9. This year’s growth performance has once again underlined the critical importance of agriculture in our economy. I propose a multi pronged programme to further strengthen our rural economy.

10. On water, which is the lifeblood of agriculture, I propose the following initiatives:

• It is important to unify the multiplicity of watershed development programmes within the framework of a single national initiative - a National Movement of Watershed Development that fosters implementation ability at the local level and creates community infrastructure for micro watershed projects through active involvement of Gram Panchayats, Local Self Help Groups and NGOs. For this, a Watershed Development Fund will be established with NABARD to cover 100 priority districts within 3 years. The Central Government will provide necessary matching assistance to NABARD. This will create income generating opportunities for the landless and the poor; especially those belonging to the Scheduled Castes, Scheduled Tribes and Other Backward Classes.

• The Accelerated Irrigation Benefit Programme aims to expedite the completion of ongoing irrigation projects by providing matching assistance to States. However, the water rates in most States do not even cover full Operations and Maintenance costs. To encourage better management and maintenance of costly irrigation assets, the Centre will provide larger financial assistance to States that rationalise their water rates to cover at least O&M costs.

• In order to promote farmer participation in water management, the Centre will provide a one time management subsidy and recurring assistance over an initial period of 3 years to all registered Water Users Associations, linked to incremental water rate collection. This will supplement the States’ own contribution.

11. Water and credit must flow together for maximum impact. Last year, I had announced a number of initiatives for improving the flow of credit from the banking sector to agriculture. I am happy to report to this House that institutional credit flow to agriculture has shown a 20% increase in the current year, taking the level to about Rs.38,000 crore as compared to Rs.31,698 crore in the previous year. I propose to take the following further measures for improving flow of agricultural and rural credit:

• The Rural Infrastructure Development Fund (RIDF) has emerged as an important scheme for financing rural infrastructure projects of the State Governments. Last year, I had announced an allocation of Rs.3,000 crore from the banking sector under RIDF IV. I propose to continue the scheme. The corpus of RIDF V will be raised to Rs.3,500 crore. The repayment period is also being extended from five to seven years. The scope of RIDF will also be widened to allow lending to Gram Panchayats, Self-Help Groups and other eligible organisations for implementing village level infrastructure projects.

• In line with my announcement last year, the Kisan Credit Card Scheme has been launched by all public sector banks. These Cards provide timely credit to farmers in a flexible and cost effective manner. So far, six lakh Kisan Credit Cards have been issued. I am asking public sector banks to extend the coverage so that twenty lakh farmers can benefit from this scheme in the coming year.

• The reform measures initiated to strengthen and restructure the Regional Rural Banks will continue. A provision of Rs.168 crore is being made for recapitalisation of RRBs.

• Micro enterprises have great potential for generating productive employment, especially in rural areas. NABARD and SIDBI have launched schemes for promotion of Self Help Groups and NGOs as a channel for flow of funds to micro enterprises. Following last budget’s initiative, NABARD is likely to cover about 15,000 Self Help Groups in 1998-99, as against the target of 10,000. I am asking NABARD and SIDBI to redouble their efforts in this direction and ensure coverage of at least 50,000 Self Help Groups during the course of the next year.

• To augment the flow of credit for food and agro processing industries, lending by banks to this sector will be treated as priority sector lending.

12. Today, we have a very weak post-harvest storage and marketing infrastructure. This causes tremendous national loss. To overcome this problem, I propose to introduce a new credit-linked capital subsidy scheme for construction of cold storages and godowns. This scheme, which will be implemented by the Ministry of Agriculture with the help of NABARD, will help create additional cold storage capacity of 12 lakh tonnes and will rehabilitate and modernise 8 lakh tonnes of existing units over the next few years. We also propose to create 4.5 lakh tonnes of onion storage capacity. This House, especially the main opposition party, can readily appreciate our special concern for onions.

13. Fragmentation of agricultural land holdings undermines productive use of land. Some States have lagged behind in attending to this important task of land reforms. To accelerate reforms in this direction, the Central Government will provide special financial assistance to States, which undertake this task.

14. One of the problems with effective distribution and use of fertilizer is the mismatch between its demand and availability at the on-set of the sowing operations. In order to tackle this problem, I propose to experiment with an incentive discount to farmers for lifting fertilizer from the cooperative societies during the lean months of April and May.