The Hindu Business Line : ‘Loan waivers, a courageous move’

The challenge, as always, is with execution of the plans. Co-option of the private sector is one recipe for superior execution. That’s a big opportunity missed.

Mr S. Sivakumar, Chief Executive – Agri Businesses, ITC Ltd

To everyone who was asking the heavy-hearted question, “What is the Government doing to stop farmer suicides?” the Finance Minister has responded with a bold answer “debt waiver!” Since the proposal was in the news for a few weeks now, the announcement came as no surprise.

In the midst of the obvious concern of economists about messing up the credit repayment culture in rural India, this is certainly a courageous move.

Given the level of debts and the consequent dejection of the small farmer, I guess, any smaller response wouldn’t have served the purpose. Every farmer I spoke to since afternoon is happy! The task now is to channelise the large sum of new loans into productive purposes so that the farmer can create a virtuous cycle of higher productivity and higher income for himself.

Irrigation

Increased allocations to irrigation and water management are always welcome, considering the level of dependence of our agriculture on monsoon rains. The institutionalisation of the future resourcing of this sector through the setting up of Irrigation and Water Resources Finance Corporation is very thoughtful.

Moving on to some of the smaller but important measures – while the withdrawal of Banking Transaction Tax will help reduce the cost of cash payments to farmers, the reduction of CST to 2 per cent will help progress along the path of unified Indian market, tax exemption to seedlings and saplings grown in nurseries will improve crop health. That the movement of fertiliser subsidy to “nutrient-based regime” is still under examination, signals the strong opposition to this logical step by vested interests.

On the farm front

As far as agriculture is concerned, one must see the allocations in this Budget in conjunction with the National Food Security Mission (NFSM) and the Rashtriya Krishi Vikas Yojana (RKVY) announced a few months ago. With some Rs 30,000 crore of funds between them, the two schemes can make a difference to the agricultural scene in the country. While the NFSM is an answer to raising productivity of rice, wheat and pulses, the RKVY localises agricultural plans based on agro-climatic conditions at the district level. Also, with the gross capital formation in agriculture well on its way to the desired 16 per cent of the Agri GDP, the outlay is not a constraint.

The challenge, as always, is with execution of the plans. Co-option of the private sector is one recipe for superior execution, but I suspect, more could’ve been done on that front – say, by extending the benefits under Income-Tax Sections 80 IA to infrastructure investments in rural India, or under 35(2)AB to expenditure on agri-extension services. That’s a big opportunity missed, as Indian agricultural value chains transit from a supply driven to a demand driven construct.

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