New Delhi: The farm credit target is likely to be raised by about 10 percent to a record Rs 12 lakh crore in the 2019-20 Budget to be presented on 1 February, according to sources.
For the current fiscal, the government has set a credit target of Rs 11 lakh crore.
"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 percent or Rs 1 lakh crore to Rs 12 lakh crore for the 2019-20 fiscal," the sources said.
The agricultural credit flow has increased consistently over the years, exceeding the target set for each fiscal. For instance, 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, they added.
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.
Credit is a critical input in achieving higher farm output. Institutional credit will also help delink farmers from non-institutional sources where they are compelled to borrow at usurious rates of interest, the sources added.
Normally, farm loans attract an interest rate of 9 percent. 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 percent interest subsidy to ensure farmers get short-term farm loan of up to Rs 3 lakh at an effective rate of 7 percent per annum.
An additional incentive of 3 percent is being given to farmers for prompt repayment of loans within due date, making the effective interest rate 4 percent.
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 RRBs and cooperative banks.
To keep watching India’s No. 1 English Business News Channel – CNBC-TV18, call your Cable or DTH Operator and ask for the Colors Family Pack (inclusive of 24 channels), available for Rs. 35/- per month, or subscribe to the channel for Rs. 4/- per day.
To keep watching the Leader in Global Market & Business News – CNBC-TV18 Prime HD, call your Cable or DTH Operator and ask for the Colors Family HD Pack (inclusive of 25 channels), available for Rs. 50/- per month, or subscribe to the channel for Rs. 1/- per day.
The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .
Updated Date: Jan 21, 2019 15:35:16 IST