CACP seeks cash transfer in lieu of food, fertiliser subsidies

Government's advisory body on farm prices CACP on Wednesday suggested direct cash transfer to beneficiaries in order to rationalise food and fertiliser subsidies, which could rise to Rs 2,00,000 crore next fiscal.

New Delhi: Government's advisory body on farm prices CACP on Wednesday suggested direct cash transfer to beneficiaries in order to rationalise food and fertiliser subsidies, which could rise to Rs 2,00,000 crore next fiscal.

In its pre-budget consultations with Finance Minister P Chidambaram, Commission for Agriculture Costs and Prices (CACP) also sought stable export policy for farm commodities and promotion of palm oil to cut vegetable oil imports, which was at a record 10 million tonnes (worth Rs 60,000 crore) in 2011-12.

Higher farm exports and reduction in edible oil imports would help Centre to curb current account deficit, it added.

"Rising current account deficit is the biggest problem that the government currently facing. So, we have pitched for rationalisation of food and fertiliser subsidies in the forthcoming Budget," CACP Chairman Ashok Gulati said after the pre-budget meeting.

Pointing out that 40 percent of food distributed through shops gets diverted, Gulati said the government can straight away save Rs 50,000 crore by plugging the leakages through conditional cash transfer (CTT).

The government can also save additional Rs 10,000-15,000 crore from storage cost of grains.

CTT can be implemented initially in 33 cities of more than one million population and then expand it to cereal surplus states and finally to cereal deficit states, he added.

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

It also demanded deregulation of urea sector to attract more investment and improve balanced use of fertilisers.

The Budget allocation for food and fertiliser subsidies was 1,36,000 crore in the 2012-13 fiscal. The figure would rise in the revised budget estimate.

In his introductory remarks, Finance Minister P Chidambaram said the agriculture and allied sectors are critical for inclusive growth.

The minister said the country needs sufficient agriculture production not only to meet the domestic demand but also for exports.

The foodgrain production during 2011-12 was record 257.4 million tonnes and during 2012-13 equally good foodgrain production is expected, he said in a statement.

Consortium of Indian Farmers Association asked the government to provide incentives to attract private and FDI investment in food processing infrastructure, irrigation projects, commodity trading and agro service centres.

The CIFA recommended long term farm export policies, implementation of Rangarajan committee report on sugar decontrol, encouraging private sector in purchase, storage and transportation besides a committee to review CACP and FCI.

It also sought pension for farmers, housing loans for farmers, credit at 3 percent interest for construction of rural godowns and exemption of duties on all imported farm machineries for 5 years.
US-based agri-food giant Cargill asked for adoption of tariff value scheme to curb farm exports instead of ban.

IARI sought increased budget allocation for farm research activities. It suggested recognition of Indian Agricultural Research Institute (IARI) as institute of national importance with one time grant of Rs 500 crore.

It suggested setting up of seed processing plants at block level, a mission-oriented three year research project to develop grain storage and climate change resilient agriculture facilities among others.

To improve plantation sector, the United Planters' Association of Southern India suggested inclusion of orthodox production subsidy scheme under the ambit of section 10(30) of the Income Tax Act so that the orthodox subsidy from Tea Board is not included as part of a total income.

The benefits provided to encourage exports and to earn foreign exchange by way of deduction in profits retained for export business needs to be reintroduced, it said.
Besides, concession import tariff should be introduced along with full excise exempting for tea machineries as done in the last budget for coffee machineries, it added.

National Cooperative Union of India said, "The existing and proposed tax structure is not conducive to the growth of cooperatives. It is rather a dampener for the sustainability of cooperatives. There is need to initiate suitable tax reforms to revitalise these institutions of public service."

Former member of Parliament Y Sivaji sought abolition of taxes and cesses on foodgrains procured and distributed by government since it is a welfare activity.

He also recommended allowing FDI in agro-processing industries like tobacco, interest-free crop loan and creation of CACP in each state among others.

As many as 20 experts from different farm groups and institutes participated in the pre-budget meeting.