Budget 2020: Modi govt may announce two mega initiatives to boost agricultural output

Modi government is expected to announce two big agricultural initiatives in Budget 2020 on February 1. Centre is likely to come up with mega schemes for crop diversification and providing financial assistance to create Farmer Producer Organisations (FPOs), The Economic Times reported. Notably, Finance Minister Nirmala Sitharaman in her Budget 2019 speech had promised to provide financial assistance to create FPOs. "We also hope to form 10,000 new Farmer Producer Organisations, to ensure economies of scale for farmers over the next five years," she had said.

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FPOs are organised groups of small and marginal farmers. These FPOs will help farmers improve their income by ensuring better market access and giving them collective bargaining power. Ministry of Agriculture will fund, handhold, train, ensure easy credit and provide other support to FPOs to make them viable.

The government is also expected to provide FPOs with technological intervention for better output. According to a government official, the main challenge that FPOs are faced with is the availability of credit as banks don't provide loans to them owing to unsecured returns, the daily reported. Apart from this, the FPOs will be able to have easy access to credit backed by sovereign guarantee.

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FPOs will run like business units and profit will be shared among member-farmers. In order to enhance competitiveness, the FPOs will also have capacity-building programmes, just like a corporate body.

Apart from rolling out financial support for FPOs, the government is also expected to roll out a Rs 500-600 crore crop diversification programme. This will be done to promote crops other than the water intensive paddy in regions like Punjab, Haryana and western Uttar Pradesh. These regions are also faced with fast depleting water table owing to overexploitation of ground water. The crop diversification programme has dual objectives -- improving soil health and maintaining balance in the agricultural ecosystem.

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