Union Budget 2010-2011 - Engine for growth

(Agricultural)
The agricultural budget was focused on controlling the food inflation, enhancing rural income and sustaining food security. India is now incorporating agri-focused strategies in order to increase agricultural production, reduce wastage of produce, provide credit support to farmers and focus on the food processing sector. Around Rs3,000cr will be spent for the growth and development of the agriculture sector in India.
Following proposals have been announced in order to propel growth in the agricultural sector:
• Provide Rs 300cr to organize 60,000 pulses and oilseed village and integrate intervention of watershed and related programs.
• Rs400cr is allocated for extending the green revolution to the eastern region of the country.
• The period for repayment of loans under the Debt Waiver and Debt Relief Scheme is being extended by six months to June 30, 2010.
• The interest subvention for timely repayment of crop loans is being raised from 1% to 2%. Thus, the effective rate of interest for crop loans for farmers who repay their crop loan as per schedule will now be 5% per year.
• Five more Mega Food Parks will be set up in addition to the 10 already being established. External Commercial Borrowings will henceforth be available for cold storage, farm level pre-cooling and preservation and storage of agricultural and allied produce marine products and meat.
• Major highlight of the budget was the 2% subsidy on loans to the farmers. Considering the weak situation of farmers in India this subsidy of interest to farmers wins the hearts of the agricultural community.
• Agricultural seed has been exempted from service tax, which will make cheaper availability of certified seeds.
• Mr. Pranab Mukherjee said that the Government would initiate to bridge the gap between wholesale and retail price.
• Strengthening food security and developing infrastructure in rural areas.
• To improve the storage capacity of food grains, Food Corporation of India is being allowed to hire godowns from private parties for a guaranteed period of seven years.
• The target for farm credit is being raised to Rs.3,75,000cr in 2010-11 from Rs.3,25,000cr in the current year.
• The transportation by road of cereals and pulses to be exempted from service tax. Provide full exemption from excise duty to trailers and semi trailers used in agriculture.
The above proposals will bridge the gap between the demand and supply of the food grains and help in capping the food inflation due to poor monsoon in the previous year. Over dependence on import of Refine oil and pulses would be reduced if adequate support to farmers is provided in this regard.
From the commodities perspective, the budget will prove beneficial especially for agricultural commodities. The Finance Ministry has tried to bridge the gap with the current inefficiencies in the system. Considering the proposals mentioned for the agricultural sector, growth for the commodities in the agri-space looks promising. The Government has announced strong measures for the agri sector and this will help to reduce the fear in minds of investors especially in terms of commodities which are traded on the futures platform.
Union-budget 2010-11 is a well-balanced budget that looks like an engine for growth for the future. The tax slabs that have been set could also help to boost spending. All in all, India will try to breach the 9% GDP growth mark by 2011-12. India, all set for a new growth story!