M A I N   N E W S

Farm group proposes loan at 4%
Vibha Sharma/TNS

New Delhi, December 15
A high-level working group on agriculture today recommended farm loans at not more than 4 per cent per annum interest and Minimum Support Price (MSP) to be fixed at 50 per cent higher than the actual cost of cultivation.

Credit to farmers should be made available at not more than 4 per cent per annum rate of interest, the working group headed by Haryana Chief Minister Bhupinder Singh Hooda said in its report to Prime Minister Manmohan Singh.

In Budget 2010, the government announced doubling of interest subsidy to 2 per cent for farmers who repay their short-term crop loans on time. Therefore, effective rate of interest for such farmers is 5 per cent per annum. The working group, constituted by the Prime Minister with Agriculture Minister Sharad Pawar and chief ministers of Punjab, Bihar and West Bengal as members, was set up to recommend strategies for increasing agricultural productivity, including long-term policies to ensure sustained agricultural growth, following Chief Ministers' conference on February 6.

The Group recommended methodology of calculating costs of cultivation by Commission for Agriculture Cost and Prices (CACP) should be reviewed to provide remunerative prices to the farmers.

Supporting the recommendation of National Commission on Farmers for MSP to be 50 per cent higher price over the actual cost of cultivation or adoption of Bureau of Industrial Cost and Prices (BICP) formula used for estimating industrial costs, the Group asked for vegetables MSP, especially potato, onion and garlic, also to be fixed by the government.

Experts maintain farmers are only getting around 20 to 25 per cent more than the cost incurred.

The Group also wanted market for agricultural produce to be freed of all restrictions on movement, trading, stocking, finance and exports and that no monopoly, including that of APMCs or corporate licensees, should be allowed.

Calling for agriculture land ceiling for corporates to be fixed at 25 times the ceiling for individual farmers and a proper policy for land lease and contract farming, it said guidelines need to be chalked out for contract farming/leasing to ensure rights of both land owner and tenant are safeguarded.

Some other significant recommendations include higher investment in power sector to ensure easy availability of energy and increased investment in agricultural research to develop high yield variety of crops. Indian companies can be encouraged to buy lands in foreign countries for producing pulses and oilseeds under long-term supply contracts to Indian canalising agencies.

Since electric power is unlikely to be available to the extent required, the group recommended that farmers should be assisted partly in meeting higher cost of diesel pumping sets for lifting water in eastern states and provided inputs like quality seeds and fertiliser.

Other proposals include a comprehensive policy for extending insurance cover to all crops and livestock to be funded by the Central government. It also suggested micro and macro-level reforms, norms of Calamity Relief Fund (CRF) to be revised and compensation for the loss of crops enhanced to at least Rs. 25,000 per hectare.

The Group has made more than 150 specific recommendations organised in nine themes that will be discussed in the Second Meeting of the Core Group December 28.