New Delhi: In a bonanza to the farming community, the government on Monday announced loans at interest rate of 4%—3% less than market rate—for farmers who pay their dues in time and raised the credit target for farm sector by Rs 1 trillion.
“The existing interest subvention scheme of providing short-term crop loans at 7% interest rate will continue during the 2011-12 fiscal,” finance minister Pranab Mukherjee said in Budget proposal.
He also said the credit target for the agriculture sector has been increased by Rs 1 trillion to Rs 4.75 trillion. Also, banks have been asked to focus on farm credit lending to small and marginal farmers, the minister said.
“In the last Budget, I had provided an additional 2% interest subvention to those farmers who repay their crop loan on time. In order to provide further incentive to these farmers, I propose to enhance the additional subvention to three per cent in 2011-12. The effective rate of interest for such farmers would be four per cent,” Mukherjee said.
Faced with high food inflation and the country’s dependence on import of pulses and edible oil, the finance minister also announced various schemes for promoting production of vegetables, pulses, oilseeds, fodder and nutrition-rich crops like millets and maize.