Farm credit push

The Budget could give a fresh impetus to agriculture.

Expanded coverage of kisan credit cards, more interest subvention on timely repayment of loans and focus on improving institutional credit penetration may be introduced in the Budget.

It is also likely to announce a package for distressed cotton growers in Maharashtra and unveil schemes for horticulture production. According to agriculture ministry officials, funds to boost cold storage facilities and tax incentives may also be announced.

The officials said a big thrust could be on expanding institutional credit to agriculture as that has been found to be a major reason behind increasing area coverage and yield.

Officials said the scope of kisan credit cards, which provide easy loan access to growers for purchase of seeds and other activities, could be expanded from 5.8 crore farming families to the entire farming population of 12 crore. “This would go a long way in improving farmers’ access to institutional credit as KCCs are one of the most preferred mode of credit for banks and farmers,” a senior farm ministry official said.

The ministry is in favour of raising interest subvention from three per cent to four per cent for timely repayment of short-term crop loans. This would put interest rate on such loans at three per cent.

A Rs 5,000-8,000-crore package for better irrigation in the cotton growing belt of Maharashtra is also likely.

The government is also expected to raise the target for bank credit to over Rs 5,00,000 crore in 2012-13. In 2011-2012, the government had fixed a farm credit disbursal target of Rs 4,75,000 crore of which almost 47 per cent had been released till September 2011.