FM nod for price stabilisation fund
The finance ministry has relented in the tussle over the farm relief package being drafted by the government.
By Prabha Jagannathan, |
NEW DELHI: The finance ministry has relented in the tussle over the farm relief package being drafted by the government. At a meeting with agriculture minister Sharad Pawar here on Monday, finance minister P Chidambaram is understood to have agreed to go beyond writing off Rs 30,000 crore in bad debts arising from loans provided to farmers in 31 debt-prone districts.
The finance ministry has also given the green signal for a long-term agricultural price stabilisation fund for crops prone to heavy price fluctuation. The fund is aimed at compensating farm commodity producers at times of heavy fall in prices. The meeting, sources said, ended with the two ministers agreeing to ‘resolve the issue of funding’. Currently, only key farm produce is covered under the MSP scheme.
“The fund involves a substantial amount and the issue of what method should be used to finance it has to be ironed out at the meeting that is expected to be convened by the prime minister. However, we, the two key ministries involved, have finalised the broad contours,” officials said. The farm ministry had suggested many options for financing the corpus of the fund, including budgetary support and a cess on indirect taxes.
The meeting with the prime minister is scheduled for the first week of February, with the aim to firm up the contours of the farm package well in time for the Budget. Farm ministry officials had sought write-off for all overdue agricultural loans in 31 drought- and debt-prone districts of four states where farmers had made at least two consecutive payments.
This could pave the way for the farmers to avail fresh loans. According to farm ministry’s assessment, the write-off could involve Rs 40,000 crore.
The finance ministry has also given the green signal for a long-term agricultural price stabilisation fund for crops prone to heavy price fluctuation. The fund is aimed at compensating farm commodity producers at times of heavy fall in prices. The meeting, sources said, ended with the two ministers agreeing to ‘resolve the issue of funding’. Currently, only key farm produce is covered under the MSP scheme.
“The fund involves a substantial amount and the issue of what method should be used to finance it has to be ironed out at the meeting that is expected to be convened by the prime minister. However, we, the two key ministries involved, have finalised the broad contours,” officials said. The farm ministry had suggested many options for financing the corpus of the fund, including budgetary support and a cess on indirect taxes.
The meeting with the prime minister is scheduled for the first week of February, with the aim to firm up the contours of the farm package well in time for the Budget. Farm ministry officials had sought write-off for all overdue agricultural loans in 31 drought- and debt-prone districts of four states where farmers had made at least two consecutive payments.
This could pave the way for the farmers to avail fresh loans. According to farm ministry’s assessment, the write-off could involve Rs 40,000 crore.
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