Budget priorities: FM first meets farm experts, then industry captains

Today’s meeting comes close on the heels of a one-and-a-half hour session that Chidambaram had with Agriculture Minister Sharad Pawar and his team just a couple of days ago before he left for Mumbai. This was among the first inter-ministerial meeting held in the FM’s preparations for the Budget.

The objective: to raise agriculture credit availability from the present level of Rs 72,000 crore to Rs one lakh crore — a hike of almost 25 per cent.

Also on the cards is a slash in interest rates on farm credit from the present level of 9 to 6-6.5 per cent.

Agriculture economists today demanded revamping of the farm credit system even as they voiced opposition to any fresh development scheme for the sector. Said Sen of CACP: ‘‘There is no dearth of schemes related to agriculture and there is no need for fresh ones. But credit for the farm sector should be stepped up.’’

Ranjana Kumar too was clear: ‘‘Money is also not a problem. It’s how to go to each farmer who is in need of this money that is the question, and how to get there in time.’’

After the meeting, Sen said there was an urgent need for writing-off bad loans to provide relief to farmers and improving banks’ balance sheets, an issue which was also discussed in the meeting with Pawar.

Speaking on behalf of other agri-economists from state varsities and farm agencies, Sen emphasised the need for consolidation of insurance schemes, as at present there were separate ones for crop sowing and farm income. Revival of cooperative banks, which are critical for the farm credit system, also figured in the talks with the FM.

The major suggestions made by the agriculturists included incentives for diversification of agriculture away from just wheat and rice, encouraging a second green revolution and setting up of agri-industry for producing value-added products.

Also on the agenda discussed with the Agriculture ministry: innovative ways and means to give rural banking a new face. Mobile banks, specialised branches of some banks and emphasis on resurrecting the sick rural cooperative banks are some of the issues which came up for discussion.

Between the Ministry of Agiculture and Finance, new ways will be devised and unveiled in the Budget. What is worrying the government is the drop of nearly Rs 13,500 crore in what is called food credit. Despite funds being available, farmers have not been able to take loans from banks — rural and cooperative.

According to experts, while Rs 72,000 crore may be the number given for agriculture credit, only Rs 22,000 crore is actually available for farmers. The remaining go in the name of agriculture infreastructure, food processing and other allied activities.

Farmers across the country have outstanding loans worth Rs 6,000 crore at an aggregate level and this could be another amnesty that the UPA government could consider by writing off these loans, just as it was done during V P Singh’s tenure.