Pre-Budget meet: Agriculturalists seek direct cash transfer of food, fertiliser subsidies

Last Updated: Thu, Jan 03, 2013 06:34 hrs

Finance Minister P Chidambaram on Wednesday kicked off the customary pre-Budget consultations. In a meeting with the finance minister, agriculturalists shared concerns on the government’s widening fiscal deficit. They also suggested direct cash transfer of fertiliser and food subsidies, which they claimed would save the government Rs 70,000-85,000 crore directly.

To protect the interests of farmers, they also urged the finance minister and his team to set up a regulator on foreign direct investment (FDI) in the retail segment. Representatives from the farming community and agricultural economists said the regulator should analyse the investments and the terms of trade to ensure farmers benefited the most from the entry of foreign chains in India.

The agriculturalists asked the government to start a system of direct cash transfer to beneficiaries to rationalise food and fertiliser subsidies, which could rise to Rs 2,00,000 crore next financial year. The direct benefit transfer scheme, which started on January 1 on a pilot basis, doesn’t include these two subsidies. They said if these were included, the government, struggling to keep its fiscal deficit under check, could save up to Rs 70,000 crore.

The allocation for food and fertiliser subsidies in Budget 2012-13 was Rs 1,36,000 crore. This is set to rise in the revised Budget estimate. “We have pitched for the rationalisation of food and fertiliser subsidies in the forthcoming Budget,” Ashok Gulati, chairman, Commission for Agriculture Costs and Prices (CACP), said after the meeting. Pointing out 40 per cent of the food distributed through shops was diverted, Gulati said the government could save Rs 50,000 crore by plugging leakages through conditional cash transfer. It could save an additional Rs 10,000-15,000 crore in grain storage costs.

On fertilisers, the CACP chief suggested the government start the direct cash transfer of subsidy to farmers immediately, as this could save the government Rs 20,000 crore.

M Chengal Reddy, chairman of the Consortium of Indian Farmers Association, said the representatives also sought a regulator for FDI in the retail space. “Our experience with domestic retailers says farmers do not actually benefit, as they procure their produce from mandis and act as just a middleman. So, we have urged the finance minister to set up a regulator to ensure all the aspects of FDI in multi-brand retail benefit the farmers. Otherwise, the very purpose of FDI would be defeated,” Reddy said.

He added a major challenge was the fact that when the government moved out of the sector, farmers would be left at the mercy of big retailers. While the Indian Agriculture Research Institute sought higher Budget allocation for farm research activities, the National Cooperative Union of India wanted suitable tax reforms to revitalise cooperatives.

In his address, Chidambaram said agriculture and allied sectors were critical sectors for inclusive growth. He also emphasised on sufficient agricultural production, not just to meet domestic requirements, but also for exports.

More from Sify: