The Centre is finalising the contours of the long-term irrigation fund in order to meet Budget commitments for rural India and bolster farm sector productivity.

The move comes in the backdrop of nearly 260 districts being declared drought hit. “After two consecutive years of poor monsoons, it is necessary to protect the rural sector and ensure there is no further impact on agricultural productivity. Rural demand is already weak and it has to be boosted to enhance overall economic growth,” said a senior government official.

The Finance Ministry is understood to have initiated discussions on the proposed long term irrigation fund that will have a corpus of ₹20,000 crore.

To be administered by the National Bank for Agriculture and Rural Development (NABARD), the fund will provide financing to irrigation projects identified by the Ministry of Rural Development.

Funds

While funds will initially be allocated by the Centre to the corpus, it may also have to borrowed from the market later.

Underlining the need for developing infrastructure for irrigation, Finance Minister Arun Jaitley had said in the Union Budget, “Irrigation is a critical input for increasing agriculture production and productivity. Out of 141 million hectares of net cultivated area in the country, only 46 per cent is covered under irrigation.”

The Minister, who had also announced a slew of measures for crop insurance, Soil Health Card Scheme as well as a Unified Agriculture Marketing Scheme, has also held a meeting with the Rural Development Ministry on the status of the implementation of Budget proposals.

Prime Minister Narendra Modi has vowed to double farmers’ incomes by 2022, while Jaitley is hoping that good rains and farm sector productivity will take growth to over 8 per cent this fiscal.

The Budget has allocated ₹35,984 crore for agriculture and farmers’ welfare in 2016-17.

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