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Price support review on farm agenda

New Delhi, Sept 26: Finance minister Jaswant Singh today held a meeting with agriculture minister Rajnath Singh on a seven-point farm agenda that includes a strategy for commodity trade, easing credit flow, policy on multinational seed companies and an alternative to the minimum support price for food grains.

The meeting, the first of a newly constituted expert advisory committee on agriculture, focused on the mechanism that will replace the system of state guarantees on purchase of grain from states in the northern region. The guarantee covers the difference between the purchase price, also known as the minimum support price, and the market rates. Once the support prices go, the government will not have to foot the bill.

Besides the huge cost the government incurs on buying grain estimated at Rs 9,000 crore a year it also has to stump up massive amounts on storing them.

With limited resources, it would like to reduce purchases of grain to far lower levels needed to maintain food security, and spend only a fixed sum on guarantees for farm prices. Sources said this could help the government save as much as Rs 4,000 crore annually.

The ministers also discussed ways to ease credit flow to the farm sector by revamping the co-operative banks, which have piled up massive bad debts as a result of which the cost of funds has spiralled for these entities.

The meeting was attended by Planning Commission member Sompal, former power minister Y. K. Alagh, former Congress minister Ram Nivas Mirdha and other experts. The other issue discussed was how to draw up new strategies for agriculture ahead of the Geneva round of WTO talks on farm trade.

These would include strategies for creating new tariff and non-tariff barriers to cheap farm imports, as well as measures to push Indian farm exports and processed foods deeper into the European and US markets.

The Cabinet has already decided that attempts should be made to secure as many agricultural commodities as special products to cover the sensitive lines farm goods that are essential to India at the WTO.

The government would like to bring in the scope of talks items like rice and wheat, where domestic rates are either higher or tend to be higher than world prices. In these products, India is to insist that it will retain high tariff barriers and will agree to very low tariff cuts. The committee felt falling investments in irrigation was impeding implementation of 400 major and minor projects. It emphasised the need to initiate a series of steps to check the ground water level from slipping further.

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