Two big farm ideas but in the fields, they were expecting more

‘‘Agriculture has not received the attention it needs… Apart from credit, there’s nothing on other fronts,’’ said M S Swaminathan, chairman, National Commission on Farmers.

The announcements, if applied to areas like Vidarbha where farmers have been committing suicide at the rate of one per day for the last few months, fall short.

CREDIT: It’s the main concern for farmers. In Vidarbha, a factor common to farmers who committed suicide was that credit was expensive (13% interest), and not easy to access (once a defaulter, a farmer cannot get another loan). The budget does address the issue. The FM has increased the amount available for banks to disburse. Interest rate has been cut. There is a small relief for farmers reeling under credit.

Farm credit target has been increased to Rs 1,75,000 crore. It had grown from Rs 1,25,309 crore in 2004-05 to an expected Rs 1,41,500 crore for 2005-06. This is expected to bring an additional 50 lakh farmers into the institutional credit net.

Farmers will receive short-term credit from NABARD at 7% with Rs 3 lakh upper limit on the principal for kharif 2006-07. There is a one-time relief of 2% of the interest on Rs 1 lakh principal for farmers who have taken crop loans, to be credited to his account before March 31, 2006. ‘‘I am willing to go that extra mile for farmers,’’ said Chidambaram. A sum of Rs 1,700 crore had been set aside for this.

To bring more cultivator households within banking ambit, a Committee on Financial Inclusion has been proposed. ‘‘Now, only 49% farmers have access to institutional credit which is shameful,’’ said the FM. The committee will suggest a plan to design and deliver credit to every household seeking credit.

FREEDOM FROM MONEYLENDERS: Farmers need to borrow not only for crops but also for things like weddings. It is believed that self-help groups (SHGs) can replace moneylenders. The FM has asked banks to credit-link an additional 385,000 SHGs in 2006-07. NABARD would be asked to open a separate line of credit for farm production and investment activities through SHGs.

INSURANCE: In spite of complaints of non-effectiveness, National Agricultural Insurance Scheme would continue.

INFRASTRUCTURE: The Rural Infrastructure Development Fund (RIDF) in 12 tranches has been increased to Rs 10,000 crore. A separate window under RIDF for rural roads with a corpus of Rs 4,000 crore would also be set up.

IRRIGATION: There is added allocation, but the budget is silent on implementation. The outlay for Accelerated Irrigation Benefit Programme (AIBP) has been raised by 58.22 per cent to Rs 7,120 crore for 2006-07.