Finance minister Arun Jaitley on Thursday announced a slew of measures to boost the rural economy and reduce distress in agriculture.
For the coming year, Jaitley announced new projects as well as enhanced support for existing schemes of farmers' interest subvention, Kisan Credit Crads and others to the tune of Rs 14.34 lakh crore in the Union budget.
Asserting that the government is committed to doubling the incomes of farmers, Jaitley announced the setting up of Agri-Market Development Fund as well as raising the minimum support price to 1.5 times the production cost for Kharif crops, a key demand of distressed farmers.
"Grameen Agricultural Market will provide farmers a means to sell directly to buyers. The focus is on low-cost farming and higher minimum selling price. Our government's emphasis is on generating farm and non-farm employment for farmers," Jaitley said in his budget speech.
Agriculture and the rural economy was the first subject Jaitley focussed on in his speech as he presented this government's last full budget ahead of the general elections scheduled for 2019. There is some speculation among politicians after today's budget, that the polls could be advanced to December 2018.
“The focus of the government next year will be to provide maximum livelihood opportunities in rural areas by spending more on livelihood, agricultural and allied activities and construction of rural infrastructure,” Jaitley said.
“In the year 2018-19, for the creation of livelihood and infrastructure in rural areas, the total amount to be spent by ministries will be Rs14.34 lakh crore from extra budgetary and non budgetary resources,” he said.
Referring to 86 per cent farmers in India, who Jaitley described as small and marginal, he said efforts will be made to link them to markets to get adequate remuneration for their produce. Among the first steps Jaitley announced was setting the minimum support price of kharif crops next year at 1.5 times the cost of production of farmers.
"This is a major benefit for which food subsidy would certainly go up. But we expect the impact of this to come only by 2020," said Subhas Chandra Garg, economic affairs secretary, speaking to reporters about the government's focus on farmers' income in this budget.
While the budget stopped short of announcing a farmers' loss compensation scheme in this budget, Jaitley said that the Niti Aayog would put in place a mechanism, after discussions with states, to ensure farmers get adequate remuneration should crop prices fall.
This year, farmers across the country have resorted to distress sell for seasonal as well as year round crops produced by them. An alarming number of farmers were reported to have resorted to distress sale outside the government designated mandis.
Jaitley also announced an increase in agricultural credit to Rs 11 trillion. Among the other measures announced by the finance minister were development and upgradation of 22,000 rural haats or markets for which he set aside Rs 2,000 crore.
He further announced a provision of Rs 500 crore for “Operation Green” to promote agriculture logistics. Announcing his measures for direct tax, Jaitley also said that Farmer Producer Organisations (FPOs) would be eligible to get 100 per cent exemption from income tax in the coming year.
The government will also make efforts to link villages and rural roads to agriculture markets, secondary schools and hospitals under the Pradhan Mantri Gram Sadak Yojna (PMGSY), Jaitley said. Funds available to women's Self-help Groups from union government would also be enhanced to Rs 75,000 crore by March 2019, he said.
The government also announced an increase in funds allocated for the National Rural Livelihood Mission under the rural development ministry to Rs 5,750 crore in 2018-19, from Rs 4,500 crore in 2017-18.
An allocation of Rs 2,600 crore to ensure irrigation facilities in 96 irrigation deprived districts, besides funds to boost fisheries and animal farming were also announced. The measures come after farmers in several states protested over a crash in crop prices last year and resorted to suicides.
Jaitley pegged the fiscal deficit target for next year at 3.3 percent—higher than market estimates—and also anticipated economic growth above 8 per cent in the next fiscal year, as he presented the budget.
Assembly elections are due in eight states—Madhya Pradesh, Chhattisgarh, Rajasthan, Karnataka, Nagaland, Tripura, Meghalaya and Mizoram—this year. Four other states are going to polls in the first half of 2019.
Before the budget, minister of state for finance, Jayant Sinha in a televised interview has said that the budget would be a political document and not just an economic or markets one this year.
