Budget 2018: Kharif crop support price to be 50 per cent more than production cost

In a major bonanza to farmers, the government said today that 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.

In an effort to take agriculture out of stress, it also announced a slew of measures such as setting up two separate funds amounting to Rs 10,000 crore for building infrastructure in sectors such as fishery, aquaculture and animal husbandry.

Besides, it allocated Rs 2,000 crore for setting up agrimarket 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.

Presenting a pro-farmer Union Budget 2018-19, Finance Minister Arun Jaitley reiterated the government's commitment to welfare of farmers saying that the emphasis is to generate higher income for farmers.

Prime Minister Narendra Modi has given a clarion call to double the farmers' income by 2022, he added.

Jaitley said the government considers agriculture as an "enterprise" and wants to help farmers produce more from the same land parcel at lesser cost and, simultaneously, realise higher prices for their produce.

Asserting that the government has been very sensitive to implementing BJP's poll promise of providing to farmers at least 50 per cent more than the cost of the crop production, Jaitely said the Minimum Support Price (MSP) for the majority of rabi crops has been announced at least one and a half times the cost involved.

"Now, we have decided to implement this resolution as a principle for the rest of crops," he said, adding that "as per pre-determined principle, government has decided to keep MSP for the all unannounced crops of kharif at least at one and half times of their production cost."

Terming this as a historic decision, the minister said the move 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.

Increasing MSP is not adequate and it is more important that farmers should get full benefit of the announced MSP, he said, while emphasising that farmers need to make decisions based on prices likely to be available after the harvest in order to get better price realisation.

On farm credit, Jaitley said: "Our government has been steadily increasing the volume of institutional credit for agriculture sector from year-to-year from Rs 8.5 lakh crore in 2014-15 to Rs 10 lakh crore in 2017-18. I now propose to raise this to Rs 11 lakh crore for the year 2018-19."

The budget has proposed to extend the facility of Kisan Credit Cards to fisheries and animal husbandry farmers to help them meet working capital needs.

Jaitley said lessee cultivators are not able to avail of crop loans at present and as a result a significant proportion of arable land remains fallow and tenant cultivators are forced to secure credit from usurious money lenders.

"NITI Aayog, in consultation with state governments, will evolve a suitable mechanism to enable access of lessee cultivators to credit without compromising the rights of the land owners," he said.

To improve agri-marketing, Jaitley announced Rs 2,000 crore 'Agri-Market Infrastructure Fund' to develop and upgrade agri-marketing infrastructure in the 22,000 Gramin Agricultural Markets (GrAMs) and 585 APMC wholesale mandis.

"These GrAMs, electronically linked to e-NAM and exempted from regulations of APMCs, will provide farmers facility to make direct sale to consumers and bulk purchasers," he said.

The government has already linked 470 wholesale mandis to the electronic National Agriculture Market scheme (e-NAM), while the rest 105 will be connected by March this year.

In order to support cultivation of medicinal and aromatic plants, Jaitley has proposed to allocate Rs 200 crore.

To deal with high price volatility in tomato, onion and potato, he proposed to launch an 'Operation Greens' on the lines of 'Operation Flood'.

"Operation Greens shall promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management. I propose to allocate a sum of Rs 500 crore for this purpose," Jaitley said.

Stating that bamboo is 'Green Gold', he said the government removed bamboo grown outside forest areas from the definition of trees.

"Now, I propose to launch a re-structured National Bamboo Mission with an outlay of Rs 1,290 crore to promote bamboo sector in a holistic manner," he added.

Jaitley also announced setting up a Fisheries and Aquaculture Infrastructure Development Fund (FAIDF) and an Animal Husbandry Infrastructure Development Fund (AHIDF).

"Total corpus of these two new Funds would be Rs 10,000 crore," the minister said.

Farmers are reeling are under stress as prices of most crops have fallen below the support price in the wake of bumper crop.