The government will soon put in place an agriculture insurance scheme to cover inputs used by farmers and not just the loans availed of by them, finance minister Arun Jaitley said on Sunday. “Hopefully, in the near future, a viable and vibrant insurance scheme will be in place for farmers,” Jaitley said at a seminar organised by Nabard. Existing crop insurance schemes only cover farmers’ loans.
Reserve Bank of India (RBI) deputy governor HR Khan told reporters on the sidelines of the event the central bank had sent its comments to the government on the new insurance scheme.”We have a modified national insurance scheme and now we are going for a weather-based insurance cover and income insurance for farmers which has become a major issue,” he said.
Citing several challenges in agriculture, Jaitley said the government would continue to make investments in the sector.
Expressing hope that a better-than-expected monsoon would keep a lid on inflation, the finance minister said there were several indicators to show there is a recovery in growth and that India could achieve a growth rate of 8-10%.”It appears that the rain gods may be kinder this year to us than they were last year,” the FM said. He added that according to the minister of agriculture, productivity of pulses was going to be higher on the back of the better-than-expected rainfall. “I hope their estimates turn out to be true,” he said.
The finance minister also said that rising tax revenues and improving macroeconomic fundamentals indicate that the economy could achieve a higher growth trajectory. However, achieving the 8-10% rate would hinge on the implementation of the goods and services tax and the government’s “smart cities”, he said. The GST Bill has been passed in the Lok Sabha and is being currently scrutinised by a select committee of the Rajya Sabha, the upper House of Parliament. The ruling BJP does not enjoy a majority in the Rajya Sabha. The government aims to roll out the GST from April 1, 2016.
Finance minister further said that “we have a lesson to learn from Greece, and the big message is countries must learn to spend within their means”. He asserted that India is well tracked on a road map, where our own fiscal deficit, current account deficit and level of inflation are under control.. “With revenue situation being more comfortable, and the reform process gaining momentum, India’s aspiration to cross 8% growth and aim at 8-10% growth is eminently achievable” he added.
The minister said “the choice that we are making between higher growth or redistribution of resources is actually a false choice. We need higher growth on one hand and targeted schemes and policies are needed to ensure that the benefits of growth reach those who have been left out”.
Jaitley, however, said the agriculture sector presents its own set of challenges. He said, while a double-digit growth in the services sector, 7% growth in manufacturing is conceivable, we have been unable to ensure even a 4% growth consistently in the field of agriculture. With productivity levels reasonably low and 85% farmers being small and marginal, the agriculture sector is afflicted by higher input costs, low level of irrigation, high indebtedness, absence of an effective insurance mechanism and adverse impacts of climate change, he said. He, however, noted that despite these challenges, Indian farmers have been able to attain self sufficiency in foodgrains.
Concerns that an inadequate monsoon would result in food prices flaring up, thereby upsetting RBI’s inflation targets had heightened when the Indian Meteorology Department’s early monsoon forecasts predicted a below-normal rainfall. However, the adequate rainfall and its distribution across the country has allayed such fears off late.
According to the IMD, rainfall has been only 4% below normal so far in the monsoon season. The government will release consumer price index (CPI) inflation for June on Monday and this would be the last retail inflation data before RBI’s third bi-monthly monetary policy statement on August 4. Retail inflation hit a three-month high of 5.01% in May.