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Farmers get their due: MSP hiked to 150% of cost

| | New Delhi

In a major thrust to the agriculture sector and to achieve its goal of doubling farmers’ income, the Government has proposed a number of measures, including hike in the minimum support price (MSP) of their kharif crops by as much as 50 per cent. The Budget for 2018-19 also allows hundred per cent tax deduction on profit

to companies registered as farmer producer companies and having annual turnover up to Rs 100 crore. 

The Budget has promised farmers a MSP that will be 1.5 times the production cost of the kharif crops. The Government said support prices for the upcoming kharif crops like  paddy will be fixed at least 50 per cent higher than the cost of  production, while raising farm credit target for the next fiscal by 10 per cent to Rs 11 lakh crore.

Budget 2018 promised to hike the MSP for farm products and to liberalise their export. On the other, the big surprise announcement on Thursday was the reserving of Rs 10,000 crore each for fisheries and animal husbandry through Fishery and Aquaculture Development Fund and Animal Husbandry Fund.

Besides, it allocated Rs 2,000 crore towards agri-market  infra fund and Rs 1,290 crore for a national bamboo mission as also  Rs 500 crore for “operation green” to check volatility in tomato, onion and potato rates and Rs 200 crore to encourage medicinal and aromatic crops cultivation.

However, the Budget did not meet expectation on  incentives drip irrigation sector and  also lacked any big bang announcement for  fertiliser sectors.

The Budget also announced a scheme called Galvanizing Organic Bio-Agro Resources Dhan (GOBAR-DHAN) for management and conversion of cattle dung and solid waste in farms to compost, fertiliser, bio-gas and bio-CNG.

Terming the move to hike MSPO as a historic decision, Jaitely said it would prove an important step towards doubling the income of farmers. The major Kharif (summer sown) crops are paddy maize, soyabean and arhar dal. To ensure farmers get MSP even if market prices fall, Jaitley said the Niti Aayog, in consultation with Central and State Governments, will put in place a fool-proof mechanism so that farmers will get adequate price for their produce.

The Modi Government’s move to hike  the minimum support price will have a direct impact on inflation.. In 2016, the Modi Government had promised to double India’s farmers’ income by 2022. With a year to go for the election, that remains a very long shot. But as Jaitley steps on the gas to boost farm incomes, the price is for everyone else to pay.

In order to encourage professionalism in post-harvest value addition in agriculture, Jaitley also proposed to allow hundred per cent deduction to companies registered as Farmer Producer Companies and having annual turnover up to Rs 100 crore in respect of their profit derived from such activities for a period of five years from financial year 2018-19.

Further, an Agri-Market Infrastructure Fund with a corpus of Rs 2,000 crore will be set up for developing and upgrading agricultural marketing infrastructure in the 22000 Grameen Agricultural Markets (GrAMs) and 585 APMCs, the Minister informed

As a primary measure, the Government announced raising institutional credit for agriculture sector to Rs11 lakh crore for the year 2018-19 from Rs10 lakh crore in 2017-18. Taking the Government’s vision ahead, Jaitley has announced the launching of ‘Operation Greens’ to address price volatility of perishable commodities like potatoes, tomatoes and onions, at an outlay of Rs. 500 crore.

‘Operation Greens’, on the lines of ‘Operation Flood’, shall promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management in the sector. The Finance Minister has also  announced 100 per cent deduction in respect of profits to Farmer Producer Companies (FPCs), having turnover up to Rs 100 crore, for a period of 5 years from 2018-19, in order to encourage professionalism in post harvest value addition in agriculture.

To boost the cluster farming, Jaitley said the Government will encourage women self-help groups to take up organic farming in clusters. Cluster farming is the idea of farmers with smaller holdings (owing to arable lands being reduced to unprofitably shrinking size due to inheritance) coming together to work on each other’s farms and share the profits equitably.

Further, Jaitley said the Government has promoted organic farming in a big way. Organic farming by Farmer Producer Organizations (FPOs) and Village Producers’ Organizations (VPOs) in large clusters, preferably of 1000 hectares each, will be encouraged.  Women Self Help Groups (SHGs) will also be encouraged to take up organic agriculture in clusters under National Rural Livelihood Programme.

Also, a sum of Rs 200 crore have been allocated to support organised cultivation of highly specialised medicinal and aromatic plants and aid small and cottage industries that manufacture perfumes, essential oils and other associated products, the Minister added.

Announcing the development and upgradation of existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs), the Finance Minister said more than 86 per cent of farmers in India are small and marginal who are not always in a position to directly transact at APMCs and other wholesale markets. In these GrAMs, physical infrastructure will be strengthened using MGNREGA and other Government Schemes and would be electronically linked to e-NAM and exempted from regulations of APMCs. This would provide farmers facility to make direct sale to consumers and bulk purchasers, the Minister added.

The Finance Minister also addressed the crucial and controversial issue that has pitched farmers and environmentalists, Union and State Governments directly against each other - the crop burning issue. Jaitley promised the setting up of a consultative committee, in collaboration with concerned ministries, to find an in-situ solution to the crop burning issue.

The Finance Minister announced that the Government is looking to honour the promise that BJP had made in their manifesto for the 2014 general elections - that of implementing the MS Swaminathan report. Swaminathan in his report had recommended giving farmers “at least 50 per cent more than the weighted average cost of production”.

Calling bamboo as ‘Green Gold’, Jaitley announced the launch of the Rs 1290-crore Re-structured National Bamboo Mission, which is based on a cluster based approach to address the complete bamboo value chain and promote bamboo sector in a holistic manner. 



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