New Delhi: In line with the BJP's poll promise before the 2014 general elections, Finance Minister Arun Jaitley on Thursday announced that the Minimum Support Price (MSP) for notified kharif crops would be 1.5 times the input cost along with formation of a concrete mechanism to ensure higher farm income.

While presenting the Union Budget for fiscal 2018-19, Jaitley said: "We have a promise made in our party's manifesto that farmers must get 1.5 times of the input cost. The government has been sensitive about it."

"For major of the notified rabi crops, MSP at 1.5 times over production cost has been decided. Now, I am feeling very happy the government has decided to announce to make the MSP for all notified crops in the upcoming kharif season at least 1.5 times of the input cost. It will help in doubling farmers' income."

In 2017, the MSP for paddy was pegged at Rs 1,550, for sorghum (jowar) at Rs 1,700, for red gram (tur/arhar) at Rs 5,450.

However, farmers were unhappy with the MSP rates as they were lower that the input cost, leading to losses.

The Finance Minister said higher income for farmers was not possible by just increasing the MSP so there was a need of a mechanism to ensure farmers get remunerative prices.

"What is more important is that farmers are benefitted from the notified MSP. If the market prices are lower than MSP, the government must procure at the MSP or devise a new mechanism to ensure farmers get the MSP. NITI Ayog is in discussion with the Centre and states to form a concrete system to ensure remunerative prices," he said.

"Our emphasis is on generating higher incomes for farmers. We consider agriculture as an enterprise and want farmers to produce more from the same land parcel at lesser cost and simultaneously realise higher prices for their produce," he said.

Jaitley also said the target of institutional credit for the agriculture sector was increased to Rs 11,000 lakh crore for 2018-19 from Rs 10,000 lakh crore in 2017-18.

Jaitley said 470 of 585 mandis (markets) in the country were connected to each other under electronic National Agriculture Market and the rest would be covered by March 2018.

He also said the government would upgrade and develop existing 22,000 rural haats into village agriculture markets as 86 per cent of the farmers in the country were small and marginal and not in a position to directly transact with the APMC markets and wholesale markets.

Allocation for the Food Processing Ministry has been doubled from Rs 715 crore in 2017-18 to Rs 1,400 crore in 2018-19.

The Minister also announced allocation of Rs 10,000 crore for Fishery and Aquaculture Development and Animal Husbandry Infrastructure.