#Budget2019: Agriculture-credit target may see Rs. 12 lakh crore hike
What's the story
The farm credit target is likely to be raised by about 10% to a record Rs. 12 lakh crore in the 2019-20 Budget, according to sources.
The budget will be presented on February 1.
For the current fiscal, the government has set a credit target of Rs. 11 lakh crore.
Farmers were given credit worth Rs. 11.68 lakh crore in 2017-18.
Details here.
Plan
Target likely to be increased by 10% this year
"The government has been increasing the credit target for the farm sector every year. This time too, the target is likely to be increased by around 10% or Rs. 1 lakh crore to Rs. 12 lakh crore for 2019-20 fiscal," the sources said.
The agricultural credit flow has increased consistently over the years, exceeding the target set for each fiscal, they added.
Previous records
Credit worth Rs. 11.68 lakh crore was given in 2017-18
Giving an example of credit increase, the sources said that credit worth Rs. 11.68 lakh crore was given to farmers in 2017-18, much higher than the Rs. 10 lakh crore target set for that year.
Similarly, crop loans worth Rs. 10.66 lakh crore were disbursed in the 2016-17 fiscal, higher than the credit target of Rs. 9 lakh crore, they said.
Information
Institutional credit will help delink farmers from non-institutional source: Sources
Credit is a critical input in achieving higher farm output, said the sources. Institutional credit will help to delink farmers from non-institutional sources where they're compelled to borrow at usurious rates of interest. Most of the time, farmers are unable to pay back, they said.
Action
Government providing subsidy for affordable short-term farm credit
Normally, farm loans attract an interest rate of 9%.
However, the government has been providing interest subvention to make available short-term farm credit at an affordable rate and help boost farm output.
The government is providing 2% interest subsidy to ensure farmers get short-term farm loan of up to Rs. 3 lakh at an effective rate of 7% per annum.
Details
Interest subvention given to PSBs, RRBs on use of funds
An additional incentive of 3% is being given to farmers for prompt repayment of loans within due date, making the effective interest rate 4%.
The interest subvention is given to public sector banks (PSBs), private lenders, cooperative banks and regional rural banks (RRBs) on use of own funds and to Nabard for refinancing the RRBs and cooperative banks.