Narendra Modi, in response to criticism of note ban, points to farm sector
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A partial waiver on interest on farm loans, higher allocations for farm credit to cooperatives and conversion of Kisan credit cards into RuPay cards for 30 million farmers were major announcements for the farm sector in Prime Minister Narendra Modi’s speech on the eve of the New Year.
“In the last few weeks, an impression was sought to be created that the agriculture sector has been destroyed (following demonetisation),” the prime minister said before announcing the relief measures, adding, “farmers themselves have given a fitting reply to those who were doing so. Rabi (winter) sowing is up by 6% compared to last year. Fertilizer offtake is up by 9%.”
However, last year saw a widespread drought across several states, which led to lower than normal sowing and lower uptake of inputs, and a year-on-year comparison is likely to spruce up numbers.
Modi further said that the government has taken adequate care to ensure that farmers do not suffer while accessing inputs for the winter sowing. As an additional relief, Modi said that farmers will not have to pay 60 days of interest for crops loans taken from cooperative banks for their winter crop. This effectively translates into a waiver of 4% interest (for two months) that farmers pay for short term crop loans with a one-year term for repayment.
Further, the government will provide Rs20,000 crore to NABARD, the apex rural bank, which will be advanced as farm loans, Modi said. This is in addition to the Rs21,000 crore allocated by the government to NABARD last month.
“The loss that NABARD suffers by giving loans to cooperative banks and societies at low interest rates shall be borne by the Government,” Modi said, adding that the conversion of Kisan credit cards to RuPay debit cards will allow farmers to use them anywhere and they will not have to visit banks to withdraw money.
The prime minister’s relief measures for farmers come against the backdrop of a protracted period of rural distress following consecutive droughts in 2014 and 2015. The normal monsoon this year was expected to revive rural incomes and demand following the robust kharif harvest, according to estimates by the agriculture ministry.
However, rural incomes have been severely dented as the cash crunch following demonetisation led to a price crash in perishable crops like vegetables. Further, a bumper kharif crop has also pushed prices of key pulses below government-announced support prices.
Earlier this year, the central government announced a revamped crop insurance scheme which boosted enrolment. Also, to aid better price realization by farmers, the Modi government launched an electronic platform for the trading of farm produce.