Tax sops for the dairy segment and schemes aimed at shoring up the supply chain for perishable products are among the measures expected in the Budget aimed at addressing the supply-side constraints in the food sector.
The focus is likely to be on quelling inflation in protein-based food products and vegetables in the medium-to-long term, with possible tax exemptions for the setting up of integrated dairy units. Schemes for encouraging investments in cold storages, apart from augmenting foodgrain storage capacities, are likely. Also on the cards could be increased budgetary support for schemes aimed at boosting production of pulses, oilseeds, vegetables and fruits, along with sops for the poultry sector.
All this comes in the wake of the sustained inflation that continues to remain among the highest in Asia despite seven rate hikes by the Reserve Bank of India since last March. According to Government sources, measures to combat inflation are expected to figure prominently in Budget 2011-12, with the focus on increasing productivity and better utilisation of agri-products as a lasting solution to food price inflation, especially in the wake of envisaged supply problems in the international markets. The Department of Industrial Policy and Promotion, the Ministry of Food Processing Industries, and the Planning Commission have been entrusted to jointly work out schemes for encouraging investments in supply chain, including provisions for cold storages, officials said.
As a step in this direction, a proposal for creating a Special Purpose Vehicle to undertake detailed studies on foodgrain storage, handling and transportation is also on the anvil. Part of the mandate is to assess the cold chain infrastructure requirement and encourage private sector participation in the creation of such facilities.
Besides, plans for the creation of two million tonnes of additional storage through modern silos as part of the 15 million tonnes of new storage capacity under the Public Entrepreneurs Guarantee scheme of FCI are expected to be announced.