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Budget 2018: States may get more say in farm pricing

January 3, 2018

Mumbai : The Union Budget for 2018-19 is likely to emphasise quickening the market intervention scheme to give states more freedom to stabilise prices of agricultural commodities at the time of slump.

Besides, the Budget may focus on market linkages for farm products and strengthen the livelihood mission to address rural distress in the wake of electoral wounds suffered by the Bharatiya Janata Party in rural Gujarat, particularly Saurashtra.

As the prices of crops such as chana, tur, and oilseeds decline below the minimum support price, the Budget may directly allocate funds to states to intervene to stabilise prices through a programme.

This would help states to address fast the issue of distress sales by farmers.

The programme, the contours of which are being worked out, could be in addition to existing initiatives such as the Market Intervention Scheme (MIS) for horticulture and agriculture crops, the Price Support Scheme (PSS) for oilseeds and pulses, and also the Price Stabilisation Fund (PSF), or a replacement of any of these.

Currently, in many of these schemes, states have to depend on the Centre for approval because a portion of the funds is borne by the Union government.

This, officials say, delays procurement and storage and also prevents an efficient distribution of procured items.
The Budget is also likely to focus on market linkage schemes to improve the infrastructure and give a big thrust to procurement by Farmer Producer Companies (FPOs), according to senior officials.

Farm credit is also likely to be strengthened with not only the target for farm loans going up from the budgeted Rs 10,00,000 crore in 2017-18, but the interest subvention on timely repayment of short-term credit could also be increased to ensure cheap advances to farmers.

For rural development, the mid-term expenditure framework (MTEF) pegged the outlay at Rs 1,12,000 crore in 2018-19 compared to Rs 1,05,000 crore budgeted for the current financial year.

Officials said the outlay in the Budget, according to preliminary discussions, could be substantially more than the amount estimated by the MTEF.

The MTEF pegged the allocation for 2018-19 at around seven per cent more than the budgetary estimate (BE) of 2017-18.

For the flagship, Mahatma Gandhi National Rural Employment Guarantee Scheme, the Budget could allocate more than Rs 60,000 crore, almost Rs 12,000 crore more than the BE of 2017-18.

The expenditure on the programme after the supplementary demand for grants (passed by the Lok Sabha) will exceed Rs 53,000 crore in 2017-18 itself.

That apart, the Budget is expected to increase the allocation for the National Social Assistance Programme (NSAP) from the existing Rs 9,500 crore because the Centre is planning to raise its share of pension distributed to old citizens and widows from the existing Rs 200 and Rs 300, respectively.

States top up this amount with their share in the NSAP.

Officials said apart from the allocation increase, a big thrust of this Budget could be on creating livelihood through the Mission Antodaya initiative, which was announced in the previous Budget.

Under the Mission Antodaya around 50,000 gram panchayats are targeted to be made poverty-free in three years.

“The ranking of all the gram panchayats has been done and in the next stage we are arranging for the linkages with institutions and bodies, based on their deprivations,” a senior official remarked.

The budgetary allocation under the Livelihood Mission could also be enhanced significantly because it translates into increased access to bank credit for self-help groups (SHGs).

The number of FPOs could also be increased to 2,000-2,500 which would also provide them better access to markets.

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