India to spend $8 billion to boost irrigation, reduce dependence on monsoon

NEW DELHI/MUMBAI (Reuters) - India has approved spending of 500 billion rupees ($7.9 billion) over five years to expand irrigation in rural areas to boost crop productivity and it also plans an online agricultural market to help farmers get better prices for their produce.

A total of 53 billion rupees has been allocated for the irrigation project in the current fiscal year ending on March 31, 2016, the government said in a statement on Thursday.

Half of India's farmland lacks irrigation so any increase in irrigated land should help reduce the country's dependence on the June-September monsoon, which is expected to be deficient this year, raising fears of the first drought in six years.

The move may help the government's standing in rural areas, after opposition parties stalled its efforts to effect changes to the land law that would have made it easier to push through compulsory land purchases for industrial and other projects.

The government has also had to cope with a wave of suicides by farmers whose livelihoods have been ruined by bad weather.

Agriculture accounts for about 15 percent of India's $2 trillion economy, but three-fifths of the population of more than 1.2 billion depends on farming for a livelihood.

Shares in irrigation system providers such as Jain Irrigation Systems, Finolex Industries Ltd and Shakti Pumps jumped as much as 9 percent in the generally flat Mumbai market following the announcement.

India will also launch a national online platform this year for trading agricultural commodities, spending 2 billion rupees on the project, Farm Minister Radha Mohan Singh told reporters.

Currently farmers are restricted to selling their produce at "mandis", or market committees, in their states. The online market will aim to group 585 of these markets eventually, and 250 in 2015.

The new platform will help farmers in not only securing higher prices but also in deciding when to sell their produce in the market, Singh said.

($1 = 63.5600 rupees)

(Reporting by C. K. Nayak and Rajendra Jadhav; Editing by Malini Menon and Alan Raybould)