Indian Finance Minister, Shri Arun Jaitley on 17th January indicated that a farm relief package for the distressed farmers could be part of the interim budget that he will present on 1st February 2019.
Jaitley while speaking to media said that the agriculture sector has been facing many challenges and the markets will understand if an approach is logical and not populist.
The minister also said that "Markets will never understand if you do something for the sake of populism. But if it is in the bigger interest due to a compelling situation that develops then that is a reasonable thing that markets be liable to understand".
Jaitley, however, did not give much detail about the relief package. He said, "Without getting into the details, because that would be revealing the mind in which we are working, (I can say that) you cannot choose to wait on some of the challenges. So, obviously, there will be a need to address them. It has happened in the past. So we plan to work within the parameters of the conventions as they exist”.
Agriculture Minister Radha Mohan Singh on 17th January had also hinted at major measures in the upcoming weeks to tackle farm distress across India, a move that will come prior to Lok Sabha elections.
According to sources, the agriculture ministry has prepared a Cabinet note on ‘addressing income deficit syndrome of small and marginal farmers’ suggesting various steps that will include a financial package and interest waiver for timely crop loan re-payers.
Fiscal deficit in India could widen by 70 basis points in the financial year 2019-20 if the Cabinet decides to bring a relief package for small and marginal farmers, as per a report by India Ratings and Research (Ind-Ra).
India Ratings said, "In case the Cabinet decides to pay Rs 10000 / acre yearly to small and marginal farmers, under ceteris paribus condition, this will push the government’s fiscal deficit by 72 bps in FY20. However not an easy option, if opted, it will hold up the rate cut process".
The news comes at a time when there is already increased pressure on the ruling BJP government to announce a package for the agriculture sector due to farmers' protests. The move could play a big role in the upcoming Lok Sabha polls.
