banner.jpg (11493 bytes)

Economic Situation
Key Objectives
Small Scale Industry
Science & Technology
External Sector
Capital Market
Expenditure Management
PSU Reform
Revised Estimates
Budget Estimates
Indirect Taxes
Custom Duties
Direct Taxes - A
Direct Taxes - B
Closing Statement

Budget 1998-99
Budget 1997-98
Budget 1996-97


Agriculture and Rural Development

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.
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.
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.
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.
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.
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.
The on-going schemes for the development of degraded and wastelands will be reoriented to permit local Self Help Groups and the landless poor, specially Scheduled Castes, Scheduled Tribes and Other Backward Classes, to develop and utilise such lands in each village. The whole programme will be based on participatory management with the Gram Panchayat having a pivotal role. During 1999-2000, we will earmark a total amount of Rs.50 crore to take up this scheme on an experimental basis in those States that are prepared to put in a matching contribution.
Rural Industrialisation is important for creating employment opportunities, raising rural incomes and strengthening agriculture-industry linkages. Thus far, it has been pursued by a multiplicity of government agencies. However, the impact of these programmes at the grass roots level has remained modest. We must integrate the efforts of the various government agencies and ensure active community participation. Accordingly, I propose a National Programme for Rural Industrialisation (NPRI) with the mission to set up 100 rural clusters every year to give a boost to rural industrialisation. This is being done for the benefit of rural artisans and unemployed youth. In the long run, it will reduce rural urban disparities. The Small Industry Development Organisation will coordinate this programme. The Khadi and Village Industries Commission (KVIC) will play an important role in this. The marketing infrastructure available with KVIC would be put to optimum use in this effort. It will go a long way in the marketing of rural industrial products if KVIC could develop its own brand name for the purpose. The proposed rural clusters will be spread throughout the country, with a reasonable balance between high potential and backward rural areas.
Even a half-century after Independence, the levels of human development in India lag behind most other countries. The essence of human development should be to empower vulnerable groups in society to take advantage of the process of development. Empowerment, in my view, entails access to five basic requirements, namely, Food, Health Care, Education, Employment and Shelter. It is our resolve to make them available to the entire population of this country within a decade. With this initiative for people-centred development, we will be implementing the Prime Minister’s mandate for ‘reforming the reforms’.

Food: The Targeted Public Distribution System has been designed to provide food security, especially to those below the poverty line, on the basis of susbidised foodgrain prices. With greater involvement of Gram Panchayats in its supervision and implementation, the Targeted Public Distribution System will be suitably strengthened to ensure its proper coverage and make it efficient.

The Targeted Public Distribution System does not however adequately cover the indigent senior citizens who have no income of their own and none to take care of them in the village. I propose to launch a new scheme, "Annapurna" in 1999-2000, to provide food security to such persons. "Annapurna" will provide 10 kg. of foodgrains per month free of cost to all indigent senior citizens who are eligible for old age pension but are presently not receiving it and whose children are not residing in the same village. The number of persons benefitting from the scheme will not for the present exceed 20% of the old age pensioners within that State. The Gram Panchayat will be required to identify, prepare and display a list of such persons after giving wide publicity.

Health Care: The expansion and improvement of health infrastructure and services are key goals set out in the Special Action Plan announced by the Prime Minister. While an extensive network for primary health care has been created in most rural areas, inadequate community participation and supervision has constrained use of these facilities to much below their capacity. Our goal is to integrate and synergise the existing programmes for health care, family welfare, rural development and related areas in different Central Ministries and to deploy the available resources so that every household secures ready access to both primary health care and family welfare services. The Central Government will provide funds to such Gram Panchayats that come forward with their own contribution to set up primary health care facilities in their respective areas. This will match similar assistance from the concerned State Government.

Education: Access to primary education is critical for empowering people. Several States have recorded considerable success with their respective models of education guarantee schemes. I propose to implement an Education Guarantee Scheme at the national level. The aim will be to provide an elementary school in every habitation, which does not have one within a radius of 1 km. Initially, the local community would provide the premises and select a local person as a part time teacher. Teaching material and other assistance will be provided by the Central and the State Governments, while Gram Panchayats will mobilise contribution from the local community in cash and kind for running the school for at least two years. After the school has functioned successfully for two years, it will be upgraded on a permanent basis. At least 1.8 lakh such schools will become operational during the next three years of the Ninth Plan. The resources available under the existing Centrally sponsored education schemes will be mobilised to support this important initiative. This initiative will provide an opportunity to the rural poor, especially those belonging to the Scheduled Castes, Scheduled Tribes and Other Backward Classes to secure education for their children. This is the first and most important step towards their empowerment.

Employment: At present, a variety of self-employment and wage employment schemes are in operation. To enhance the effectiveness of these schemes in generating income-earning opportunities for the rural poor, Government will follow a four-pronged strategy with the common theme of ensuring greater involvement of Panchayati Raj institutions:

The existing scheme of Jawahar Rozgar Yojana will be modified to ensure that all funds are placed at the disposal of Gram Panchayats for creation of rural infrastructure. They will have the sole authority for preparation of annual action plans and their implementation, including the power to execute works with the approval of the Gram Sabha. The modified scheme will be called "Gram Samridhi Yojana".
The wage employment programme of Employment Assurance Scheme will be implemented at the district/block levels, with the selection of works being decided by the Zila Parishads in consultation with the other elected representatives. The Employment Assurance Scheme presently operates through out the country. We will give special priority to areas suffering from endemic labour exodus.
The Gram Panchayat will maintain a live employment register available to the Gram Sabha and public for scrutiny. To ensure that the funds under the wage employment schemes are spent with the active involvement of the elected Panchayati Raj institutions, it is proposed that while 80% of funds would be released to implementing agencies as per normal procedure, the remaining 20% will be released as an incentive only if the State has put in place elected and empowered Panchayati Raj institutions.

The plethora of self-employment programmes for the rural poor will be merged into a single programme called "Swaran Jayanti Gram Swa-Rozgar Yojana", which will have greater participation of the Gram Panchayats. This will enable the implementing agencies to have greater flexibility in execution to meet the needs of the local people.

These schemes will largely benefit the poor and the unemployed youth in the rural areas, especially those belonging to the Scheduled Castes, Scheduled Tribes and Other Backward Classes.


The rural housing shortage at the beginning of 1997-98 was estimated at nearly 140 lakh units, which included shelterless households and those with only kutcha dwellings. Government’s priority will be to provide shelter to all shelterless poor households by the end of the Ninth Plan. The task of upgradation of kutcha dwellings of poor households will be completed by the end of the Tenth Plan. Furthermore, to ensure integrated provision of shelter, sanitation and drinking water, we propose to launch a comprehensive "Samagra Awas Yojana", which will embrace existing programmes including Indira Awas Yojana.

The National Human Development Initiative will go a long way in empowering the weakest sections of the population and improving the quality of rural life. This will minimise the rural-urban disparities. The effectiveness of this initiative will depend critically on the extent to which the Gram Panchayat, as an elected body, can assume a pivotal role in implementing the various components of the programmes. I propose to declare 1999-2000 as the "Year of the Gram Sabha" to affirm our resolve to set the process of decentralised democracy in motion, with human development as the core objective of planning.


Latest News>..<Fiscal Budget>..<The Economic Survey>
The Railway Budget>..<Post Budget Reactions>..<Other Policies>

Copyright 1996-99 MediaWeb India,
except where otherwise noted.
Please read the legal notice and disclaimers