TAD NewsDesk, New Delhi: In the new budget of 2021 there is a chance of government hiking the Agricultural credit target to Rs 19 Lakh Crore. This budget is likely to be presented on February 1.
Finance Minister Nirmala Sitharaman commented,
“Non-banking finance companies and co-operatives are active in the agriculture credit space. The Nabard refinance scheme will be further expanded. Agriculture credit target for the year 2020-21 has been set up at Rs 15 lakh crore.”
Over the years, the agricultural credit flow has been on a rise. The fluctuation is visible through the following rise:
- In 2017-18, credit worth Rs 11.68 lakh crore was given to farmers while the set target was Rs 10 lakh crore.
- 2016-17 fiscal, crop loans worth Rs 10.66 lakh crore were disbursed instead of the set target of Rs 9 lakh crore.
According to sources, institutional credit will help them to get away from non institutional sources which are clearly at more interest rates and proves as great disadvantage to farmers.
Normally, farm loans attract an interest rate of 9 per cent. However, the government has been providing interest subvention to make available short-term farm credit at an affordable rate and help boost farm output. This year, the government is providing a 2% interest subsidy to ensure that farmers get short-term farm loans of up to Rs 3 lakh at an effective rate of 7% per annum.
Moreover, An additional incentive of 3% is being given to farmers for prompt repayment of loans within due date, making the effective interest rate 4%.
This will benefit the farmers greatly and would provide them with incentives to improve the position of their agricultural lands.
Source: Bloomerg Quint