India to Spend $20 Billion to Lift Income for Farmers, Fishermen

(Bloomberg) --

India will spend 1.5 trillion rupees ($20 billion) to help its farmers and fishermen boost exports and profits as the economy gradually reopens after the world’s biggest lockdown.

Prime Minister Narendra Modi’s government will offer loans to build warehouses and cold storage systems, support overseas sales of some local specialties such as mangoes and saffron, and help double exports of shrimp and other seafood. The administration also proposes to amend laws and allow farmers to sell their produce without any curbs.

“Where entitlements are due, yes they will be given, but largely our focus is making sure India stands up on its own, in turn generate more jobs and so on,” Finance Minister Nirmala Sitharaman said at a briefing on Friday. “Empowering people through creation of skill, creation of logistics and so on.”

Friday’s announcements were her third in the last three days, part of a $265 billion package that includes several monetary measures and is equivalent to 10% of gross domestic product. While India’s economy is set for its first annual contraction in four decades, the government forecasts agriculture output will grow faster than expected, emerging as the lone bright spot.

With Friday’s announcements, more than two-third of the planned stimulus measures have been released, according to Bloomberg News calculations. Sitharaman on Wednesday offered $72 billion liquidity to small firms, shadow banks, and electricity distributors, and on Thursday gave $32 billion of cheap credit to farmers and workers in the informal economy.

“We do not foresee any major immediate benefits of the measures announced today, but the long-term thinking of the government is clear,” said B. Gopkumar, managing director and chief executive officer of Axis Securities, adding that the plans were intended to strengthen the value chain and infrastructure. “The impact on equity markets of today’s announcements is likely to be limited as benefits are back-ended.”

Though farming activities are allowed with some restrictions during the lockdown, the movement of migrant labor has been hampered as most transportation services remain suspended. The lockdown came as a shock to farmers who were getting ready with their harvests, but were forced to destroy the crop in some parts due to disruption in supply chains.

The government will amend the Essential Commodities Act to scrap stockpile limits on crops including cereals, edible oils, oilseeds, pulses, onions and potato, to help farmers fetch good prices, Sitharaman said. Curbs will only be imposed if prices of the commodities rise during a famine or any national calamity.

India also plans to enact a law to allow farmers to sell their produce across the country without any state barriers. Currently, cultivators are bound to sell their crops in state-run wholesale markets.

©2020 Bloomberg L.P.