The government on February 1 announced an 11% hike in agriculture credit target to ₹20 lakh crore for the next fiscal year with a focus on animal husbandry, dairy and fisheries.
The agricultural credit target is ₹18 lakh crore for the current 2022-23 fiscal.
Among other big-ticket announcements, the Finance Minister Nirmala Sitharaman in her Budget speech said the government will launch the “Aatmanirbhar Clean Plant Programme” to boost the availability of disease-free, quality planting material for high value horticultural crops at an outlay of ₹Rs 2,200 crore.
A new sub-scheme of Pradhan Mantri Matsya Sampada Yojana will be launched with a targeted investment of ₹6,000 crore to further enable activities of fishermen, fish vendors, and micro and small enterprises, improve value chain efficiencies, and expand the market, she said.
"The agriculture credit target will be increased to ₹20 lakh crore with a focus on animal husbandry, dairy and fisheries," the Finance Minister said.
The government has been increasing the credit target for the farm sector every year.
Normally, farm loans attract an interest rate of 9%. However, the government has been providing interest subvention to make available short-term crop loans at an affordable rate and help boost farm output.
The government is providing a 2% interest subsidy to ensure farmers get short-term farm loans of up to ₹3 lakh at an effective rate of 7% per annum.
To enhance coverage of small and marginal farmers in the formal credit system, the RBI has decided to raise the limit for collateral-free agriculture loans from ₹1 lakh to ₹1.6 lakh.
The interest subvention is given to public sector banks, private lenders, cooperative banks and regional rural banks on the use of their funds and to Nabard for refinancing Regional Rural Banks (RRBs) and cooperative banks.