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buttton1.gif (3634 bytes)  Agriculture and Rural Development

13. It is my firm belief that sustained and broad-based growth of agriculture is essential for alleviating poverty, generating incomes and employment, assuring food security and sustaining a buoyant domestic market for industry and services.

14. We must take all necessary measures to strengthen the rural economy. Credit flow to agriculture through institutional channels of commercial banks, cooperative banks and Regional Rural Banks is estimated at about Rs.41,800 crore this year. It is expected to increase by over 20 per cent to a level of Rs.51,500 crore in 2000-2001. In my last two budgets we have launched a wide array of initiatives to promote the flow of rural credit. In this budget I propose to strengthen the earlier programmes and launch further initiatives:

The Rural Infrastructure Development Fund (RIDF) managed by NABARD has emerged as a popular and effective scheme for financing rural infrastructure projects. Last year I had announced an enhanced allocation of Rs.3,500 crore from the banking sector for RIDF V and extended the repayment period of loans to 7 years. The scope of RIDF was also widened to allow lending to Gram Panchayats, Self Help Groups, NGOs and other eligible organisations for implementing village level infrastructure projects. This year the corpus of RIDF VI will be increased to Rs.4,500 crore and the interest charged on this lending will be reduced by half a percent.

Micro finance has emerged as an effective tool for alleviating poverty in many countries. In my last budget I had asked NABARD and SIDBI to cover 50,000 Self Help Groups to develop micro enterprises. NABARD by itself is likely to link 50,000 such Groups to banks during the current year. NABARD and SIDBI will cover an additional one lakh Groups during 2000-2001. To give a further boost to this programme a Micro Finance Development Fund will be created in NABARD with a start up contribution of Rs.100 crore from RBI, NABARD, banks and others. This Fund will provide start up funds to micro finance institutions and infrastructure support for training and systems management and data building. Special emphasis will be placed on promotion of micro enterprises in rural areas set up by vulnerable sections including women, Scheduled Castes, Scheduled Tribes and Other Backward Classes.

The cooperative system is a crucial channel for credit in rural areas. However, over time, problems have developed, mainly because of excessive bureaucratization and the overlapping jurisdiction of State Governments and NABARD. Some State Governments have already taken legislative action to promote genuinely cooperative institutions. For rural credit, clear delineation of the supervisory role of RBI/NABARD on banking matters is also essential. To promote these two prerequisites for a more vibrant rural cooperative credit system I propose to establish a Fund in NABARD. The details will be worked out in the light of the forthcoming recommendations of the Capoor Committee earlier constituted by Government. In the meantime, RBI is advising the banks to accord priority to the credit needs of those cooperatives which are entirely controlled by user-members and managed by them prudently.

The programme of Kisan Credit Cards is progressing very well. Cooperative Banks, Regional Rural Banks and Commercial Banks together have so far issued more than 50 lakh cards and card-cum-pass books to the farmers. I am asking NABARD and Commercial Banks to redouble their promotional efforts so as to issue an additional 75 lakh Kisan Credit Cards by March 2001.

Due to our efforts at recapitalizing RRBs, 158 RRBs are posting operating profits. Out of these, 48 RRBs have been able to wipe out their accumulated losses. In view of the importance of the RRBs in rural financing, we will continue with this programme of strengthening the RRBs.

15. The Planning Commission and the Ministry of Agriculture have worked out modalities to integrate 28 ongoing separate Centrally Sponsored Schemes of agricultural development into one comprehensive programme. This will weed out duplication, enhance the productivity of the support programme and accord greater flexibility to State Governments to develop and pursue activities on the basis of regional priorities. This is a major step forward towards the goals of convergence and decentralisation that I had outlined in my budget last year.

16. There is urgent need to review and coordinate our long-term strategy at the National and the State levels on the pattern of land use in the country, development of agriculture in relation to the agro-climatic conditions in the different regions and preservation of our forest resources. We need to adopt an integrated approach to a number of related subjects such as preservation and development of the forest wealth, optimum utilisation of the wasteland, watershed development, safeguarding bio-diversity etc. In view of the complexity of the issues involved, a National Commission on Land Use Policy comprising of experts in the relevant fields will be set up to examine the various aspects and make appropriate recommendations to Government.

17. Our Government stands fully committed to ensure that the fruits of economic reforms are shared by all sections of society, especially those living in rural areas and more particularly the Scheduled Castes, Scheduled Tribes and Other Backward Classes. Five elements of social and economic infrastructure are critical to the quality of life specially in rural areas: health, education, drinking water, housing and roads.

18. Even after 52 years of Independence the provision of basic services in rural areas remains very unsatisfactory. Forty per cent of our villages are without proper roads; 1.8 lakh villages do not have a primary school within 1 km; 4.5 lakh villages have drinking water problems; some estimates indicate a shortage of 140 lakh rural dwelling units; rural health infrastructure suffers from large deficiencies. These large gaps in basic services in rural areas are not acceptable and Government is committed to removing them rapidly.

19. Universalisation of elementary education is one of our key objectives. A new Department of Elementary Education and Literacy has already been created under the Ministry of Human Resources Development to give a new thrust and focus to these efforts. Some new initiatives include a scheme for universalisation of elementary education called "Sarva Shiksha Abhiyan" which would enable all children to enroll by 2003 and expansion of the District Primary Education Programme to cover the remaining districts in Uttar Pradesh, West Bengal, Orissa and Gujarat. On the literacy front the National Literacy Mission would be revamped so that the literacy rate can be raised to 75% by the year 2005. The plan allocation for elementary education has been increased from Rs.2,931 crore to Rs.3,729 crore next year. A new Department of Drinking Water Supply in the Ministry of Rural Development has been set up to intensify the efforts and accelerate the pace of coverage. Our objective is to provide drinking water facilities in all rural habitations in the next five years. It is proposed to cover around 60,000 habitations and 30,000 schools in the next year. The outlay of the Department is being enhanced to Rs.2,100 crore from Rs.1,807 crore this year. The Reproductive and Child Health programme will receive Rs.1,051 crore as against an allocation of Rs.695 crore in 1999-2000. For rural housing schemes a provision of Rs.1,710 crore has been made.

20. To impart greater momentum to these efforts I am announcing the launching of a new scheme, the "Pradhan Mantri Gramodaya Yojana" with the objective of undertaking time bound programmes to fulfill these critical needs of the rural people. I am providing a sum of Rs.5,000 crore separately for this Scheme in the budget. Out of this a sum of Rs.2,500 crore will be earmarked for launching a nationwide programme of constructing rural roads and improving rural connectivity. Under the Scheme, Central assistance will be provided to States for implementing specific projects in these sectors. The concerned Ministries in the Central Government will lay down the guidelines and monitor the implementation of these programmes. The erstwhile Basic Minimum Services Scheme will be merged with the new Scheme. Thus the overall provision in the budget for schemes concerning the five basic needs of the rural population is more than Rs.13,000 crore.

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