New Delhi: A day after Prime Minister Narendra Modi claimed that the rash of loan waivers announced by some Congress-ruled states is not the solution to the agrarian crisis, the Centre on Friday announced a market-based solution for farmers.

The move suggests that the Modi administration is not as yet joining the race for farm loan waivers.

The agriculture ministry said the incentive for export of onion has been doubled to 10% in the interest of farmers. Under the scheme, exporters get duty-free scrips, which can be traded or used to pay a number of taxes. The move is expected to encourage exporters to buy more of the commodity from farmers, boosting demand for the politically sensitive farm produce.

“This will result in better prices for onion in domestic markets.... Onion arrivals have increased in the market at present due to which the prices in the mandis are subdued. To contain the situation, it has been decided to encourage exports so that domestic prices stabilise," the government said.

With this, onion enjoys one of the highest incentives for agro-exports, the ministry said. The move will help farmers who have recently harvested or sowed seeds anticipating better prices, it said.

This is in sharp contrast to the Congress’ move in the states it had won in the recent Assembly elections. “The Congress would waive farm loans within six hours of forming government in Haryana," Bhupinder Singh Hooda, Congress leader and former Haryana chief minister, said on Friday. The state goes to Assembly polls next year.

Hooda’s words echo that of party president Rahul Gandhi, who said earlier this month that he would not allow Modi to sleep until the Centre announced a nationwide farm loan waiver, even as he promised to waive all farm loans if his party came to power next year.

“Domestic onion prices are quite depressed. A 10% incentive under the Merchandise Exports from India Scheme is sufficient for exporters to ship more onions. There is demand for onion in the Middle East and other markets. As exports expand, farmers will gain," said Ajai Sahai, director general and chief executive officer of Federation of Indian Export Organisations.

In an interview aired by All India Radio on Tuesday night, finance minister Arun Jaitley avoided a question on whether the National Democratic Alliance government will announce a national farm loan waiver, but said states that can afford such short-term measures could go ahead. “So far we are on a tight fiscal deficit and I would not be in a position to comment on that. We have taken a position that if a state has the fiscal space, it can go ahead," said Jaitley.

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