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| FM pours water over PM's agri plans | | |
May 16
NEW DELHI
Prime Minister Manmohan Singh might be hoping for a big leap forward in agriculture, but finance minister P Chidambaram poured cold water over proposals for additional funding by pointing out that the fertiliser subsidy Bill for the current year had already touched Rs 50,000 crore.
With the subsidy Bill growing from year to year, where would the additional funds to be transferred to the states by way of assistance come from, Chidambaram asked at the meeting of the Planning Commission on Monday. The subsidy, he is understood to have said, was not only unfocussed but downright unethical.
The FM has made the point on earlier occasions as well as he feels that central guarantees to underwrite all fertiliser production was hugely inefficient and locked funds for schemes to "rationalise and modernise" agricultural practices in the country.
The discussion at the meeting, seen to be a precursor to the NDC meeting on May 29, was a bit generalised. The need for crop diversification, power, irrigation and better seeds is pretty much a given and in that sense are a "motherhood" statement.
The PM has been concerned that rural distress was getting to be a big political headache and, according to his aides, is perturbed by suffering of farmers in the "suicide" districts in states like Maharashtra and Andhra Pradesh. With two years to go for the next general elections, he is keen to put in place actionable plans which can show results.
The PM, in his closing remarks, also called for "rationalising" fertiliser subsidy. "The manner in which the fertiliser subsidy is ballooning is a cause for concern. In addition to the fiscal sustainability of such a subsidy in the long run, we need to see whether such a subsidy is delivering the outcomes we desire both in terms of yields and the mix of nutrients that are used," he said.
Singh added that the Plan panel should come up with alternate models for delivering fertiliser subsidy in a more cost effective and more efficient manner.
While the Prime Minister spoke of additional central help in the form of incentives, the FM raised the issue of the feasibility of the Planning Commission's proposal to transfer more resources to states as additional central assistance (ACA) for funding agricultural growth.
Plan panel chief Montek Singh Ahluwalia said while the Centre would be stepping up investment in farm infrastructure, it should provide incentives to states to boost irrigation and introduce new high-yield seeds. But the finance minister spoke a different tune and said, "It is not clear what will be the size of the envelope that can be accommodated under the ACA method. I doubt whether large outlays for sectors, which require substantial funds, can be channelised through the ACA."
The finance minister added that such large outlays were routed through the finance commission or the Planning Commission after taking into accounts overall resource availability and inter-sectoral and inter-state allocations.
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