Ailing Farms Set...

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[With food price inflation a growing worry and India's farm sector expansion seen slowing, Friday's union budget is expected to focus heavily on raising agricultural productivity and improving the lives of farmers. The ruling Congress party-led coalition has to face voters at nearly a dozen state elections this year and national polls by May 2009 and three-quarters of India's workforce get all or part of their income from agriculture. Following are some of the proposals which may figure in Finance Minister Palaniappan Chidambaram's speech, according to analysts interviewed by Reuters. LOANS: - Loans to farmers, many deeply indebted, worth 300 billion rupees ($7.5 billion) could be waived, while the annual target for credit may be raised. For 2007/08, India set a target of 2.25 trillion rupees. - Interest rates on new loans from state-run banks may be trimmed, although at 7 percent they are already the lowest for any category of borrower. Many farmers are unable to secure bank loans and turn instead to money lenders who impose tough terms. DUTIES/TAXES: - Cut import duty on palm and soyoil by 15-20 percent, from 45 percent and 40 percent respectively, to lower prices. - Value-added tax of 4 percent on edible oils may be scrapped. - Local edible oil producers want an investment fund set up to raise output of key oils, which could reduce the need for costly imports. - Lower excise duty on diesel, widely used by farmers. This has been demanded by the government's communist allies. The current duty on diesel is 6 percent plus 3.25 rupees a litre. SPENDING: - Increased expenditure on irrigation, which only covers 40 percent of cultivated land, leaving a majority of farmers at the mercy of unpredictable monsoon rains. - More money for agricultural logistics, including warehouses, cold-storage, and transport to cut wastage and trim costs. - Subsidies on fertiliser may be raised or further targeted at poorer farmers. (Reuters)