Economics & Politics / Rural India

Budget 2012-13 : Indian Farmers wishlist

We have come a long way, Baby… or have we???

Agriculture is the foundation of the rural economy which supports nearly 70% of our population and the basis of food security for the entire nation and its citizens. At this juncture, India is in a precarious situation both in terms of the economic condition of the farming community, especially the small and marginal farmers, tenant farmers and those dependent on rainfed agriculture, and the ecological condition in terms of poor soil health, abysmal groundwater situation, poor crop diversity and extent of chemical poisoning of our farm ecosystem and our food.

The Budget should give the highest priority to strengthening Indian agriculture, with the focus on sustainable livelihoods, especially for the small, marginal and medium farmers, and agricultural workers who together constitute more than 90% of the farming community. The need of the day is for the nation’s economic policies to focus on providing dignified livelihoods to these 700 million people and making agriculture and allied sectors economically vibrant and ecologically sustainable

Farmer’s expectations for the Indian budget are as follows, with a hope that this will mark a new beginning towards an economic policy focused on sustainable rural livelihoods.

  • Public investment in agriculture is very low, with a large portion of it going towards subsidy for chemical fertilizers. As a sector which provides livelihood for about 60% of the population, at least 25% of the Indian budget should be allocated to agriculture and allied sectors.
  • The prices for farmers produce are not increasing commensurate with the rise in inputs costs and living costs. The Minimum Support Prices for the food crops are kept on a leash due to possible impact on food inflation. The National Farmers Commission recommended that farmers should be paid at least 1.5 times the Cost of Cultivation C2. The Government should set up the ‘Price Compensation mechanism’ which will directly pay the farmers the gap between the Target Price (C2+50%) and the MSP (or the average Farm Harvest Price if lower than MSP).
  • Government should set up a Price Stabilisation Fund to address the market fluctuations in commercial crops
  • Special program to support expansion of ecologically sustainable agriculture should be initiated by the government as a pilot in 100 districts, with at least 50% of these being in rainfed areas. This program should integrate ecological management of soil fertility, pest control, crop diversity, water conservation and livestock.
  • Ecological Services bonus to farmers who practice ecological agriculture and cultivate eco-friendly crops like millets.
  • A major mission should be taken up to identify and record tenant farmers, and to provide them access to crop loans, insurance, compensation for crop loss, and all government subsidies and programs. Tenant farmers form the most vulnerable section of the agrarian community and constitute a majority of farmer suicides.
  • A concerted program to update land records should be taken up in a time-bound manner, especially with a view of implementing land reforms and ensuring that the benefits of government programs and compensation for land acquisition reach the real cultivators.
  • Drastic increase in outlay for Disaster Relief Fund for farmers, which should provide timely compensation for crop loss due to any disaster such as floods, drought, cyclone and untimely rains – at Rs.10,000 per acre on the lines of recommendations of the Hooda committee.
  • Adequate crop insurance should be provided for all crops in all regions. Expanded outlay for crop insurance program should ensure doubling the number of farmers and acres covered during this year, and should subsidize the premium payments which have become unviable for many small farmers.
  • Labour subsidy of 50 person-days/hectare for agricultural operations on private lands of farmers to compensate for the steep rise in labour wages. This should be in addition to the 100-day entitlement of labour work under NREGS and should be operationalized through a pilot program involving farmer and worker collectives.
  • A rural livelihoods program should be introduced that focuses on agro-based processing, storage and marketing facilities to be set up in rural areas, managed by farmer collectives.


Farmers Seek Holistic Budget 2012-13

Applications of farmers to Finance Minister (Mr. Pranab Mukharjee) requesting to consider their problems (Click here)


What Government Ministries are suggesting?

  1. Agriculture ministry pitches for crop loan at 3% in Budget:  In its Budget wish-list, the agriculture ministry has demanded lowering of interest rate on crop loans to 3% for those farmers who pay in time, from the existing 4%. The ministry has suggested an additional 1% interest subvention (subsidy) on short-term crop loans of up to Rs3 lakh to farmers who pay their dues on time. Other farmers get crop loans at 7% interest rate. Sources further said the ministry has suggested that the target of credit flow to agriculture sector by banks and financial institutions be continued at Rs4,75,000 crore in the 2012-13 fiscal as well..(Read More)
  2. Planing Commision wants skill development at village levels : To better implement India’s marquee rural job guarantee programme, the Planning Commission wants more money to be set aside to train officials involved in the welfare schemes by paring administrative costs. Currently, 6% of the total outlay, or about Rs2,400 crore, goes into administrative expenses. The outlay for the programme in 2011-12 is Rs40,000 crore. If the government accepts the commission’s recommendation, it could mean an outlay of at least Rs1,600 crore for training officials. At present, no fixed amount is earmarked to be spent on training officials. (Read More)
  1. Ministry of Rural Development seeks double budgetary support: Rural development minister Jairam Ramesh and Planning Commission member Mihir Shah want budgetary support for the government’s sanitation and drinking water programmes to be doubled to around Rs. 20,000 crore in the forthcoming national budget. (Read More)

What Finance minister has indicated?

With fiscal 2013 being the first year of the 12th Five-Year Plan (2012-17), various ministries are demanding higher budgetary support to provide impetus to key programmes they are executing. The finance ministry has indicated to the Planning Commission that additional gross budgetary support (GBS) for 2012-13 should be limited to Rs. 50,000 crore.

The government finances the Plan expenditure on infrastructure and social sector programmes through GBS. The finance ministry is seeking to cap the GBS increase in the next fiscal at 11% above the Rs. 4.4 trillion GBS (as per budget estimates) extended in the 2011-12 budget; in the previous budget, the hike was 15.8%.

Under the Accelerated Irrigation Benefit Programme, the ministry of water resources has asked for Rs. 28,000 crore, given the magnitude of the programme, the Planning Commission is not hopeful of getting more than Rs. 2,000 crore over what was allocated last year(i.e Rs 12,620 crore)

Similarly, Rural development ministry had sought Rs. 6,780 core in the forthcoming budget (up from Rs. 1,650 crore in 2011-12) for implementing the Total Sanitation Campaign (TSC), his understanding was that the Plan panel had only recommended Rs. 2,500 crore.(Read More)


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