January 28, 2019
In a bid to address distress in the agriculture sector, the Union Cabinet is likely to approve a big package for farmers today. Having lost three Hindi heartland states of Rajasthan, Madhya Pradesh and Chhattisgarh to arch rival Congress in December, the ruling BJP-NDA is likely to woo the most aggrieved community — farmers.
As per media reports, the Cabinet is in view of offering direct benefit transfers to people below poverty line (BPL) and to farmers via direct investment support.
Centre might announce direct benefit transfer (DBT) worth Rs 4,000 per acre per season plus interest-free crop loan up to Rs 1 lakh per farmer in an instant two-fold relief to the farmers, sources in the know told BusinessToday.In. The initiatives will cost the Centre Rs 2 lakh crore towards DBT and another Rs 28,000-30,000 crore towards interest subvention, adding up to nearly Rs 2.3 lakh crore on an annual basis. At least the Rs 70,000 fertiliser subsidy scheme will be subsumed into the scheme to make it possible. Some other smaller schemes may also get subsumed.
Agriculture sector, which provides nearly half of country’s employment and supports more than three-fourth of population, is facing abysmally low investment. The agriculture ministry has recommended several options to provide both short and long term solutions to address agrarian distress. Agriculture Minister Radha Mohan Singh had recently indicated that the government would announce an agriculture package before the 2019-20 Budget, to be presented on February 1.
Since 2019 general elections is inching closer, the government has less time to implement any new scheme, so it might announce measures to facilitate agricultural financing to promote economic activities. The Narendra Modi-led government believes that the scheme’s impact must be felt by the intended beneficiaries well before the elections to deliver the political dividend it is seeking — return to power.
According to experts, substantial increases in agricultural investments are required to combat poverty, realise food security and to make farming profitable. This demands comprehensive approach to pull the sector out of the crisis, such as higher minimum support price (MSP), investment support for farmers in line with Telangana’s popular Rythu Bandhu (Agriculture Investment Support Scheme), low interest on crop loans, minimum premium for taking insurance policy for food crops.