Advisory Council Suggests Cuts In Farm Subsidy

New Delhi, Sept 28: | Updated: Sep 29 2003, 05:30am hrs
Though country is willing to accept the proposal for creation of a special Development Box under WTO agreement so that it can be allowed to adequately fund its farm sector, attempts are underway in the government circles to reduce the existing level of agriculture subsidy. A high-level expert advisory council on agriculture has suggested measures for further cuts in farm subsidy with a view to restore the fiscal health of the government. India is under no obligations to reduce the level of subsidies and support to the farm sector. At present, the total aggregate measures of support (AMS) to farm sector is not only much below the permissible 10 per cent, it is negative. The budgetary estimate of the food subsidy for the year 2003-04 is Rs 27,800 crore. The food subsidy bill had increased from Rs 6,600 crore in 1996-97 to Rs 24,200 crore in 2002-03. Though, this food subsidy bill is only a fraction of the total subsidy rendered covering other sectors, the government feels that there is a need to curtail this particular subsidy for restoring the fiscal health.

The high-level expert committee was formed after 2003-04 budgetary announcement to advise the government on cuts in subsidies. This high-level expert advisory council on agriculture which met on Friday suggested to the Union finance ministry a seven-point roadmap for improvements in the agro sector which includes taking of policy initiatives on phasing out of the farm subsidy bill, boosting capital investment in agriculture and strengthening the farm credit delivery system.

The two-hour-long first meeting of the council, chaired by Union finance minister Jaswant Singh viewed issues which needed immediate focus on farm subsidy, farm credit, devising of trade and tariff policy for agriculture products, formulating a technology package, activating of watershed programme and participatory irrigation network besides pushing up the declining capital investment in agriculture sector.

The meeting was attended by agriculture minister Rajnath Singh, Planning Commission member Sompal, former Union ministers Dr YK Alag and Ram Niwas Mirdha. The deliberations began on the finance ministers suggestion that a strategy should be made to usher a second green revolution in the country. The experts opined that the subsidy in agriculture could be brought under check only after providing an alternative in the shape of technology package to farmers, better inputs, farm-friendly trade and tariff mechanism and farm credit on soft terms.

Mr Mirdha told FE that the need to revitalise and recapitalise the cooperatives credit structure were discussed in the meeting. The finance ministry could prepare a model farm credit strategy with involvement of banks and cooperatives which could act as catalytic agents to the economically-sagging farm sector. The agriculture GDP, which dipped to a negative last year, is expected to jump by five point with good monsoon rejuvenating the farm sector this year. Dr Alag suggested that the line taken at the recent WTO meet at Cancun must be the basis for future strategy to protect farmers. For strengthening cooperative banking sector, the members were unanimous in the view that the implementation of the Kapoor and Vyas committees recommendations for the cooperatives.