Govt may increase agri-credit target to Rs 22-25 trn in interim Budget

The government is likely to announce in the upcoming interim Budget a substantial increase in the agricultural credit target to Rs 22-25 lakh crore for the next fiscal and ensure every eligible farmer has access to institutional credit, according to sources.

The government's agri-credit target is Rs 20 lakh crore for the current fiscal.

Currently, the government provides interest subvention of two per cent on short term agri-loans of up to Rs 3 lakh for all financial institutions. This means farmers are getting a farm loan of up to Rs 3 lakh at a concessional rate of 7 per cent per annum.

An additional interest subvention of 3 per cent per annum is also being provided to farmers who repay on time. Farmers can also avail long term loans but interest rate is as per the market rate.

For the 2024-25 fiscal, there could be a sharp increase in the agri-credit target to Rs 22-25 lakh crore, sources said.

According to the sources, there is more focus on agri-credit and the government is implementing several campaigns to identify the left out eligible farmers and bring them in the credit network.

The agriculture ministry has also created a separate division on 'credit' in order to give a focused approach, the sources added.

Further, the sources mentioned that the credit disbursal for various agricultural and allied activities has been exceeding the target in the last 10 years.

In the current fiscal, about 82 per cent of the agri-credit target of Rs 20 lakh crore has been achieved till December 2023. About Rs 16.37 lakh crore credit has been disbursed by both private and public banks in the said period, the official data showed.

"The agri-credit disbursal is likely to exceed the target this fiscal as well," the sources added.

During the 2022-23 fiscal, the total farm credit disbursal was at Rs 21.55 lakh crore, surpassing the target of Rs 18.50 lakh crore kept for the same period.

As per the data, as many as 7.34 crore farmers have availed credit through the network of Kisan Credit Card (KCC). About Rs 8.85 lakh crore was the outstanding amount as on March 31, 2023.

As per the 2019 NSS Report on Situation Assessment of Agricultural Households and Land and Livestock holdings of Households in Rural India, the percentage of indebted agricultural households is 50.2 per cent in the country. Out of which, 69.6 per cent of the outstanding loans were taken from institutional sources.

Looking at the NSS Report, the sources said there is still a large segment of agricultural households who do not have an access to the institutional credit. The government is targeting to bring such people under the formal credit network.

As a result, the government has been focusing on achieving 100 per cent saturation in KCC in the last three months through three different initiatives 'Ghar Ghar KCC campaign', 'Viksit Bharat Sankalp Yatra' and 'PM-JANMAN' campaign focusing on Particularly Vulnerable Tribal Groups (PVTGs)', they added.

KCC is being issued to left out farmers, fishermen, and tribal farmers.