Date: 19th November, 2016

Dear Shri Jaitley Ji,

Bharat Krishak Samaj is a non-partisan association of farmers advocating the crucial need for India to focus on farmer prosperity.

Over decades the nation has been instilled with fear of our inability to feed ourselves. Our policy including budget allocations for the farm sector are made on theone premise of increasing food production. It is time to change the false narrative of farm policy to one of inclusive growth and farmer prosperity. Food systems which make available safe nutritious food grown sustainably arethe way forward. Our suggestions for pre-budget 2017 consultation are as follows:

1. Demonetization worries requires immediate attention. Restrictions of exchanging and accepting old currency notes imposed on district cooperative banks must be removed immediately. This can begin in branches which are electronically connected to the RBI system. Cash availability to APMC markets must be enhanced per week to the tune of 15% of the shopkeeper’s weekly average turnover recorded in APMC books in the last financial year. It will help revive stagnating flow of perishable fruits and vegetables.

2. Anomalies in draft GST bill must be removed. (Sent separately)

3. Increased outlays for agriculture to be higher than 2014-15. It is pertinent to note that the Budget allocation for 2015-16 was lower than 2013-14.

4. Target 2% expenditure on agriculture R&D of agri. GDP over the next few years.

5. Revive agriculture extension. Announce a 5 year plan to appoint one agriculture graduate as extension worker for every ten villages; create 60,000 jobs.

6. 10 times increased funding for data collection& assessment. The government should create a ‘nationally consistent database’ to be made available at a nominal cost to all stakeholders.

7. Equitable distribution of resources to all irrespective of land holding size to be calculated for a 2 hectare farm. (direct payment to bank account of women member of the farmer family).

8. Incentivize balanced use of fertilizers; increase urea price & simultaneously decrease price of P&K fertilizers, so no added burden is imposed on the farmers or the government.

9. Emphasis on “Agro Forestry” for income generation.

10. Animal husbandry sector funding must reflect priorities for preventive measures as is being delivered by NDDB and AMUL rather than target to cure disease.Animal health is a major driver for disease in humans.

11. Fund Gaushala’s with the condition; 40% of total animals in their keep be male cattle.

12. More incentives for Bio gas units without restricting incentives for electricity generation.

13. Incentivize farm machinery leasing services, so farmers get to use good farm machinery without having to own machinery.Misuse and changing terms of support under Sub-Mechanization of Agricultural Machinery Scheme be stopped.

14. There have been media reports where claims have been made that farmers declare income of Crores. We suggest income tax return of all citizens declaring agriculture income over ten lacs must be scrutinized by the IT department.

15. Farmers are responding to consumer’s preference and demands. Taxes can change consumption behaviour. Therefore, it’s essential to tax unhealthy food (excess sugar & salt which lead to increased health care costs). The funds can be used for incentivising sustainable farm practices.

16. Paramparagat Krishi Vikas Yojana promotes organic farming. Increase outlay by ten times with specific incentives to increase crop diversity in individual farms.

17. Initially, target to replace chemical use in farms by 10%. Funding to set-up laboratories to test for sub-standard & spurious pesticides. Additionally, fund laboratories to check fresh & processed food imports.

18. Agro-processing incentives should be restricted to small and marginal entrepreneurs with preference to FPOs. This will increase additional employment in rural areas and also facilitate in enhancing farmer income.

19. Need long term Agriculture Import-Export policy with stable tariff structure. Charge maximum permissible import duties on fresh farm produce.No restrictions on export of agriculture produce.

20. All the incentives being provided under Startup India mission should be extended to Farmer Producer Organizations (FPOs), including tax exemptions, provision of capital and infrastructure. Though agricultural income of farmers is exempt from income tax, the income of FPOs is taxable at 30% from the very first year – this is a major disincentive for farmers to come together to establish collective business entities. Allocation should be taken up to 3000 crore rupees.

21. India now imports over 70% of its edible oil needs and this number is getting bigger by the year. A collateral damage of this is the shrinking supply and higher prices of oil meals which has a bearing on the cost of production of poultry and animal husbandry. The remedy is to keep the edible oil duties higher for farmer to see value in oilseed cultivation. Minimum Support Prices should be effectively implemented for pulses and oilseeds, operationalizing the new MSP concept articulated in Economic Survey 2016-17 (social and environmental rationalization of MSP) so that these various measures incentivize the higher production of pulses and oilseeds in the country.

22. Irrigation:
(a) Fund repair & maintenance of all existing irrigation projects. Provide drainage for existing irrigated areas. Don’t fund new flood irrigation projects.
(b) Increase outlay for Watershed Management subsumed under Pradhan Mantri Krishi Sichai Yojana by 10 times with special focus on Rainfed Areas.
(c) Fund 1 million small water storage reservoirs & distribution of soil moisture measuring sensors to all farmers.
(d) Support by way of granting infrastructure status and Micro-Irrigation industry treated as priority sector for all fiscal and tax exemptions.
(e) Solar Pumping Systems to be subsidized and promoted for individual farmers/community irrigation projects. Need budgetary provision of 250000 solar pumping systems per annum as against 50000 today.
(f) At present, the infrastructure being created by Irrigation and agriculture departments is without reference to each other or in isolation. So request to bring fundamental change in the planning and department functioning.

23. Credit:
(a) Double number of farmers receiving loans of up-to rupees two lacs & for that charge 1% interest only. Link Aadhar to such loans accounts to avoid duplication. Subvention is not helping, do away with it.
(b) Institutional credit is not reaching small farmers. Announce corrective measures. Order a CAG audit of agriculture credit lending portfolio of public sector banks.
(c) Ensure tenant farmers or lessee farmers get access to bank loans should be a high priority. In view of the Bhoomiheen Kisan Credit scheme and NITI Ayog report highlighting the need to support lessee farmers, we propose that a Credit Guarantee Fund be set up to increase the bankers’ confidence in lending to non-land owning “licensed” cultivators, both as individual farmers and in Joint Liability Groups. Such a Fund needs to be established and can have around 5000 crore rupees set aside for the purpose in 2017-18.

24. Markets:
(a) For delivering remunerative prices to farmers the ‘Price Deficiency Payment Mechanism’ as envisaged by NITI Aayog must be implemented immediately.
(b) Cover more crops in ‘Market Intervention Scheme’ & ‘Price Stabilization Fund’. Increase outlay to 5000 crore rupees.
(c) The Public Distribution System should be used to procure pulses and millets too, to increase the food basket for poor consumers and to encourage farmers to diversify through assured markets.
(d) Fund to increase the number of agriculture market yards ‘Mandi’ by 50% & provide full infrastructure in all existing agriculture market yards.
(e) In farm marketing, not only should the compulsion of going through regulated mandis (APMC mandis) be removed but emergence of private markets and farmers’ mandis for direct sale to consumers should also be encouraged.
(f) Lowering of market levies and middlemen’s is essential. Since lowering of marketing levies are bound to reduce state governments’ revenues and therefore will be resisted by them, do consider compensating full or part of these losses for 5 years.

25. More funds for Indian metrological department specifically for improving medium term weather forecasts for agriculture.

26. Natural Disasters affecting farmers are now annual events though occurring in different locations. Substantially, increase funding for SDRF/NDRF. Outlays for disaster relief to farmers should be increased to at least 25000 crore rupees.

27. System of Rice Intensification must be incentivized with more funding.

28. In the light of 7thPay Commission coming into force, the incomes of the employees in organized sector will see a substantive increase, whereas the incomes of farmers are either stagnant or declining (taking inflation into consideration). Establish a permanent, statutory Farmers’ Income Commission to ensure basic living incomes to all agricultural households. A Farmers’ Income Guarantee Act must be enacted. There should be budgetary allocations made for 2017-18 to set up the Farm Income Commission and get the institution up and running towards a full-fledged income security mechanism from 2018-19.

29. A comprehensive program to establish homestead gardens should be promoted to boost household nutrition.

30. Fund allocation must be sensitive to protecting and sustaining bio-diversity. Direct funding to Panchayats must be with the conditionality that the Panchayats will set aside / create 10-acre bio-diversity reserves.  

31. To raise farmers’ income, incentives need to be provided to them to switch over to high-value agriculture involving cultivation of fruits and other high-priced crops, dairying, poultry, piggery, beekeeping, fisheries, etc. needs integrated farming.

32. When funding urban renewal or smart cities, make it mandatory for cities to allocate space for farmer markets in residential areas based on population density.

33. Budget should also encourage the concepts like provision of urban facilities in rural areas (PURA) to improve the quality of life in villages and reduce the gap between cities and villages in this respect. Instead of funding smart cities, it is suggested to fund 4,000 smart census towns.

To save the farm sector it is crucial to create off farm jobs so no more than 1/3rd of Indian population is dependent on agriculture.Our achievements of the past have become our biggest challenge today. We may not make the change now but we can make the momentum which will change the narrative leading to the change.

With warm regards.

 Yours Sincerely,
(Ajay Vir Jakhar)

Shri Arun Jaitley,
Hon’ble Minister of Finance,
Govt. of India
North Block, New Delhi-110001