Govt cuts irrigation costs to drought-hit farmers

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India took steps amid its second drought in just four years to cut irrigation costs and increase fodder supplies for livestock farmers but stopped short of curbing exports of agricultural products or banning futures trade.

June-September monsoon rains, the main source of irrigation for 55 per cent of its farmlands, are so far 19 per cent below average. This has triggered fears of lower output and higher food inflation in one of the world's largest consumers and producers of grain.

Agriculture Minister Sharad Pawar said the government would halve the cost of diesel - used to power water pumps on farms - in areas where rains have been 50 per cent below average up to July 15. The subsidy will continue until the end of the season.

He was speaking after chairing a ministerial meeting on drought, as power cuts - blamed in part on high demand for farm irrigation - paralysed north India for a second day running and New Delhi bathed in its first serious rainfall of the monsoon.

"All regions having 50 per cent deficiency in rainfall will qualify for diesel subsidy which will be borne by both state and central governments on 50:50 basis," Pawar said.

Rainfall has been 'deficient' to 'scant' in 320 districts, he said, adding more areas were affected than in the last drought of 2009 when India had to import sugar to meet demand, sending global prices spiralling.

This time around, it is pulses and soybean crops which are under the most strain. Bumper stocks of grains and a sugar harvest that has outstripped demand are lending a cushion.

Fodder for livestock is also a concern and Pawar said import duty on oilcakes would be waived to help supplies both to the feed industry and edible oils producers.

The ministers will meet again after Pawar has visited drought-affected areas, he said, by which time the weather office should have issued its forecast for the rest of the season.

Pawar singled out the states of Karnataka, Maharashtra, Haryana and Rajasthan for financial assistance to ensure drinking water supplies and said the government would also give an extra subsidy on seeds for replanting of crops.