Promising to turn new leaf, Govt sows reforms in fields

Reacting to the announcements, M S Swaminathan, chairman of National Farmers Commission, said: ‘‘We hope this is an indication of things to come in the next Budget where it should come together more elaborately.’’ He said this was the first time that a Budget had taken a ‘‘holistic view of the problems facing rural India’’.

What made everybody happy were two very concrete steps: complete tax holiday for agro processing industries for five years; and, excise exemption for farm implements, including tractors, spades and dairy machinery. This is expected to lead to faster modernisation and growth of agro processing industry, leading to non-farm employment in the sector.

While this looks like a clear policy that will benefit farmers, one of the most significant portions is to address the problem of water — restoring traditional water sources by providing Rs 1000 crore. Chidamabaram called it his ‘‘big dream’’ and acknowledged that water had reached a ‘‘crisis’’.

He announced an ambitious nationwide water harvesting scheme to cover one lakh irrigation units at an average cost of Rs 20,000 per unit with 50 per cent government subsidy through NABARD.

All drinking water schemes will be brought under the Rajiv Gandhi Drinking Water Mission with an allocation of Rs 2,610 crore. Panchayats will be encouraged to plan, implement, own and operate their water supply.

The Budget is also committed to completing pending irrigation projects priority-wise. Only 28 of the 178 large and medium projects have so far been completed. The Budget refrained from announcing mega water projects.

‘‘It still does not say what incentives it will give to the private sector for entering the area of restoring these water bodies,’’ said Chengal Reddy chairman of the Federation of Farmers Association.

Coming back to farmers, timely and adequate credit — it already received some attention after the government took over — got another fillip when the Finance Minister promised doubling credit in the next three years. Regional Rural Banks and Cooperatives have been made responsible for disbursal of this credit. Those who do so would get incentives for restructuring.

A new task force has been appointed to look into cooperative credit. Incidentally, the Vyas committee, appointed by the previous government, is already working on revamping credit. ‘‘The question is not of how much credit is available, it is the recovery mechanism that needs to be looked at. That’s leading to mass suicide by farmers,’’ said Sharad Joshi, Shetkari Sangathana founder. For the first time, innovative pilot projects on weather, farm income and livestock would be tried out. The crop insurance that is in place has proven to be unsuccessful.

There is another spark of reform in trying out food stamps instead of distributing food through the PDS system to BPL families. There have been enough indicators to show that with leakages in the system, benefits never really reached the poor.

For diversification of agriculture, National Horticulture Mission has been announced to double the horticulture production by 2011-12 from 150 million tonnes to 300 million tonnes. States will be asked to emulate the AMUL model and establish a state level cooperative society. By giving tax holiday for agro processing industry, combined with the Horticulture Mission, the food sector is expected to come up.

For a sector devoid of investments and capital formation, the Minister announced reviving the defunct Small Farmers Agribusiness Consortium that was initially set up in 1998. He says it should be run by a banker and act as a venture capitalists for small agri business companies. There is additional allocation for dryland irrigation and oilseeds. Indian Council for Agricultural Research has been asked to get into viable research with priority on dryland farming and biotechnology.

‘‘There is still no incentive for private companies to enter into storage and handling of grains, irrigation or even abolition of Essential Commodities Act that would really help the smallest farmer,’’ said Joshi.

There is some good news for the rural poor on the increased allocation for some Central-run schemes. It comes with a big question-mark whether it will really reach the people it’s meant for. The Budget provides for Rs 1000 crore additional gross budgetary support for schemes like Food For Work, Sarva Siksha Abhiyan, Mid-day meals, basic health care, Antyodaya Anna Yojana, Self Help Groups.

‘‘The Finance Minister has given enough indications on what the roadmap is. Now it is upto the Ministry, the states and research institutions to flesh out these policies and bring about a transformation,’’ said Swaminathan.