Budget 2013: Farm credit enhanced by Rs 1.25 lakh crore for FY14

Allocates additional Rs 10,000 crore in subsidy for implementing Food Security Bill

Small and marginal farmers got a major boost in the union Budget today so did the government's ambitious food security bill.

Finance Minister P Chidambaram today hiked the farm credit limit to Rs 700,000 in 2013-14, almost 22% more than 2012-13 and also announced the setting up of a new mission on crop diversification and livestock management.

The food security bill got a grant of Rs 10,000 crore over and above the food subsidy requirements. Chidambaram also announced the setting up of a credit guarantee fund for Farmer Producer Organizations (FPOs) and matching equity grant.

To enable farmers access the benefits under short-term crop loans even private sector scheduled commercial banks were also allowed to disburse crop loans.

Chidambaram announced extension of interest-subvention on crop loans to private sector banks and commercial banks.

"Agricultural credit is a driver of agricultural production. We will exceed the target of Rs 5,75,000 crore fixed for 2012-13. For 2013-14, I propose to increase the target to Rs 7,00,000 crore," Chidambaram said while presenting the Budget for the 2013-14 fiscal in the Lok Sabha.

The interest-subvention for short-term crop loan will be continued and farmers who repay loan on time will be able to get credit at 4% interest per annum, he added.

"So far, the scheme has been applied to loans extended by public sector banks, regional rural banks and cooperative banks, I propose to extend the scheme to crop loans borrowed from private sector banks and scheduled commercial banks in respect to loans given within the service area of the branch concern," the Minister said.

Looking at the success of the scheme -- Bringing Green Revolution in the Eastern India, Chidambaram allocated Rs 1,000 crore for the next fiscal. Another Rs 500 crore was allocated for crop diversification in states covered during the Green Revolution such as Punjab and Haryana, which are facing stagnation in farm yields.

On proposed Food law, the Minister said, "I sincerely hope Parliament will pass the Bill as early as possible. Over and above the normal provision for food subsidy, I have set apart Rs 10,000 crore towards the incremental costs that is likely under the Act."