Farm credit to cross target of Rs 3.75 lakh cr

Farm credit is likely to reach Rs 4 lakh crore this fiscal against the government's target of Rs 3.75 lakh crore, Agriculture Minister Sharad Pawar said today.

The credit disbursement in 2009-10 fiscal was nearly Rs 3.84 lakh crore against the target of Rs 3.25 lakh crore.

"Flow of agriculture credit in 2010-11 is likely to reach Rs 4 lakh crore from the level of Rs 86,981 crore in 2003-04," Pawar said here.

In the first seven months of this fiscal, the banks have already disbursed agriculture credit worth Rs 2.29 lakh crore.

As part of farmer-friendly policy, the government has taken several measures to improve agriculture credit flow in order to boost investment in the farm sector.

Banks provides farm loans at an interest rate of 7 per cent. However, farmers making timely payments are getting crop loan at 5 per cent interest from the current fiscal.

From kharif 2006-07, farmers are receiving crop loans up to a principal amount of Rs 3 lakh at seven per cent rate of interest.

In 2009-10, an additional one percent interest subvention (that is borne by the government) was provided to those farmers who repaid their short-term crop loans as per schedule.

The subvention rate for timely repayment of crop loans was doubled during last year's budget to two per cent for this fiscal, thus bringing down the effective rate of interest for such farmers to 5 per cent per annum.

The limit of collateral free farm loan has also been increased from Rs 50,000 to Rs 1 lakh.