In poll year, Mukherjee extends sop for small farm loans

In a step that will keep the farmers’ lobby happy, Finance Minister Pranab Mukherjee today announced that the government will continue to provide interest rate subvention during the next financial year to ensure that farmers keep getting short-term crop loans of up to Rs 3 lakh at 7 per cent per annum.

The budget expense on subvention for the next fiscal is estimated at Rs 2,011 crore, vis-à-vis the revised estimate of Rs 2,600 crore for 2008-09.

The 2009-10 budget estimate for the fertiliser ministry has been pegged at Rs 50,200 crore, down over 33 per cent from the revised estimate of Rs 75,915 crore. According to a recent trend, the government sets a low budget estimate and raises the additional requirement through supplementary grants.

The budget allocation for the Department of Agriculture and Cooperation has been put at Rs 7,458 crore, as against the revised estimate of Rs 7,395 crore for 2008-09. The allocation for agricultural research and education has been raised to Rs 3,241 crore, vis-à-vis the revised estimate of 2,960 crore. The allocation for the Department of Animal Husbandry and Dairying has been increased to Rs 1,106 crore as against the revised estimate of Rs 1,015 crore.

“The total debt waiver and debt relief so far amounts to Rs 65,000 crore covering 3.6 crore (36 million) farmers,” Finance Minister Pranab Mukherjee pointed out. The agricultural credit disbursements has increased from Rs 87,000 crore in 2003-04 to Rs 250,000 crore in 2007-08, marking a three-fold increase as against the plan, announced in 2004, to double it.

In the period between 2003-04 and 2008-09, the plan allocation for agriculture increased by 300 per cent. To strengthen the short-term co-operative credit structure, the government is implementing a revival package in 25 states involving a financial assistance of around Rs 13, 500 crore.

The gross capital formation in agriculture as a proportion of agriculture Gross Domestic Product significantly improved from 11.1 per cent in 2003-04 to 14.2 per cent in 2007-08.

During this four-year period, the annual growth rate of agriculture rose to 3.7 per cent. Despite a high base, the outlook for 2008-09 is encouraging.