Budget for Agriculture Sector

 Agriculture remains a priority for the government; the Finance Minister announced a slew of initiatives for the sector in his budget. As was expected the Finance Minister increased the outlay to the sector along with increased credit flow and greater funds for research and development. Increased funding was also directed towards the eastern states with a view of stepping agriculture production in them. Keeping in view the better performance of the eastern states and continuing with his efforts of bringing in a ‘second green revolution’, the FM increased the allocation for the states to Rs 1,000 crore in next fiscal. The total plan outlay for the agriculture sector has been increased by 18%. The outlay for the agriculture ministry’s flagship growth scheme Rashtriya Krishi Vikas Yojana (RKVY) was also stepped up by 17%.

To improve credit supply to farmers, target for agricultural credit was increased by Rs 1,00,000 crore to Rs 5,75,000 crore. Further a special fund called the RRB Credit Refinance Fund has been proposed with the view of enhancing the capacity of Regional Rural banks (RRB) in disbursing short term crop loans to the small and marginal farmers. The FM has also proposed modifying the Kisan Credit Card (KCC) Scheme to make it a smart card which can be used at ATMs.

The interest subvention scheme for providing short term crop loans to farmers at 7% interest per annum will be continued in 2012-13.   An additional subvention of 3% will be available to prompt paying farmers. In addition, the same interest subvention on post harvest loans up to six months against negotiable warehouse receipt will also be available. This is expected to encourage the farmers to keep their produce in warehouses.

Irrigation too received an impetus by an allocation of Rs. 300 crore.  A special government owned company to fund sub-sectors like micro-irrigation, contract farming, waste water management and sanitation was also proposed.

In keeping with the Prime Minister’s desire of encouraging research and development in the agriculture sector, an increased outlay of Rs. 200 crores was announced in the budget.

The budget has given due focus to agriculture which is not surprising as agriculture still employs more than 58% of India’s working population and has been growing at a dismal pace of 2-3.5%. The Prime Minister too has expressed his desire to bring this growth level up to 4% in the 12th Plan period. The increase in growth will not only increase production to sustain the growing population but will more importantly improve the living conditions of farmers. Increased credit flow to the sector is a welcome measure in this regard. Adequate credit at low cost will help mechanization of the sector and also reduce the dependence of the farmers on local moneylenders. Increased focus on the north eastern states will not only tap their agricultural production but will also help realize the objective of inclusive growth.

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