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FM doles out cheaper loans to farmers; ups credit by Rs 1 lakh cr

Press Trust of India  |  New Delhi 

Providing a big pro-farm thrust, the government today announced reduction in interest rate to 4% for farmers who repay loans on time and raised agri-credit target by a whopping Rs 1 lakh crore to boost investments in the sector.

Faced with high food inflation, Finance Minister Pranab Mukherjee unveiled various schemes in the Budget 2011-12, with an outlay of Rs 2,200 crore to increase production of vegetables, millets, milk, pulses, palm oil and fodder.


Emphasising upon the need for affordable credit to farmers, he announced an "additional subvention to 3 per cent in 2011-12" for those farmers who repay in time.

"Thus, the effective rate of interest for such farmers will be 4 per cent per annum," Mukherjee said.

The government decided to continue the existing scheme of providing short-term crop loans to farmers at 7 per cent for the next fiscal.

To increase investment in the farm sector, the Finance Minister raised the agri-credit lending target for banks to Rs 4,75,000 crore for 2011-12 from Rs 3,75,000 crore this year, with special focus on small and marginal farmers.

Pointing out that high food inflation is still a concern for the government, Mukherjee said:"Removal of production and distribution bottlenecks for these items (vegetables, milk, meat and poultry)will be the focus of my attention this year."

In view of growing demand for vegetables, he announced Rs 300 crore to set up a "vegetable cluster", initially close to metros.

To reduce 40 per cent wastage of fruits and vegetable, the Budget announced setting up of 15 more mega food parks next fiscal. Besides, it gave "infrastructure status" to boost investment in cold chains and post-harvest storage facilities. It exempted excise duty on equipments used in cold storage.

With infrastructure status, investors in cold chains will benefit tax holiday and priority sector lending from banks.

Mukherjee asked the state governments to reform the Agriculture Produce Marketing Act (APMC) urgently to improve the supply chain.

Striving to make India self-sufficient in pulses and edible oil, Mukherjee announced two separate schemes with an outlay of Rs 300 crore each to encourage production of pulses and palm cultivation.

At present, the country imports 3-4 million tonnes of pulses and nearly 9 million tonnes of cooking oils to meet domestic shortages.

Identifying rising demand in animal protein products like fish and milk, the government launched a "National Mission for Protein Supplements" with an allocation of Rs 300 crore.

The government also sought to promote balanced nutrition by enhancing production of coarse cereals like bajra, ragi, jowar and other millets. The programme will cover 25,000 villages.

Another Rs 300 crore was provided to increase fodder production, essential for sustained production of milk. To augment domestic supply of fodder, import duty was exempted on de-oiled rice bran cake and duty of 10 per cent was slapped to discourage its export.

"De-oiled rice bran cake constitutes an important ingredient of cattle feed and its improved availability would have a positive impact on milk production," he said.

 The Finance Minister made a provision of Rs 400 crore for bringing green revolution in the eastern India, mainly West Bengal and Bihar's rice-based areas. This scheme was launched last year.

First Published: Mon, February 28 2011. 19:01 IST
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