||Debt Releif to Farmers -Budget 2008-09
Excerpts relevant to the Social Sector from Speech of P. Chidambaram ,Minister of Finance
(Full text is at http://indiabudget.nic.in/ub2008-09/bs/speecha.htm )
Mr. Speaker, Sir
I rise to present the Budget for 2008-09. ...
I. THE ECONOMY: AN OVERVIEW
2. Honourable Members! The India growth story, so far, has been an absorbing and inspiring tale. Beginning January 1, 2005, the economy has recorded a growth rate of over 8 per cent in 12 successive quarters up to December 31, 2007. In the first three years of the UPA Government, the Gross Domestic Product (GDP) increased by 7.5 per cent, 9.4 per cent and 9.6 per cent, resulting in an unprecedented average growth rate of 8.8 per cent. In the current year too, according to the Advance Estimates by the Central Statistical Organisation (CSO), the growth rate will be 8.7 per cent - although I am confident that we will maintain the average of 8.8 per cent. The drivers of growth continue to be "services" and "manufacturing", which are estimated to grow at 10.7 per cent and 9.4 per cent, respectively.
3. Nevertheless, 2007-08 has been the most challenging of the last four years. At the beginning of the year, the outlook for the global economy was benign. Our economy, thanks to our own policies as well as globalisation, was poised to record another year of high growth: in fact, the first half of 2007-08 returned a growth of 9.1 per cent. However, since August 2007, the financial markets in the developed countries have witnessed considerable turbulence that has not yet abated. The consequences for developing countries are also not yet clear.
4. Moreover, agriculture has struck a disappointing note. Despite a fine start in the first half of 2007-08, the growth rate for the whole year in agriculture is estimated at only 2.6 per cent.
5. There are other downside risks too. World prices of crude oil, commodities and food grains have risen sharply in the period April 2007 to January 2008. The position of crude oil is well known to this House. Among commodities, the prices of iron ore, copper, lead, tin, urea etc are elevated. The prices of wheat and rice have increased in the world market by 88 per cent and 15 per cent, respectively. All these trends are inflationary, and there is pressure on domestic prices, especially on the prices of food articles. Consequently, the management of the supply side of food articles will be the most crucial task in the ensuing year.
6. We have also witnessed capital inflows that are far in excess of the current account deficit. This poses a challenge to monetary management. The solution lies in increasing the absorptive capacity of the economy in the medium term. In the short term, it is our responsibility to manage the flows more actively. Government will, in consultation with the RBI, continue to monitor the situation closely and take such temporary measures as may be necessary to moderate the capital flows consistent with the objective of monetary and financial stability.
7. Keeping inflation under check is one of the cornerstones of our policy. Recently, the Prime Minister declared, "I think no Government in our country can be oblivious to the objective of ensuring reasonable price stability without hurting the growth process." There can be no clearer enunciation of policy. However, since the downside risks have increased worldwide, we must be vigilant and prepared to make swift adjustments in our policies to achieve the goal of growth with price stability.
8. Let me first deal with agriculture, briefly for the present, and at some length later. The Ministry of Agriculture has estimated that the total output of food grains in 2007-08 will be 219.32 million tonnes and that will be an all time record. In particular, production of rice is estimated at 94.08 million tonnes; maize at 16.78 million tonnes; soya bean at 9.45 million tonnes; and cotton at 23.38 million bales (of 170 kg each) - and each of these will be an all time record. Government is conscious that while a lot has been done, a lot more needs to be done. Since the last Budget, Government has formulated and announced the National Policy for Farmers. Besides, Government has launched the Rashtriya Krishi Vikas Yojana with an outlay of Rs.25,000 crore and the National Food Security Mission with an outlay of Rs.4,882 crore. Both schemes will be implemented during the Eleventh Five Year Plan period. We are determined to become self-sufficient in food grains. Presently, I shall place before this House a number of new initiatives in the agriculture sector.
The Growth Story: Faster and more inclusive
9. To return to the India growth story, I am of the firm belief that we owe our sustained progress to the policy of economic reforms first ushered in by a Congress Government and now carried forward by the UPA Government.
10. If 1984 and 1991 were turning points in the history of India's economy, 2004 was another turning point. Confident that high growth was sustainable, the UPA Government had declared in the National Common Minimum Programme its intention to make growth more inclusive. Sir, I ask this House, respectfully, to judge our record on inclusive growth from the following sample of facts:
• agricultural credit doubled in the first two years of this Government and is poised to reach a level of Rs.240,000 crore by March 2008.
• the National Rural Employment Guarantee Scheme has proved to be a historic measure of empowerment of Scheduled Castes and Scheduled Tribes and, especially, of women.
• the Mid Day Meal Scheme is the largest school lunch programme in the world covering 11.4 crore children.
• the National Rural Health Mission has taken improved health care to rural India by strengthening the primary health centres of which 8,756 have been made 24 x 7.
• the Kasturba Gandhi Balika Vidyalaya Scheme has enrolled 182,000 girls in residential schools, thus helping to bridge the gender gap in education.
11. Bharat Nirman has made impressive progress in 2007-08. This ambitious programme is now over 1,000 days old. At the current pace, on each day of the year 290 habitations are provided with drinking water and 17 habitations are connected through an all weather road. On each day of the year 52 villages are provided with telephones and 42 villages are electrified. On each day of the year 4,113 rural houses are completed.
12. Mr. Speaker, just as I sat down to write this speech, I received a slim volume titled "Indira Gandhi - Selected Sayings". Within minutes, I found this gem and I quote, "The more one does, the more one attempts, the more one is capable of doing". What I have narrated so far is indeed proof of more inclusive growth, but if you ask me "can we do better?", my answer would be "we can and we should." Budget 2008-09 is about raising our sights and doing more and doing better.
II. THE ELEVENTH FIVE YEAR PLAN:
THE CRUCIAL SECOND YEAR
15. Let me assure the House that all ongoing programmes will receive ample funds.
16. For Bharat Nirman, I propose to provide Rs.31,280 crore [including the North Eastern Region (NER) component] as against Rs.24,603 crore in 2007-08.
Education: Sarva Shiksha Abhiyan
17. Education and health are the twin pillars on which rests the edifice of social sector reforms. The total allocation for the education sector (including NER) will be increased by 20 per cent from Rs.28,674 crore in 2007-08 to Rs.34,400 crore in 2008-09.
18. Of this, Sarva Shiksha Abhiyan (SSA) will be provided Rs.13,100 crore; the Mid-day Meal Scheme will be provided Rs.8,000 crore; and secondary education will be provided Rs.4,554 crore.
19. The focus of SSA will shift from access and infrastructure at the primary level to enhancing retention; improving quality of learning; and ensuring access to upper primary classes.
20. A Model School programme, with the aim of establishing 6,000 high quality model schools, will be started in 2008-09. I propose to provide Rs.650 crore for the new scheme.
Jawahar Navodaya Vidyalaya
21. Jawahar Navodaya Vidyalayas are quality schools. In order to make such schools more accessible to SC and ST students, Government plans to establish Navodaya Vidyalayas in 20 districts that have a large concentration of Scheduled Castes and Scheduled Tribes. I propose to set apart Rs.130 crore in 2008-09 for this purpose.
Kasturba Gandhi Balika Vidyalaya
22. Kasturba Gandhi Balika Vidyalayas were set up to address the issue of equity in the education of girls belonging to SC, ST, OBC and minority communities. So far, 1,754 vidyalayas have been started, and I propose to allocate funds (as part of SSA) to set up an additional 410 vidyalayas in educationally backward blocks. I also propose to provide a sum of Rs.80 crore to set up new or upgrade existing hostels attached to the Balika Vidyalayas.
National Means-cum-Merit Scholarship
23. Last year, I had announced the National Means-cum-Merit Scholarship Scheme to enable students to continue their education beyond class VIII and up to class XII. I had provided Rs.750 crore with the promise to add a like amount every year for three more years. The Scheme will be implemented by award of 100,000 scholarships beginning 2008-09. I intend to keep my promise and earmark another sum of Rs.750 crore so that a corpus of Rs.3,000 crore will be built up in four years.
Nehru Yuva Kendra
24. 123 districts do not have a Nehru Yuva Kendra. I propose to allocate Rs.10 crore in 2008-09 to set up a Kendra in each of these districts and to cover the recurring expenditure in the first year.
Mid-day Meal Scheme
25. The Mid-day Meal Scheme has been extended to upper primary classes in 3,479 educationally backward blocks. The scheme will now be extended to upper primary classes in Government and Government-aided schools in all blocks in the country. This will benefit an additional 2.5 crore children, taking the total number of children covered under the Scheme to 13.9 crore.
Institutes of Higher Education
26. Knowledge is power. It is knowledge that will drive success in the 21st century. India has the opportunity to become a knowledge society. Following the Prime Minister's announcement, an IIM at Shillong; three IISERs at Mohali, Pune and Kolkata; and an IIIT at Kanchipuram have started functioning. Government will establish one Central University in each of the hitherto uncovered States. We propose to make a beginning in 2008-09 by establishing 16 Central Universities. Besides, we propose to set up three IITs in Andhra Pradesh, Bihar and Rajasthan; two IISERs at Bhopal and Tiruvananthapuram; and two Schools of Planning and Architecture at Bhopal and Vijayawada. More institutes of higher education, as promised by the Prime Minister, will be established during the Eleventh Plan period.
27. I also propose to make a grant of Rs.5 crore to the Deccan College Post-Graduate and Research Institute, Pune which is one of the oldest institutions of modern learning in India.
Science and Technology
28. We must encourage our children to take to careers in science and research and development. Ministry of Science and Technology will introduce a scheme called Innovation in Science Pursuit for Inspired Research (INSPIRE) that will include scholarships for young learners (10-17 years), scholarships for continuing science education (17-22 years) and opportunities for research careers (22-32 years). I propose to provide Rs.85 crore in 2008-09 for this inspired contribution to building a knowledge society.
29. The recommendations of the National Knowledge Commission, submitted from time to time, are under active consideration. Some of them have been incorporated in the Eleventh Plan. Government has accepted an important recommendation to inter-connect all knowledge institutions through an electronic digital broadband network. This will encourage sharing of resources and collaborative research. I propose to provide Rs. 100 crore to the Ministry of Information and Technology for establishing the National Knowledge Network.
30. Turning to the health sector, I propose to allocate Rs.16,534 crore for the sector (including NER). This will mark an increase of 15 per cent over the allocation in 2007-08.
National Rural Health Mission
31. The National Rural Health Mission (NRHM) is the key instrument of intervention by the Central Government. The goal is to establish a fully functional, community owned, decentralised health delivery system. 462,000 Associated Social Health Activists (ASHAs) and link workers have been trained and are in place. 177,924 Village Health and Sanitation Committees are functional. 323 district hospitals have been taken up for upgradation. Ambitious goals have been set for 2008-09, and I propose to increase the allocation for NRHM to Rs.12,050 crore .
32. The National Aids Control Programme will be provided Rs.993 crore. Studies have shown that the prevalence rate of HIV/AIDS has come down from 0.9 per cent to 0.36 per cent, which is a matter of some satisfaction.
33. The drive to eradicate polio continues with a revised strategy and a focus on the high risk districts in Uttar Pradesh and Bihar. I propose to provide Rs.1,042 crore in 2008-09 for this purpose.
Rashtriya Swasthya Bima Yojana
34. Two major interventions are planned to be started in 2008-09. The first is the Rashtriya Swasthya Bima Yojana that will provide a health cover of Rs.30,000 for every worker in the unorganised sector falling under the BPL category and his/her family. I am happy to report that most of the States have agreed to join the Yojana and it will be launched in Delhi and in the States of Haryana and Rajasthan on April 1, 2008. I propose to provide Rs.205 crore as the Centre's share of the premia in 2008-09.
National Programme for the Elderly
35. The other major intervention will be for the elderly. A National Programme for the Elderly with a Plan outlay of Rs.400 crore will be started in 2008-09. Among other measures, we will establish, during the Eleventh Plan period, two National Institutes of Ageing, eight regional centres, and a department for geriatric medical care in one medical college/tertiary level hospital in each State.
Integrated Child Development Services
36. The universalization of the Integrated Child Development Services (ICDS) Scheme is underway. At the end of December 2007, 5,959 ICDS projects and 932,000 Anganwadi and mini-Anganwadi centres were functional. The beneficiary count had increased to 629 lakh children and 132 lakh pregnant and lactating mothers. I propose to enhance the allocation for ICDS from Rs.5,293 crore in 2007-08 to Rs.6,300 crore in 2008-09.
37. I am also happy to announce that the remuneration of Anganwadi workers will be increased from Rs.1,000 per month to Rs.1,500 per month. Likewise, the remuneration of Anganwadi Helpers will be increased from Rs.500 per month to Rs.750 per month. Over 18 lakh Anganwadi workers and helpers will benefit from the increase.
38. As Honourable Members are aware, there are eight flagship programmes of the UPA Government. I have dealt with two in the education sector (SSA & MMS) and two in the health sector (NRHM & ICDS). Let me now refer to the allocations that I propose to make for the other four flagship programmes:
• The National Rural Employment Guarantee Scheme (NREGS) will be rolled out to all 596 rural districts in India. Initially, we will provide Rs.16,000 crore. Let there be no apprehension in anyone's mind: as demand rises, more money will be provided to meet the legal guarantee of employment.
• The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is the main vehicle for improving urban infrastructure. It has also succeeded in driving reforms in urban governance and urban-related laws. I propose to increase the allocation from Rs.5,482 crore in 2007-08 to Rs.6,866 crore in 2008-09.
• The goal of the Rajiv Gandhi Drinking Water Mission is to supply safe drinking water to uncovered habitations and slipped back habitations as well as to address issues of quality. I propose to enhance the allocation to Rs.7,300 crore in 2008-09 as against Rs.6,500 crore in 2007-08.
The Mission does not yet have a separate component for school children in water-deficient habitations. Our children should have good, clean drinking water. Hence, I propose to allocate funds to the Mission under a separate sub-head in order to install a standalone system to provide potable water to each school in water-deficient habitations. The cost of each system, depending on the technology and design, is estimated to be between Rs.15,000 to Rs.30,000. While a detailed plan for four years will be drawn up, I propose to make an initial allocation of Rs.200 crore in 2008-09.
• The Total Sanitation Campaign is all about changing habits and mindsets, and it is a continuous process. I propose to provide Rs.1,200 crore in 2008-09.
39. Honourable Members will recall that I had in July 2004 announced support for a desalination plant to be installed near Chennai. A proposal has now been received from the Government of Tamil Nadu to establish a plant under public private partnership. While the proposal will be examined for approval, I propose to signal the Government's support to the project by setting apart Rs.300 crore in 2008-09.
North Eastern Region
40. The North Eastern Region (NER) will continue to receive special attention and enhanced allocations. I propose to provide Rs.1,455 crore to the Ministry of Development of North Eastern Region (DONER). Including that amount, the total Budget allocation for NER, spread over different ministries/departments, will increase from Rs.14,365 crore in 2007-08 to Rs.16,447 crore in 2008-09.
41. The North Eastern Region and, especially, Arunachal Pradesh and the border areas face special problems that cannot be tackled in the usual course or through normal schemes. Hence, Government proposes to identify the urgent needs of these areas and address them through a special mechanism. In order to jumpstart the process, I propose to set apart a sum of Rs.500 crore in a fund dedicated for the purpose.
SC, ST, OBC and Minorities
42. Scheduled Castes, Scheduled Tribes, socially and educationally backward classes, and minorities will continue to receive special attention.
Development and Finance Corporations
43. Development and Finance Corporations have been set up for certain disadvantaged groups. I propose to contribute additional equity to these corporations in the following manner:
National Handicapped Development Corporation .00
44. In previous Budgets, we had announced a slew of pre- and post-matric scholarship programmes for SC, ST, OBC and minorities. All of them will be continued in 2008-09 with adequate funds as summarised below:
Scheduled Castes Rs.804 crore
Scheduled Tribes Rs.195 crore
Other Backward Classes Rs.164 crore
Minorities (post-matric) Rs.100 crore
45. I propose to allocate a sum of Rs.75 crore in 2008-09 to the Rajiv Gandhi National Fellowship Programme. As Honourable Members are aware, this programme supports SC and ST students pursuing M.Phil and PhD courses.
Scheduled Castes and Scheduled Tribes
46. Following the practice initiated in 2005-06, I have included in the Budget documents a statement on the schemes for the welfare of SCs and STs. I have provided Rs.3,966 crore for schemes benefiting SCs and STs exclusively and Rs.18,983 crore for schemes where at least 20 per cent of the benefits are earmarked for SCs and STs.
47. The allocation to the Ministry of Minority Affairs will be increased from Rs.500 crore in 2007-08 to Rs.1,000 crore in 2008-09. Government has taken up the report of the Justice Rajindar Sachar Committee for speedy implementation. Apart from the schemes commenced in 2007-08, it is proposed to implement the following schemes/measures in 2008-09:
• a multi-sectoral development plan for each of the 90 minority concentration districts will be drawn up at a cost of Rs.3,780 crore. The allocation in 2008-09 will be Rs.540 crore;
• a pre-matric scholarship scheme with an allocation of Rs.80 crore next year;
• a scheme for modernising Madrassa education for which a provision of Rs.45.45 crore has been made in 2008-09;
• 256 branches of public sector banks have been opened this year until December 2007 in districts with substantial minority population. 288 more will be opened by March 2008 and many more in
• continuing the exercise started this year, more candidates belonging to the minority communities will be recruited to the Central Para-Military Forces.
48. I also propose to provide Rs.60 crore to enhance the corpus fund of the Maulana Azad Education Foundation.
Women and Children
49. I confess that policy makers often tend to forget that one-half of the population is constituted by women and they are entitled to an equal share - and an equal say - in all programmes and schemes. Gender Budgeting has gained wider acceptance and credibility. Four more ministries/departments have set up gender budgeting cells taking the total number to 54. Honourable Members will find in the Budget documents a statement embracing 33 demands for grants contributed by 27 ministries/departments and 5 Union Territories. According to the statement, Rs.11,460 crore has been provided for 100 per cent women-specific schemes and Rs.16,202 crore for schemes where at least 30 per cent is for women-specific programmes.
50. We will score another 'first' this year. A statement on child related schemes is included in the budget documents and Honourable Members will be happy to note that the total expenditure on these schemes is of the order of Rs.33,434 crore.
51. I propose to allocate Rs.7,200 crore in 2008-09 to the Ministry of Women and Child Development. This represents an increase of 24 per cent over the allocation in 2007-08.
Self Help Groups
52. The Life Insurance Corporation of India (LIC) runs the Janashree Bima Yojana and offers life and permanent disability cover to people in 44 categories. One of the categories is Self Help Groups, but only 35,000 SHGs have been covered so far. Considering the fact that there are over 30 lakh SHGs credit-linked to banks, I propose to single out this category for special attention. I propose to ask LIC to rapidly scale up the scheme and cover all women SHGs that are credit-linked to banks. Since one-half of the premium is subsidized through the Social Security Fund, I propose to contribute Rs.500 crore to the corpus of the fund with the assurance that annual contributions will be made as the scheme is scaled up. This scheme, together with the Rashtriya Swasthya Bima Yojana, will mark the beginning of a new deal for women by providing them life and health cover.
Supplement to GBS
53. Honourable Members will note that the allocations to various sectors and schemes are generous. I hasten to add that more can be done and more will be done subject, however, to one condition: the condition of performance. In the last Budget, I had announced a Plan 'B' and I was able to provide additional Plan funds of Rs.8,365 crore in cash through two supplementaries - and a third one will follow shortly. The nub of the problem lies in implementation - and implementation mostly is in the hands of State Governments. This year too, I intend to mobilise additional resources to the tune of Rs.10,000 crore to be used for Plan capital expenditure. This money - under Plan 'B' - will be available to ministries/departments of the Central Government and to State Governments that achieve the physical and quality targets set under different Plan schemes.
54. I shall now return to the subject of agriculture.
55. I have already referred to the Rashtriya Krishi Vikas Yojana and the National Food Security Mission.
56. Notwithstanding some shortcomings, the growth of agricultural credit has been impressive and for this I have to thank our scheduled commercial banks and Regional Rural Banks. Between them, they account for about 75-79 per cent of agricultural credit disbursed during any year. We will exceed the target set for 2007-08. For 2008-09, I propose to set a target of Rs.280,000 crore.
57. Short-term crop loans will continue to be disbursed at 7 per cent per annum and I am making an initial provision of Rs.1,600 crore for interest subvention in 2008-09.
Investment in Agriculture
58. What ails agriculture, among other things, is the fall in investment. However, there seems to be a turnaround. Gross Capital Formation (GCF) in agriculture as a proportion of GDP in the agriculture sector has improved from a low of 10.2 per cent in 2003-04 to 12.5 per cent in 2006-07. This, however, needs to be raised to 16 per cent during the Eleventh Plan to achieve the target growth rate of 4 per cent.
59. Government is investing heavily in the Accelerated Irrigation Benefit Programme (AIBP) and the Rainfed Area Development Programme and in the management and augmentation of water resources. Under AIBP, 24 major and medium irrigation projects and 753 minor irrigation schemes will be completed in this financial year, creating additional irrigation potential of 500,000 hectare. The outlay for 2007-08 was Rs.11,000 crore with a grant component of Rs.3,580 crore. These are being increased in 2008-09, and the estimated outlay is Rs.20,000 crore with a grant component of Rs.5,550 crore.
60. The Rainfed Area Development Programme has been finalised and will be implemented in 2008-09 with an allocation of Rs.348 crore. Priority will be given to those areas that have not been the beneficiaries of watershed development schemes.
61. The centrally sponsored scheme on micro irrigation launched in January 2006 has brought an area of 548,000 hectare under drip and sprinkler irrigation within two years. I propose to allocate Rs.500 crore for the scheme in 2008-09 with a target of covering another 400,000 hectare.
62. Agreements have been signed with the World Bank by the Governments of Tamil Nadu, Andhra Pradesh and Karnataka under the project to repair, renovate and restore water bodies. The three agreements are for a total sum of US$738 million that will benefit a command area of 900,000 hectare. I am confident that similar agreements will be signed soon between the World Bank and the Governments of Orissa, West Bengal and some other States.
Irrigation and Water Resources Finance Corporation
63. While these ongoing programmes will raise the level of investment in agriculture, I think that we need an ambitious scheme of a much larger proportion. Government is of the view that massive investments are required to be made in irrigation projects. Recently, Government has approved 14 projects that satisfy certain criteria as national projects and three of them alone would require Rs.7,000 crore during the Eleventh Plan period. Having regard to the magnitude of the challenge, I propose to establish the Irrigation and Water Resources Finance Corporation (IWRFC) with an initial capital of Rs.100 crore contributed by the Central Government. State Governments and other financial institutions will be invited to contribute to the equity. It is our intention to mobilise the very large resources that will be required to fund major and medium irrigation projects. I hope to be able to incorporate IWRFC as a company before March 31, 2008.
National Horticulture Mission
64. The National Horticulture Mission (NHM) now covers 340 districts in 18 States and two Union Territories. An area of 276,000 hectare has been brought under horticulture crops and an area of 56,000 hectare of old plantations has been rejuvenated. Special thrust is being given to the revival of crops such as coconut, cashew and pepper. NHM will be provided Rs.1,100 crore in 2008-09.
65. 500 soil testing laboratories will be set up in the public and private sectors during the Eleventh Plan period with Government assistance of Rs.30 lakh per laboratory. In addition, I propose to make a one-time allocation of Rs.75 crore to the Ministry of Agriculture in order to provide one fully-fitted mobile soil testing laboratory each to 250 districts of the country before March 2009.
66. The Special Purpose Tea Fund set up last year for re-plantation and rejuvenation will be provided Rs.40 crore in 2008-09. I propose to provide funds for similar support to other plantation crops such as cardamom (Rs.10.68 crore), rubber (Rs.19.41 crore) and coffee (Rs.18 crore). A crop insurance scheme for tea, rubber, tobacco, chilli, ginger, turmeric, pepper and cardamom will be introduced next year.
67. In order to promote research on matters concerning the plantation sector, I propose to make a one-time grant of Rs.5 crore to the Centre for Development Studies, Tiruvananthapuram. The Tocklai Experimental Station at Jorhat of the Tea Research Association will celebrate its centenary in 2010. It is in the process of upgrading its facilities and expanding its activities to cover other North Eastern States, North Bengal and Darjeeling. I propose to make a special centenary grant of Rs.20 crore to the Tea Research Association.
68. The National Plant Protection Training Institute at Hyderabad will be converted and upgraded into an autonomous National Institute of Plant Health Management with budgetary support of Rs.29.4 crore.
69. Pending a decision on an alternative crop insurance scheme that is acceptable to the farmers as well as viable to the insurer, the National Agriculture Insurance Scheme (NAIS) will be continued in its present form for Kharif and Rabi 2008-09. I propose to provide Rs.644 crore for the scheme.
70. In addition, the Weather Based Crop Insurance Scheme that is being implemented as a pilot scheme in selected areas of five States will be continued. I intend to provide Rs.50 crore for this purpose in 2008-09.
71. Government will continue to provide fertilisers to farmers at subsidized prices. Government is examining proposals to move to a nutrient based subsidy regime and alternative methods of delivering the subsidy.
Cooperative Credit Structure
72. The Prof. Vaidyanathan Committee's report on reviving the short-term cooperative credit structure is under implementation in 17 States. So far, a sum of Rs.1,185 crore has been released by the Central Government to four States. I am happy to report that the Central Government and the State Governments have reached an agreement on the content of the package to implement the Prof. Vaidyanathan Committee's report on reviving the long-term cooperative credit structure. The cost of the package is estimated at Rs.3,074 crore, of which the Central Government's share will be Rs.2,642 crore or 86 per cent of the total burden.
Debt Waiver and Debt Relief
73. Sir, while I am confident that the schemes and measures that I have listed above will give a boost to the agriculture sector, the question that still looms large is what we should do about the indebtedness of farmers. Honourable members will recall that Government had appointed a Committee under Dr. R. Radhakrishna to examine all aspects of agricultural indebtedness. The Committee has since submitted its report and it is in the public domain. The Committee had made a number of recommendations but stopped short of recommending waiver of agricultural loans. However, Government is conscious of the dimensions of the problem and is sensitive to the difficulties of the farming community, especially the small and marginal farmers. Having carefully weighed the pros and cons of debt waiver and having taken into account the resource position, I place before this House a scheme of debt waiver and debt relief for farmers:
(i) All agricultural loans disbursed by scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007 and overdue as on December 31, 2007 will be covered under the scheme.
(ii) For marginal farmers (i.e., holding upto 1 hectare) and small farmers (1-2 hectare), there will be a complete waiver of all loans that were overdue on December 31, 2007 and which remained unpaid until February 29, 2008. In respect of other farmers, there will be a one time settlement (OTS) scheme for all loans that were overdue on December 31, 2007 and which remained unpaid until February 29, 2008. Under the OTS, a rebate of 25 per cent will be given against payment of the balance of 75 per cent.
(iii) Agricultural loans were restructured and rescheduled by banks in 2004 and 2006 through special packages. These rescheduled loans, and other loans rescheduled in the normal course as per RBI guidelines, will also be eligible either for a waiver or an OTS on the same pattern.
(iv) The implementation of the debt waiver and debt relief scheme will be completed by June 30, 2008. Upon being granted debt waiver or signing an agreement for debt relief under the OTS, the farmer would be entitled to fresh agricultural loans from the banks in accordance with normal rules.
(v) Government estimates that about three crore small and marginal farmers and about one crore other farmers will benefit from the scheme. The total value of overdue loans being waived is estimated at Rs.50,000 crore and the OTS relief on the overdue loans is estimated at Rs.10,000 crore.