India Modi Seeks to Boost Farm Incomes by Raising Support Prices
(Bloomberg) -- India will ensure to boost farm returns by increasing support prices for crops by more than 50 percent of their production costs, a move aimed at fulfilling Prime Minister Narendra Modi’s promise of doubling farmers’ incomes by 2022.
The government will increase the minimum support price for monsoon-sown crops such as rice, soybeans, cotton and pulses, said Finance Minister Arun Jaitley, who presented the government’s budget in parliament for the financial year beginning April 1. The announcement meets the ruling party’s pledge on farm incomes in its 2014 poll manifesto.
The farming community is agitated over falling commodity prices and high debt levels. Bumper harvests, boosted by a normal monsoon in 2016 after back-to-back droughts and good rain last year, have hurt prices of crops like oilseeds and pulses. Depressed prices, combined with poor arrangements for government-assured purchases, have triggered protests by farmers.
“We have taken up programmes to direct the benefits of structural changes and good growth to reach farmers, poor and other vulnerable sections of our society and to uplift the under-developed regions,” said Jaitley. The government has decided to increase minimum support price for all crops, he said.
India’s agriculture export potential is as high as $100 billion against current export of $30 billion, he said. To realize this potential, export of agri-commodities will be liberalized, said Jaitley.
About 800 million people of India’s 1.3 billion depend directly or indirectly on farming, with agriculture accounting for about 16 percent of the economy. The country is the world’s top grower of cotton and the second-biggest producer of wheat, rice and sugar.
Modi’s party faces as many as eight state elections this year after economic woes contributed to its worst showing in more than two decades in a vote in his home state in 2017. The national poll is due early in 2019.
Other measures include:
- To spend 20 billion rupees ($314 million) to set up agricultural market fund; 100 billion rupees for fisheries and animal husbandry infrastructure fund
- Plans to develop 22,000 rural farm markets
- Farm credit allocation increased to 11 trillion rupees from 10 trillion
- Farmer-producer companies allowed 100% income tax deduction
- Allocation for food processing sector to almost double to 14 billion rupees
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