Agricultural Credit allowance sees hike uptoRs. 10 lakh crore
India’s Finance Minister, Arun Jaitley, announced a large hike amounting to Rs. 1 lakh crore, in the credit target for the next Financial Year, which would total to a cumulative of Rs. 10 lakh crores, in his Budget 2016-17 speech. This moves comes as the latest in a series of financial boosts taken by the NDA Government, with an eye on doubling the total revenue from farm incomes in the next 5 years. Jaitley took this historic step of the announcement on the massive hike, after being pressurised by members of the civil society financial experts, who had increasingly pressed upon this NDA government, the urgent need to shore up farm incomes. This was a historic call as the percentage increase of credit levels is the highest ever an Indian Finance Minister has announced in the Ministry’s Annual Financial Budget.
Status-quo credit levels
At present levels, the Government, has made provisions to have enough resources at disposal so that it can supply short term crop loans up to Rs. 3 lakhs to farmers at very market sensitive subsidised rates of 7 per cent annually. Apart from this, the Government has also taken steps to ensure that a cumulative additional advantage of 3 per cent is also provided, for time sensitive issues such as immediate settlement of loans within due deadlines, making the total effective interest rate a rather generous 4 per cent. Jaitley also announced the budget allocation of resources for a new crop insurance scheme, “Pradhan Mantri Fasal Bima Yojana”, which had been launched last year. This scheme, which had been earlier budgeted at Rs. 5500 crores now finds itself with a whopping budget of Rs. 13240 crores. In fact, the next Financial Year also sees the budget allocation fixed at a massive Rs. 9000 crore, giving the surest of all boosts to the farming sector.
Features of the Scheme: Boost to other agricultural sector
Providing a major fillip to the agricultural sector, Jaitley expressed hope that with better monsoons expected this year, agriculture can be expected to grow at 4.1% in the current year. He further announced that the coverage of the scheme will be increased from 30 per cent of the cropped area in 2016-17 to around 40 per cent in 2017-18 and 50 per cent in 2018-19.A corpus of Rs. 5000 crore has been assigned to create a dedicated micro-irrigation fund. This bulk of these resources would be focused on those states where agriculture is not the primary driving force behind the economy, to boost the agricultural sector. The Finance Minister also emphasised on dairy being an important source of surplus additional income for farmers. For this purpose, the Government would be setting up a dairy processing fund of Rs. 8000 crore over three years with an initial corpus of Rs. 2000 crore. This focus on dairy as an important industry has led experts to predict a revival of the sector, as had happened in the massive growth of the White Revolution in the 1970s, following massive governmental infrastructure support to this traditional industry. One of the last yet much talked about areas that Jaitley mentioned in his speech is a law on contract farming, which would expectedly be circulated to all State Governments, for their concerted opinions, before it is pushed through to serve as a further boost to agricultural sector.