Budget focuses on farm sector: Analysts

February 28th, 2011 - 5:13 pm ICT by IANS  

Pranab Mukherjee Chennai, Feb 28 (IANS) In his union budget Finance Minister Pranab Mukherjee has given thrust to improving infrastructure, farmers’ development and raising agricultural productivity, say research analysts.”Overall, it is a welcome budget for the agriculture sector. There are lots of long term measures proposed in this budget. The finance minister has mentioned about bring urea under nutrient-based subsidy (NBS) regime. Food Security Bill is also to be introduced. The agricultural growth is expected to be 5.5 percent,” Prasoon Mathur, senior analyst, Religare Commodities, told IANS.

Mukherjee, in his budget speech in the Lok Sabha Monday, said the new policy on providing subsidies on fertilisers on the basis of their nutrient composition could soon be extended to urea, one of the most widely used fertilisers.

Sageraj Bariya, research analyst with Angel Broking, said: “The finance minister has reduced excise duty on micro irrigation systems which augurs well for companies operating in that sector. It will be interesting to see how the government plans to bring urea under the NBS regime.”

Presenting his sixth budget and the nation’s 80th, Mukherjee proposed raising of rural infrastructure development fund corpus by Rs.2,000 crore to Rs.18,000 crore and also announced Rs.2,000 crore corpus for creating addition warehousing facilities.

The government is also considering creation of huge food storage facilities and announced infrastructure status for cold storage sector.

The minister also announced issuance of tax free bonds of Rs.30,000 crore for infrastructure development covering Warehousing Corporation, National Highway Authority of India and others, while increasing the foreign institutional investors (FII) limit in corporate bonds infrastructure by an additional $20 billion.

Mukherjee also announced creation of Rs.100 crore equity fund for micro finance companies.

Referring to the increase in credit flow to farmers from Rs.375,000 crore to Rs.475,000 crore, Bariya said the budget is a pro-farmer one.

According to a research report prepared by Religare Commodities, the interest subsidy for farmers who repay their loans is raised by one percent to three percent thus reducing the effective interest to four percent.

Referring to the increased allocations for green revolution, cultivation of pulses in rain-fed areas, Rashtriya Krishi Vikas Yojana, encouraging farmers to produce vegetables and oil palm production and others, Mathur said: “With cultivable area almost stagnant it has become imperative to increase farm productivity.”

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