Agriculture Budget

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Jamil S. ManerSachin B. Chougule

Agriculturebudget 2012


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Report Highlights:

The Indian fiscal year (IFY) 2012/13budget increases Ministry of Agricultureauthority by 19 percent for spending on

agricultural support to INR 176.9 billion($3.5 billion), roughly 10 percentgreater than the rate of inflation.

With a few exceptions the budgetconsists of continuation and slight

expansion of existing programs.


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Introduction

On March 16, 2012, Finance MinisterPranab Mukherjee presented theGovernment of Indias (GOI) Budget for

Indian fiscal year (IFY) 2012/13(April/March) in the backdrop of aslowdown in the economy and

government in a state of policyparalysis due to the pressures ofcoalition politics.


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Agriculture Remains a Priority

Agriculture retained its high priority inthe budget with a planned allocationfor agriculture and allied sectors raised

by 19 percent to INR 176.9 billion ($3.5billion). The budget provides additionalfunds to several ongoing programs for

enhancing agricultural production,irrigation management, higher farmcredit and improving post-harveststorage and processing infrastructure.


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Augment Agricultural Production

The government will continue ongoingprograms focused on providingincentives to farmers to increase

agricultural production. However, someof the programs received higherallocations in the budget:

INR 10 billion ($199 million) is allocatedfor the Bringing Green Revolution to

Eastern India initiative, compared to


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Expand Rural Credit

The interest subvention scheme forproviding short term crop loans at 7percent interest will be continued in

2012/13. The additional subvention of 3percent for farmers repaying the loan intime will also continue.

The 3-percent interest subvention onpost-harvest loans up to 6 months

against negotiable warehouse receipts


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Develop Irrigation

In the budget speech, Finance Ministercalled attention to the threat of waterstress affecting agriculture productionin the near future, and the need tofocus on micro irrigation schemes to

dovetail with water harvestingschemes. In general the budget forirrigation is tripled, INR 10.82 billion

($216.4 million). Some of the specific


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Support Food Processing, Storageand Market Infrastructure

The food processing sector has beengrowing at an average of over 8percent in the last five years. For better

outreach and flexibility for meeting thelocal needs, the government will launchthe National Mission on Food

Processing in cooperation with thestate governments.


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Merge Agriculture DevelopmentPrograms

Finance Minister informed that the government intends to merge the existingagriculture development activities in Rashtriya Krishi Vikas Yojana (NationalAgriculture Development Scheme) and a set of missions, which are:

National Food Security Mission (NFSM) which aims to bridge the yield gap of foodgrains and fodder. The ongoing Integrated Development of Pulses Villages,Promotion of Nutri-cereals, and Accelerated Fodder Development Program will bemerged in NFSM.

National Mission on Sustainable Agriculture including Micro Irrigation currentlytaken as a part of the National Action Plan on Climate Change will be merged

with the Rainfed Area Development Programme.

National Mission on Oilseeds and Oil Palm with the aim of increasing productionand productivity of oilseeds and oil palm.

National Horticulture Mission aims at horticulture diversification and will include


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The 2012 budget left the basic importduties on most agricultural productsunchanged, except for soy products,including protein and protein extracts,for which the import duty was loweredto 10 percent.


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Fertilizer Subsidy Also RiseDespite Reform Measures

The 2012 budget estimates thefertilizer subsidy for 2011/12 at Rs. 672billion (against INR 500 billion

allocation in the last budget), and hasallocated INR 609.7 billion for 2012/13as it pursues measures to improve

disbursement of the fertilizer subsidy.

In 2012/13, the government plans to

implement a mobile-based Fertilizer


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Comments

The ruling government has beenreeling from the poor showing in recentstate legislative elections, increasing

pressure from the minor allianceparties.

When coupled with high-profile

corruption scandals over the last year,and the slowdown in economic growth,the government is scarcely in a position

to push a reformist budget agenda.


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THANK YOU

Agriculture Budget

Documents

Transcript of Agriculture Budget