In order to promote growth in agriculture sector, India has increased its farm credit during 2014-15 financial year.
Indian finance minister, Arun Jaitley while presenting his budget on July 10, 2014 said that banks are providing strong credit support to the agriculture sector for which a target of $133 billion has been set for agriculture credit during 2014-15.
Under the interest subvention scheme for short term crop loans, the banks are extending loans to farmers at a concessional rate of 7 per cent.
The farmers get a further incentive of 3 per cent for timely repayment and hopes to continue the scheme in 2014-15, the minister added.
Jaitley said that National Bank for Agriculture and Rural Development (NABARD) operated the Rural Infrastructure Development Fund (RIDF) out of the priority sector lending shortfall of the banks, which helps in creation of infrastructure in agriculture and rural sectors across the country.
The minister proposed to raise the corpus of RIDF by an additional $836 million from the target given in the interim budget to $4.18 billion in the current financial year.
Increasing warehousing capacity for increasing the shelf life of agriculture produces and thereby the earning capacity of the farmers is of utmost importance, Jaitley adds.
Keeping in the view the urgent need for availability of scientific warehousing infrastructure in the country, the minister proposed an allocation of $836 million for the fund for the year 2014-15 the Finance Minister added.
The share of long term investment credit in agriculture is going down as compared to short term crop loan. This is severely hampering the asset creation in agriculture and allied activities.
In order to give a boost to long term investment credit in agriculture, the finance minister proposed to set up long term rural credit fund in NABARD for the purpose of providing refinance support to Cooperative Banks and Regional Rural Banks with an initial corpus of $836 million.
To ensure increased and uninterrupted credit flow to farmers and to avoid high cost market borrowings by NABARD, the minister proposed to allocate an amount of $8.36 billion for STCRC Fund during 2014-15.
The issue of profitability of small holding based agriculture has assumed importance in view of increasing proportion of small and marginal farmers in the country, the minister stressed.
Jaitley proposed to supplement NABARD’s Producers’ Organization Development Fund for Producer’s development and up liftment called ‘PRODUCE’ with a sum of $34 million which will be used for building 2,000 producers organizations across the country over the next two years.
The minister also initiated the scheme Pradhan Mantri Krishi Sinchayee Yojana (Prime Minister Agriculture Irrigation Scheme) with a sum of $167 million that would facilitate access to irrigation.
There was a need to provide assured irrigation to mitigate risk to the farmer since bulk of the farm lands are rainfed and depend on monsoon.
