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Budget 2016 govt raises agriculture spending to rs36,000 crore

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IDBI Bank's AGRI Banking focuses on sustainable business solutions of agriculture issues with innovative strategies to drive the inclusive growth.

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Budget 2016 govt raises agriculture spending to rs36,000 crore

  1. 1. BUDGET 2016 GOVT RAISES AGRICULTURE SPENDING TO RS36,000 CRORE
  2. 2. Increased funding to go into irrigation schemes, crop insurance, and national e-market for farm produce, pulse production and interest subsidy
  3. 3.  In a major push for agriculture in the Union budget, funding for the recently launched crop insurance scheme Pradhan Mantri Fasal Bima Yojana (PMFBY) has been more than doubled from Rs.2,589 crore in 2015-16 (budget estimate) to Rs.5,500 crore for 2016-17.
  4. 4. The budget announced on Monday placed a renewed focus on the farm sector in a bid to revive agriculture growth and improve farm incomes at a time when rural India is going through a protracted period of distress.
  5. 5.  Farmers and rural India will get the government’s immediate attention and the priority is to provide additional resources, finance minister Arun Jaitley said, adding that the government will aim to double farm incomes in the next five years.
  6. 6. The increased funding in the budget will go into a gamut of irrigation schemes, crop insurance, the creation of a national e-market for farm produce, higher production of pulses and interest subsidy for easing the burden of loan repayment for farmers. Jaitley said that 2.85 million hectares will be brought under irrigation through the flagship Pradhan Mantri Krishi Sinchayi Yojana (PMKSY) scheme in 2016-17. The government has made irrigation and drought-proofing a priority after two consecutive monsoon failures in a country where over half of the farm lands are rain-fed. Further, 89 projects under the Accelerated Irrigation Benefits Programme (AIBP) that are languishing will be fast-tracked.
  7. 7. This will help irrigate nearly 8 million hectare, Jaitley said, adding that the centre will spend Rs.17,000 crore on these projects next year, and Rs.86,500 crore in the next five years. Further, the budget created a dedicated long-term irrigation fund under NABARD (National Bank for Agriculture and Rural Development), with an initial corpus of Rs.20, 000 crore. The overall budget for the agriculture sector was raised by over 44%, from Rs.24, 909 crore in 2015-16 to Rs.35, 984 crore in 2016-17 (budget estimates). Rural credit got a boost, too, from a target of Rs.8.5 trillion in 2015-16 to Rs.9 trillion next year. And to ease the burden of loan repayment on drought-hit farmers, the budget allocated Rs.15, 000 crore towards interest subvention.
  8. 8. To increase crop yields in rain-fed areas the budget allocated Rs.412 crore towards organic farming. “The emphasis is on value addition so that organic produce grown in this part finds domestic and export market,” the finance minister said. For enhancement in pulses production, the budget allocated Rs.500 crore under the National Food Security Mission. The programme will cover 622 districts in the country. To help farmers get remunerative prices, a national agriculture loan market will be launched in April to connect 585 regulated wholesale markets across the country, Jaitley said. He added that 12 states have already amended their farm produce marketing laws and more states are expected to join the e-platform.
  9. 9. The centre will also strengthen procurement at support prices across the country, Jaitley said, adding that an online procurement system will be introduced by the Food Corporation of India. The emphasis on irrigation and crop insurance schemes in this year’s budget comes on the back of consecutive monsoon failures, and after the centre faced flak for ignoring the distress in rural India. While 2014 saw a deficit of 12% in the June to September south-west monsoon, last year (2015) recorded an even worse deficit of 14% with more than 10 states declaring a drought. The centre spent nearly Rs.13, 000 crore in drought assistance to states during 2015-16.
  10. 10. Reviving the farm sector was a major challenge for finance minister Jaitley as sectoral growth rate of agriculture nosedived to minus 0.2% in 2014-15, from 4.2% in 2013-14. For 2015-16, the growth rate is estimated to be a dismal 1.1%, and is likely to be revised downwards if winter crop yields take a hit. Agriculture sustains nearly half of all households in India and needs a new paradigm, said the 2015-16 Economic Survey released last week. The survey urged the government to spend on efficient irrigation technologies, support less water intensive crops like pulses and oilseeds, create a national market for farm produce, and revamp the dismal research and extension services.
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IDBI Bank's AGRI Banking focuses on sustainable business solutions of agriculture issues with innovative strategies to drive the inclusive growth.

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