Budget speech 2007-08: Full text

FM'S SPEECH: Chidambaram said that there were many pluses and a few minuses, both of which he dealt with in his speech candidly.

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Keywords: 2007-08, Speech

Extension System

The green revolution of the 1960s was brought about by thousands of agricultural extension workers who worked side by side with our farmers under a programme called Training and Visit (T&V). Sadly, the extension system seems to have collapsed. In order to revive extension work, the Ministry of Agriculture will, in consultation with State Governments, draw up a new programme that will replicate T&V with suitable changes.

The Agriculture Technology Management Agency (ATMA) that is now in place in 262 districts will be extended to another 300 districts in 2007-08. I propose to enhance the provision for ATMA from Rs.50 crore to Rs.230 crore next year.

Fertiliser subsidies

I had budgeted Rs.17,253 crore for fertiliser subsidies in 2006-07. According to Revised Estimates, this will rise to Rs 22,452 crore, and there is a demand for more money. While fertilisers should indeed be subsidised, we must find an alternative method of delivering the subsidy directly to the farmer. The fertiliser industry has agreed to work with the Department of Fertilisers to conduct a study and find a solution. Based on the report, Government intends to implement a pilot programme in at least one district in each State in 2007-08.

Agricultural Insurance

The National Agricultural Insurance Scheme (NAIS) will be continued in its present form for Kharif and Rabi 2007-08. I propose to make a provision of Rs 500 crore for the scheme.

Agricultural Insurance Corporation (AIC) has been running a pilot weather insurance scheme since Kharif 2004 and it appears to be a more promising risk mitigation scheme. Hence, Government will ask AIC to start a weather based crop insurance scheme on a pilot basis in two or three States, in consultation with the State Governments concerned, as an alternative to the NAIS. The scheme will be operated on an actuarial basis with an element of subsidy. I intend to allocate Rs.100 crore for this purpose in 2007-08.

National Bank for Agriculture and Rural Development (NABARD)

NABARD provides refinance to cooperative institutions. As the volume of farm credit increases and the Vaidyanathan Committee recommendations for reform of rural credit cooperatives are implemented, the demand for refinance will increase. In order to augment its resources, I propose to allow NABARD to issue rural bonds to the extent of Rs.5,000 crore. These bonds will be guaranteed by the Government and will be eligible for suitable tax exemption.

Rural Infrastructure Development Fund

The Rural Infrastructure Development Fund (RIDF) continues to sanction and disburse funds to State Governments. In 2006-07, out of a corpus of Rs 10,000 crore, NABARD has so far issued sanctions for Rs 8,440 crore and will achieve its target. Keeping in view the growing demand for these funds, I propose to raise the corpus of RIDF-XIII in 2007-08 to Rs 12,000 crore. I would urge State Governments to use these funds primarily in the distressed districts of the State.

A separate window for rural roads under RIDF was opened with Rs 4,000 crore. Against this, projects for Rs 2,311 crore have been sanctioned in 2006-07. I propose to continue the separate window under RIDF-XIII in 2007-08 with a corpus of Rs 4,000 crore.

Social Security

One of the commitments made in the NCMP is that Government will introduce a social security scheme for unorganised workers. A committee chaired by Dr Arjun Sengupta has given its report which is under consideration. Pending a decision, in order to signal the UPA Government's concern for the welfare of unorganised workers, I propose to make a beginning. I propose to extend death and disability insurance cover through Life Insurance Corporation of India (LIC) to rural landless households under a new scheme called 'Aam Admi Bima Yojana' (AABY).

According to NSS Report No. 491, the estimate of such households is about 1.5 crore. By end March 2007, 70 lakh households will be covered through existing schemes of the LIC with the support of some State Governments and the social security fund with the LIC. Under AABY, I propose to cover the rural landless households which enjoy no cover at all today, and the number may be actually more than what is indicated in the NSS report.

The head of the family or one earning member in the family will be insured. The Central Government will bear 50 per cent of the premium of Rs 200 per year per person and I would urge the State Governments to come forward to bear the other 50 per cent on behalf of the beneficiaries.

Taking into account the annual cost to the Central Government, I intend to place a sum of Rs.1,000 crore in a fund that will be maintained by LIC. I propose to finalise the scheme in consultation with State Governments and begin to implement it in 2007-08.

Mr Speaker, Sir, I have devoted the last 15 minutes or so to agriculture. There is no dearth of schemes; there is no dearth of funds. What needs to be done is to deliver the intended outcomes. Saint Tiruvalluvar watches over us and warns:-

"Uzhavinar Kai Madangin Illai Vizhaivathoom Vittame Enbarkum Nilai" (If ploughmen keep their hands folded, even sages claiming renunciation cannot find salvation)