Highlights of RBI’s Third Bi-monthly Monetary Policy Statement, 2018-19

Following are the Highlights of RBI’s Third Bi-monthly Monetary Policy Statement,     2018-19:

Policy Measures

• The Monetary Policy Committee (MPC) decided to increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.50%.
• Consequently, the reverse repo rate under the LAF stands adjusted to 6.25%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75%.
• The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth. 

 Assessment

Global economic activity has continued to maintain steam; however, global growth has become uneven and risks to the outlook have increased with rising trade tensions. Among AEs, the US economy rebounded strongly in Q2, after modest growth in Q1, on the back of rising personal consumption expenditures and exports. In the Euro Area, weak growth in Q1 continued in Q2 due to subdued consumer demand, weighed down by political uncertainty and a strong currency. In Japan, recent data on retail sales, consumer confidence and business sentiment point to moderation in growth. Economic activity in major EMEs has slowed somewhat on volatile and elevated oil prices, mounting trade tensions and tightening of financial conditions. The Chinese economy lost some pace in Q2, pulled down by efforts to contain debt. The Russian economy picked up in Q1; recent data on employment, industrial production and exports indicate that the economy has gained further momentum. South Africa’s economy contracted in Q1; though consumer sentiment has improved, high unemployment and weak exports pose challenges. In Brazil, economic activity suffered a setback in Q1 on nation-wide strikes; more recent data suggest that growth remained muted as industrial production contracted in May and the manufacturing PMI declined.

Global trade lost some traction due to intensification of trade wars and uncertainty stemming from Brexit negotiations. Crude oil prices, which remained volatile and elevated in May-June on a delicate demand-supply balance, eased modestly in the second half of July on higher supply from OPEC and non-OPEC producers. Base metal prices have fallen on the general risk-off sentiment triggered by fears of an intensification of trade wars. Gold prices have softened on a stronger dollar. Inflation remained firm in the US, reflecting higher oil prices and stronger aggregate demand. Inflation has edged up also in some other major advanced and emerging economies, driven, in part, by rising energy prices and pass-through effects from currency depreciations.

Global financial markets have continued to be driven mainly by monetary policy stances in major AEs and geopolitical tensions. Equity markets in AEs have declined on trade tensions and uncertainty relating to Brexit negotiations. Investors’ appetite for EME assets has waned on increases in interest rates by the US Fed. The 10-year sovereign yield in the US has moderated somewhat from its peak on May 17 on safe-haven demand, spurred by escalating trade conflicts. Yields have softened in other key AEs as well. In most EMEs, however, movements in yields have varied reflecting domestic macroeconomic fundamentals and tightening global liquidity. Capital flows to EMEs declined in anticipation of monetary policy tightening in AEs. In currency markets, the US dollar appreciated, supported by strong economic data. The euro strengthened in June on receding political uncertainty and taper talk by the central bank. However, the currency has traded soft thereafter on mixed economic data and the rising US dollar. EME currencies, in general, have depreciated against the US dollar over the last month.

In India IIP strengthened in April-May 2018 on a y-o-y basis. This was driven mainly by a significant turnaround in the production of capital goods and consumer durables. Growth in the infrastructure/construction sector accelerated sharply, reflecting the government’s thrust on national highways and rural housing, while the growth of consumer non-durables decelerated significantly. The output of eight core industries accelerated in June due to higher production in petroleum refinery products, steel, coal and cement. Capacity utilisation in the manufacturing sector remains robust. The assessment based on the Reserve Bank’s business expectations index (BEI) for Q1:2018-19 remained optimistic notwithstanding some softening in production, order books and exports. The July manufacturing PMI remained in expansion zone, although it eased from its level a month ago with slower growth in output, new orders and employment.

 Retail inflation, measured by year-on-year change in the CPI rose from 4.9 per cent in May to 5 per cent in June, driven by an uptick in inflation in fuel and in items other than food and fuel even as food inflation remained muted due to lower than usual seasonal uptick in prices of fruits and vegetables in summer months. Low inflation continued in cereals, meat, milk, oil, spices and non-alcoholic beverages, and pulses and sugar prices remained in deflation. Fuel and light group inflation rose sharply, pulled up by LPG and kerosene, while electricity inflation remained low. The pass-through of global crude oil prices impacted inflation in domestic petroleum products as well as transport services. Inflation also picked up modestly in respect of education and health. The June round of the Reserve Bank’s survey of households reported a further uptick of 20 basis points in inflation expectations for both three-month and one-year ahead horizons as compared with the last round. Manufacturing firms polled in the Reserve Bank’s industrial outlook survey reported higher input costs and selling prices in Q1:2018-19. The manufacturing PMI showed that input prices eased slightly in July, although they remained high. Input costs for companies polled in Services PMI in June also stayed elevated. Farm and non-farm input costs rose significantly. Notwithstanding some pick-up in February and March 2018, rural wage growth remained moderate, while wage growth in the organised sector remained firm.

The liquidity in the system remained generally in surplus mode during June-July 2018. In June, the Reserve Bank absorbed surplus liquidity of around Rs.140 billion on a daily net average basis under the LAF even as the system migrated from net surplus to a net deficit mode in the second half of the month due to advance tax outflows. Interest rates in the overnight call money market firmed up in June reflecting the increase in the repo rate on June 6, 2018. The weighted average call rate (WACR) traded, on an average, 12 basis points below the repo rate – the same as in May. Systemic liquidity moved back into surplus mode in early July with increased government spending but turned into deficit from July 10 onwards; on a daily net average basis, the Reserve Bank injected liquidity under the LAF of Rs.107 billion in July. The WACR in July, on an average, traded 9 basis points below the policy rate. Based on an assessment of prevailing liquidity conditions and of durable liquidity needs going forward, the Reserve Bank conducted two open OMO purchase auctions of Rs.100 billion each on June 21 and July 19, 2018.

Merchandise exports growth picked up in May and June 2018 on a y-o-y basis, aided by engineering goods, petroleum products, drugs and pharmaceuticals, and chemicals. During the same period, merchandise import growth also accelerated largely due to an increase in crude oil prices. Among non-oil imports, gold imports declined due to lower volume, while imports of machinery, coal, electronic goods, chemicals, and iron and steel increased sharply. Double-digit import growth in May and June pushed up the trade deficit. While net FDI inflows improved significantly in the first two months of 2018-19, with the tightening of liquidity conditions in AEs, growing geopolitical concerns and with the escalation of protectionist sentiment, net FPI outflows from the domestic capital market have continued, albeit at an increasingly slower rate. India’s foreign exchange reserves were at US$404.2 billion on July 27, 2018.

Outlook

 GDP growth outlook for 2018-19 is retained at 7.4 per cent as in the April policy. GDP growth is projected in the range of 7.5-7.6 per cent in H1 and 7.3-7.4 per cent in H2, with risks evenly balanced. Various indicators suggest that economic activity has continued to be strong. The progress of the monsoon so far and a sharper than the usual increase in MSPs of kharif crops are expected to boost rural demand by raising farmers’ income. Robust corporate earnings, especially of fast moving consumer goods (FMCG) companies, also reflect buoyant rural demand. Investment activity remains firm even as there has been some tightening of financing conditions in the recent period. Increased FDI flows in recent months and continued buoyant domestic capital market conditions bode well for investment activity. The Reserve Bank’s IOS indicates that activity in the manufacturing sector is expected to remain robust in Q2, though there may be some moderation in pace. Rising trade tensions may, however, have an adverse impact on India’s exports.

Headline inflation outlook is driven primarily by several factors. First, the central government has decided to fix the MSPs of at least 150 per cent of the cost of production for all kharif crops for the sowing season of 2018-19. This increase in MSPs, which is much larger than the average increase seen in the past few years, will have a direct impact on food inflation and second round effects on headline inflation. A part of the increase in MSPs based on historical trends was already included in the June baseline projections. However, there is a considerable uncertainty and the exact impact would depend on the nature and scale of the government’s procurement operations. Second, the overall performance of the monsoon so far augurs well for food inflation in the medium-term. Third, crude oil prices have moderated slightly, but remain at elevated levels. Fourth, the central government has reduced GST rates on several goods and services. This will have some direct moderating impact on inflation, provided there is a pass-through of reduced GST rates to retail consumers. Fifth, inflation in items excluding food and fuel has been broad-based and has risen significantly in recent months, reflecting greater pass-through of rising input costs and improving demand conditions. Finally, financial markets continue to be volatile. Based on an assessment of the above-mentioned factors, inflation is projected at 4.6 per cent in Q2 and 4.8 per cent in H2 of 2018-19, with risks evenly balanced. Excluding the HRA impact, CPI inflation is projected at 4.4 per cent in Q2 and 4.7-4.8 per cent in H2.

Developmental and Regulatory Policies

• Extension of MSF to Scheduled Primary (Urban) Cooperative Banks, and extension of LAF and MSF to Scheduled State Cooperative Banks, complying with the eligibility criteria prescribed for LAF / MSF, as part of the Reserve Bank’s continuous efforts in improving the transmission of monetary policy to money market rates.
• Investment in Non-SLR Securities by Primary (Urban) Cooperative Banks. In order to bring further efficiency in price discovery mechanism and as a step towards harmonization of regulations they will be permitted to undertake eligible transactions for acquisition / sale of non-SLR investment in secondary market with mutual funds, pension / provident funds, and insurance companies. This is in addition to undertaking eligible transactions with Scheduled Commercial Banks and Primary Dealers.    
• Co-origination of loans by Banks and Non-Banking Financial Companies (NBFCs) for lending to the priority sector to provide the much-needed competitive edge for credit to the priority sector. All SCBs (excluding Regional Rural Banks and Small Finance Banks) may co-originate loans with NBFCs - NBFC-ND-SIs, for the creation of eligible priority sector assets. The co-origination arrangement should entail joint contribution of credit by both lenders at the facility level. It should also involve sharing of risks and rewards between the banks and the NBFCs for ensuring appropriate alignment of respective business objectives, as per their mutual agreement.

Financial Markets

• Review of Foreign Exchange Derivative facilities for Residents (Regulation FEMA-25):  It is now proposed to undertake a comprehensive review of FEMA 25, in consultation with the Government of India, to, inter alia, reduce the administrative requirements for undertaking derivative transactions, allow dynamic hedging, and allow Indian multinationals to hedge the currency risks of their global subsidiaries from India.
• Comprehensive Review of Market Timings: It is necessary that timings across products and funding markets complement each other and avoid unanticipated frictions. It is, therefore, proposed, to set up an internal group to comprehensively review timings of various markets and the necessary payment infrastructure for supporting the recommended revisions to market timings. 
• Review of SGL/ CSGL Guidelines: In order to facilitate greater participation in the G-Secs markets and to provide market participants further operational ease in opening and operating of Subsidiary General Ledger (SGL) and Constituent Subsidiary General Ledger (CSGL) Accounts, it has been decided to review comprehensively the SGL/CSGL Guidelines. 

Highlights of RBI’s Sixth Bi-monthly Monetary Policy Statement, 2017-18:

Policy Measures

• The Monetary Policy Committee (MPC) decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.00%.
• Consequently, the reverse repo rate under the LAF remains unchanged at 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate are at 6.25%.
• The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth. 

 Assessment

Global economic activity has gained further pace with growth impulses becoming more synchronised across regions. Among AEs, the Euro area expanded at a robust pace, supported by consumption and investment. The US economy lost some momentum with growth slowing down in Q4 of 2017 even as manufacturing activity touched a multi-month high in December. The Japanese economy continued to grow as manufacturing activity gathered pace in January on strong external demand. Economic activity accelerated in EMEs) in the final quarter of 2017. The Chinese economy grew above the official target, driven by strong domestic consumption and robust exports. However, some downside risks to growth remain, especially from easing fixed asset investment and surging debt levels. In Russia, strong private consumption, rising oil prices and high exports are supporting economic activity, although weak investment and economic sanctions are weighing on its growth prospects. In Brazil, data on household spending and unemployment were positive in Q4. However, recovery remains vulnerable to political uncertainty, which has dampened consumer confidence. South Africa continues to face challenges on both domestic and external fronts, including high unemployment and declining factory activity.

Global trade continued to expand, underpinned by strong investment and robust manufacturing activity. Crude oil prices touched a three-year high as production cuts by the OPEC coupled with falling inventories weighed on the global demand-supply balance. Bullion prices touched a multi-month high on a weak US dollar. Inflation remained contained in most AEs and was divergent in key EMEs due to country-specific factors.

Global financial markets have become volatile in recent days due to uncertainty over the pace of normalisation of the US Fed monetary policy. The volatility index (VIX) has climbed to its highest level since Brexit. Equity markets have witnessed a sharp correction, both in AEs and EMEs. Bond yields in the US have hardened sharply, adding to the upward pressures seen during January, with concomitant rise in bond yields in other AEs and EMEs. Forex markets have become volatile as well. Until this episode of recent volatility, global financial markets were buoyed by investor appetite for risk, corporate tax cuts by the US, and stable economic conditions. Equity markets had gained significantly in January, driven by robust Chinese growth, uptick in commodity prices, and positive corporate sentiment in general. In currency markets, the US dollar had touched a multi-month low on February 1 on fiscal risks and improving growth prospects in other AEs.

In India as per the first advance estimates released by the CSO is estimated to decelerate to 6.1 per cent in 2017-18 from 7.1 per cent in 2016-17 due mainly to slowdown in agriculture and allied activities, mining and quarrying, manufacturing, and public administration and defence services. Manufacturing output boosted the growth of IIP in November. After a period of prolonged weakness, cement production registered robust growth in November-December, which along with continuing healthy growth in steel production led to acceleration of infrastructure goods production in November. The manufacturing purchasing managers’ index (PMI) expanded for the sixth consecutive month in January led by new orders. Assessment of overall business sentiment in the Indian manufacturing sector improved in Q3 as reflected in the Reserve Bank’s Industrial Outlook Survey (IOS). However, core sector growth decelerated in December due to contraction/deceleration in production of coal, crude oil, steel and electricity. Acreage in the case of wheat, oilseeds and coarse cereals was lower than last year and there was a higher shortfall in area sown for rabi crops as of end-January.

 Retail inflation, measured by year-on-year change in the CPI, increased for the sixth consecutive month in December on account of a strong unfavourable base effect. After rising abruptly in November, food prices reversed partly in December, reflecting mainly the seasonal moderation, albeitmuted, in prices of vegetables along with continuing decline in prices of pulses. Cereals inflation moderated with prices remaining steady in December. However, inflation in some components of food – eggs; meat and fish; oils and fats; and milk – increased. Fuel and light group inflation, which showed a sharp increase in November, softened somewhat in December, driven by moderation in electricity, LPG and kerosene inflation.

CPI inflation excluding food and fuel, increased further in November and December, largely on account of increase in housing inflation following the implementation of higher HRA for government employees under the 7th CPC award. Inflation also picked up in health and personal care and effects. Reflecting incomplete pass-through to domestic petroleum product prices, inflation in transport and communication remained muted in December. Inflation also slowed down in clothing and footwear, household goods and services, recreation, and education. Organised sector wage growth remained firm, while the rural wage growth decelerated.

The liquidity in the system continues to be in surplus mode, but it is moving steadily towards neutrality. The weighted average call rate (WACR) traded 12 bps below the repo rate during December-January as against 15 bps below the repo rate in November. On some days in December and January, the system turned into deficit due to slow down in government spending and large tax collections, which necessitated injection of liquidity by the Reserve Bank. For December as a whole, however, the Reserve Bank absorbed Rs. 316 billion (on a net daily average basis). For January, on the whole, the Reserve Bank absorbed Rs. 353 billion.

Merchandise exports bounced back in November and December. While petroleum products, engineering goods and chemicals accounted for three-fourths of this growth, exports of readymade garments contracted. During the same period, merchandise import growth accelerated sequentially with over one-third of the growth emanating from petroleum (crude and products) due largely to high international prices. Gold imports increased – both in value and volume terms – in December, after declining in the preceding three months. Pearls and precious stones, electronic goods and coal were major contributors to non-oil non-gold import growth. With import growth exceeding export growth, the trade deficit for December was US$ 14.9 billion. Even though the current account deficit narrowed sharply in Q2 of 2017-18 on a sequential basis, it was higher than its level a year ago, mainly due to widening of the trade deficit. While net FDI inflows moderated in April-October 2017 from their level a year ago, net FPI inflows were buoyant in 2017-18 (up to February 1). India’s foreign exchange reserves were at US$ 421.9 billion on February 2, 2018.

Outlook

 GVA growth for 2017-18 is projected at 6.6 per cent. Beyond the current year, the growth outlook will be influenced by several factors. First, GST implementation is stabilising, which augurs well for economic activity. Second, there are early signs of revival in investment activity as reflected in improving credit offtake, large resource mobilisation from the primary capital market, and improving capital goods production and imports. Third, the process of recapitalisation of public sector banks has got underway. Large distressed borrowers are being referenced for resolution under the Insolvency and Bankruptcy Code (IBC). This should improve credit flows further and create demand for fresh investment. Fourth, although export growth is expected to improve further on account of improving global demand, elevated commodity prices, especially of oil, may act as a drag on aggregate demand. 

Headline inflation averaged 4.6 per cent in Q3, driven primarily by an unusual pick-up in food prices in November. Though prices eased in December, the winter seasonal food price moderation was less than usual. Domestic pump prices of petrol and diesel rose sharply in January, reflecting lagged pass-through of the past increases in international crude oil prices. Considering these factors, inflation is now estimated at 5.1 per cent in Q4, including the HRA impact.

Developmental and Regulatory Policies

• Relief for MSME Borrowers: (for which the aggregate exposure of banks and NBFCs does not exceed ₹ 250 million as on January 31, 2018), MSMEs who have registered under GST, be allowed by banks and NBFCs to pay the amounts overdue as on September 1, 2017 and payments due between September 1, 2017 and January 31, 2018, within 180 days from their original due date, as a measure to support their transition to a formalised business environment.
• Remove the currently applicable loan limits of Rs. 50 million and Rs. 100 million per borrower to Micro, Small and Medium Enterprises, (Services) respectively, for classification under priority sector.
• It has been decided that the sub-target of 8 percent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure (CEOBE), whichever is higher, will be made applicable for lending to the small and marginal farmers for foreign banks with 20 branches and above from FY 2018-19. Further, the sub-target for bank lending to the Micro Enterprises in the country of 7.50 percent of ANBC or CEOBE, whichever is higher, will also be made applicable for foreign banks with 20 branches and above from FY 2018-19.
• It has been decided to harmonize the methodology of determining benchmark rates by linking the Base Rate to the MCLR with effect from April 1, 2018. 
• With a view to harmonizing regulations across different types of collateral and also to encourage wider participation, especially for corporate debt repos, the repo directions are proposed to be streamlined and simplified. 
• It is now proposed to allow non-residents hedging their INR currency risk arising out of their current and capital account transactions to dynamically hedge their currency and interest rate exposures onshore using any of the permitted instruments.
• It is now proposed to merge position limits across all foreign currency-INR pairs and provide a single limit of USD 100 million per user (both resident and non-resident) across all exchange traded currency derivatives, in all exchanges combined. 
• It is proposed that (i) FBIL would assume the responsibility for standardising the valuation of Government securities (issued by both the Centre and States) currently being done by FIMMDA; and, (ii) FBIL would also assume the responsibility for computation and dissemination of the daily “Reference Rate” for Spot USD/INR and other major currencies against the Rupee, which is currently being done by the Reserve Bank.
• With a view to providing customers of NBFCs with a cost-free and expeditious grievance redress mechanism, it has been decided to introduce an Ombudsman Scheme for NBFCs. The scheme will cover all deposit taking NBFCs and those with customer interface having asset-size of Rupees One Billion and above. 
• Standardize the note printing processes, procurement of raw materials, quality assurance processes, security, etc.
• With a view to promote a less cash economy it has been decided to discontinue the incentives for installation of Cash Recycler Machines (CRMs) and Automated Teller Machines (ATMs).

Highlights of the Union Budget for 2018-19

Introductory Remarks

Budget 2018-19 reflects the Government’s firm commitment to substantially boost investment in Agriculture, Social Sector, Digital Payments, Infrastructure and Employment Generation on the one hand and simultaneously stick to the path of fiscal rectitude by aiming for a reduction of fiscal deficit by 0.2% of GDP over RE 2017-18.

Fiscal situation

• Fiscal deficit target for 2018-19 at 3.3% of GDP to accommodate higher demand for expenditure against the earlier target of 3%. Revised deficit target for the year ending in March 2018 is 3.5% of GDP from the targeted 3.2%. Revenue deficit shot up to 2.6% of GDP in 2017-18 from the budget estimate of 1.9% of GDP (as receiving GST revenue for 11 months in 2017-18 led to a shortfall of Rs.50,000 crore).
• Aims to reduce its debt-to-GDP ratio to 48.8% in 2018-19, 46.7% in 2019-20 and 44.6% in 2020-21. Nominal GDP for BE 2018-2019 has been projected at Rs. 18722302 crore assuming 11.5% growth over the estimated GDP of Rs. 16784679 crore for 2017-18 (RE).
• Revenue receipts budgeted at Rs. 1725738 crores for 2018-19 against a BE of Rs. 1515771 and RE of Rs. 1505428 crore for 2017-18. Centre’s tax revenues at Rs. 1480649 crore in BE 2018-19 against a BE of Rs. 1227014 crore and RE of Rs.1269454 crore in 2017-18. Non- tax revenues at Rs. 245089 crore in BE 2018-19 against a BE of Rs. 288757 crore and RE of Rs. 235974 crore in 2017-18.
• Total expenditure is budgeted at Rs. 2442213 crore for 2018-19 as against a BE of Rs. 2146735 crore and RE of Rs. 2217750 crore in 2017-18.
• BE of Expenditure for 2018-19 show an increase of Rs. 2,24,463 crore over the RE 2017-18. Increases have occurred for higher —compensation to States and UTs for revenue loss on roll out of GST; payment of interest under Market loans; food subsidy under National Food Security Act; Defence, Civil and pensions payable to erstwhile employees of Department of Telecommunications, absorbed in Bharat Sanchar Nigam Limited; outlays provided for investment in Indian Railways, School Education and Literacy, Higher Education Financing Agency, Atomic Energy Industries and Construction of roads; capital expenditure of Defence Services; higher requirement by Central Armed Police Forces; provision made for Pradhan Mantri Swasthya Suraksha Yojana.
• Borrowings and Other Liabilities estimated at Rs. 624276 crore in BE of 2018-19 as against a BE of Rs. 546531 crore and RE of Rs. 594849 crore in 2017-18.
• Total resources going to States including the devolution of State’s share in taxes, Grants/Loans, and releases under Centrally Sponsored Schemes in BE (2018-19) is Rs.12,69,435 crore, with a jump of Rs. 1,53,558 crore over RE (2017-18) and Rs. 2,83,760 crore more than the Actuals (2016-17).

• Disinvestment target for this year set at ₹80,000 crore.

Tax proposals

Personal income tax

• No changes in personal income tax slabs.
• Salaried tax-payers to get a standard deduction of Rs. 40,000 in lieu of transport allowance and "other medical expenses".
• All senior citizens will now be able to claim benefit of a deduction of Rs. 50,000 for any medical insurance.
• For critical illnesses, the deduction has been increased to Rs. 1,00,000.
• Govt. will contribute 12% of the wages of new employees in EPF in all sectors for next 3 years. Women’s contribution to EPF reduced to 8% for first 3 years
  

• ₹2,000-crore fund for development of agri markets.
• Free power connections to 4 crore homes under Saubhagya Yojana. Rs. 16000 crore under this scheme
• Eight crore free gas connections for poor women through Ujjwala Yojana.
• Govt. to implement minimum support price for all crops; It is hiked to 1.5 times of production costs.
• New flagship National Health Protection Scheme, providing a health insurance cover of ₹5 lakh per family per year announced.
• Automatic revision of emoluments parliamentarians every five years, pegged to inflation.
• develop and upgrade existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs). In these GrAMs, physical infrastructure will be strengthened using MGNREGA and other Government Schemes. These GrAMs, electronically linked to e-NAM and exempted from regulations of APMCs, will provide farmers facility to make direct sale to consumers and bulk purchasers.
• Organic farming in large clusters, preferably of 1000 hectares each, will be encouraged.
• Allocation of Ministry of Food Processing is being doubled from `715 crore in RE 2017-18 to `1400 crore in BE 2018-19.
• Rs. 500 crore ‘‘Operation Greens’’ to promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management.
• Export of agricommodities to be liberalized. state-of-the-art testing facilities in 42 Mega Food Parks to be set up.
• Volume of institutional credit for agriculture sector raised to Rs. 11 trillion for the year 2018-19 from Rs. 10 trllion in 2017-18.

BUDGET GLOSSARY

https://mofapp.nic.in/budgetmicrosite/images/union-budget-2018-brochure.pdf