. Arjun Sengupta has given its report which is under consideration. Pending a decision, in order to signal the UPA Government's concern for the welfare of unorganised workers, I propose to make a beginning. I propose to extend death and disability insurance cover through Life Insurance Corporation of India (LIC) to rural landless households under a new scheme called 'Aam Admi Bima Yojana' (AABY). According to NSS Report No. 491, the estimate of such households is about 1.5 crore. By end March 2007, 70 lakh households will be covered through existing schemes of the LIC with the support of some State Governments and the social security fund with the LIC. Under AABY, I propose to cover the rural landless households which enjoy no cover at all today, and the number may be actually more than what is indicated in the NSS report. The head of the family or one earning member in the family will be insured. The Central Government will bear 50 per cent of the premium of Rs.200 per year per person and I would urge the State Governments to come forward to bear the other 50 per cent on behalf of the beneficiaries. Taking into account the annual cost to the Central Government, I intend to place a sum of Rs.1,000 crore in a fund that will be maintained by LIC. I propose to finalise the scheme in consultation with State Governments and begin to implement it in 2007-08.

65. Mr. Speaker, Sir, I have devoted the last 15 minutes or so to agriculture. There is no dearth of schemes; there is no dearth of funds. What needs to be done is to deliver the intended outcomes. Saint Tiruvalluvar watches over us and warns:-

"Uzhavinar Kai Madangin Illai Vizhaivathoom
Vittame Enbarkum Nilai"
[ If ploughmen keep their hands folded Even sages claiming renunciation cannot find salvation]

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