Agriculture and Rural Development
This years growth performance has once again underlined the critical importance of
agriculture in our economy. I propose a multi pronged programme to further strengthen our
10. On water, which is the lifeblood of agriculture, I propose the
It is important to unify the multiplicity of watershed development
programmes within the framework of a single national initiative - a National Movement of
Watershed Development that fosters implementation ability at the local level and creates
community infrastructure for micro watershed projects through active involvement of Gram
Panchayats, Local Self Help Groups and NGOs. For this, a Watershed Development Fund will
be established with NABARD to cover 100 priority districts within 3 years. The Central
Government will provide necessary matching assistance to NABARD. This will create income
generating opportunities for the landless and the poor; especially those belonging to the
Scheduled Castes, Scheduled Tribes and Other Backward Classes.
The Accelerated Irrigation Benefit Programme aims to expedite the
completion of ongoing irrigation projects by providing matching assistance to States.
However, the water rates in most States do not even cover full Operations and Maintenance
costs. To encourage better management and maintenance of costly irrigation assets, the
Centre will provide larger financial assistance to States that rationalise their water
rates to cover at least O&M costs.
In order to promote farmer participation in water management, the
Centre will provide a one time management subsidy and recurring assistance over an initial
period of 3 years to all registered Water Users Associations, linked to incremental water
rate collection. This will supplement the States own contribution.
11. Water and credit must flow together for maximum impact. Last year,
I had announced a number of initiatives for improving the flow of credit from the banking
sector to agriculture. I am happy to report to this House that institutional credit flow
to agriculture has shown a 20% increase in the current year, taking the level to about
Rs.38,000 crore as compared to Rs.31,698 crore in the previous year. I propose to take the
following further measures for improving flow of agricultural and rural credit:
The Rural Infrastructure Development Fund (RIDF) has emerged as an
important scheme for financing rural infrastructure projects of the State Governments.
Last year, I had announced an allocation of Rs.3,000 crore from the banking sector under
RIDF IV. I propose to continue the scheme. The corpus of RIDF V will be raised to Rs.3,500
crore. The repayment period is also being extended from five to seven years. The scope of
RIDF will also be widened to allow lending to Gram Panchayats, Self-Help Groups and other
eligible organisations for implementing village level infrastructure projects.
In line with my announcement last year, the Kisan Credit Card Scheme
has been launched by all public sector banks. These Cards provide timely credit to farmers
in a flexible and cost effective manner. So far, six lakh Kisan Credit Cards have been
issued. I am asking public sector banks to extend the coverage so that twenty lakh farmers
can benefit from this scheme in the coming year.
The reform measures initiated to strengthen and restructure the
Regional Rural Banks will continue. A provision of Rs.168 crore is being made for
recapitalisation of RRBs.
Micro enterprises have great potential for generating productive
employment, especially in rural areas. NABARD and SIDBI have launched schemes for
promotion of Self Help Groups and NGOs as a channel for flow of funds to micro
enterprises. Following last budgets initiative, NABARD is likely to cover about
15,000 Self Help Groups in 1998-99, as against the target of 10,000. I am asking NABARD
and SIDBI to redouble their efforts in this direction and ensure coverage of at least
50,000 Self Help Groups during the course of the next year.
To augment the flow of credit for food and agro processing
industries, lending by banks to this sector will be treated as priority sector lending.
12. Today, we have a very weak post-harvest storage and marketing
infrastructure. This causes tremendous national loss. To overcome this problem, I propose
to introduce a new credit-linked capital subsidy scheme for construction of cold storages
and godowns. This scheme, which will be implemented by the Ministry of Agriculture with
the help of NABARD, will help create additional cold storage capacity of 12 lakh tonnes
and will rehabilitate and modernise 8 lakh tonnes of existing units over the next few
years. We also propose to create 4.5 lakh tonnes of onion storage capacity. This House,
especially the main opposition party, can readily appreciate our special concern for
13. Fragmentation of agricultural land holdings undermines productive
use of land. Some States have lagged behind in attending to this important task of land
reforms. To accelerate reforms in this direction, the Central Government will provide
special financial assistance to States, which undertake this task.
14. One of the problems with effective distribution and use of
fertilizer is the mismatch between its demand and availability at the on-set of the sowing
operations. In order to tackle this problem, I propose to experiment with an incentive
discount to farmers for lifting fertilizer from the cooperative societies during the lean
months of April and May.
15. The on-going schemes for the development of degraded and wastelands will be
reoriented to permit local Self Help Groups and the landless poor, specially Scheduled
Castes, Scheduled Tribes and Other Backward Classes, to develop and utilise such lands in
each village. The whole programme will be based on participatory management with the Gram
Panchayat having a pivotal role. During 1999-2000, we will earmark a total amount of Rs.50
crore to take up this scheme on an experimental basis in those States that are prepared to
put in a matching contribution.