Credit is a critical input in achieving higher farm output.New Delhi:The farm credit target is likely to be raised by about 10 per cent to a record Rs 12 lakh crore in 2019-20 Budget to be presented on February 1, according to sources.For current fiscal, government has set a credit target of Rs 11 lakh crore."The government has been increasing credit target for farm sector every year.
This time too, target is likely to be increased by around 10 per cent or Rs 1 lakh crore to Rs 12 lakh crore for 2019-20 fiscal," sources said.
The agricultural credit flow has increased consistently over years, exceeding target set for each fiscal.
For instance, credit worth Rs 11.68 lakh crore was given to farmers in 2017-18, much higher than Rs 10 lakh crore target set for that year, they added.
Similarly, crop loans worth Rs 10.66 lakh crore were disbursed in 2016-17 fiscal, higher than 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, sources added.
Normally, farm loans attract an interest rate of 9 per cent.
However, 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 per cent interest subsidy to ensure farmers get short-term farm loan of up to Rs 3 lakh at an effective rate of 7 per cent per annum.
An additional incentive of 3 per cent is being given to farmers for prompt repayment of loans within due date, making effective interest rate 4 per cent.
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.
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