Credit Flow to Farmers Raised to Rs. 4,75,000 Crore
Finance Minister, Shri Pranab Mukherjee has proposed to raise the target of credit flow to the farmers from Rs. 3,75,000 crore this year to Rs.4,75,000 crore in 2011-12. Banks have been asked to step up direct lending for agriculture and credit to small and marginal farmers.
Presenting the Union Budget for 2011-12 in the Lok Sabha today, Shri Mukherjee said, the existing interest subvention scheme of providing short term crop loans to farmers at 7% interest will be continued during 2011-12. He further proposed to enhance the additional subvention to 3% in 2011-12. Thus, the effective rate of interest for such farmers will be 4% per annum.
In view of the enhanced target for flow of agriculture credit, Shri Mukherjee proposed to strengthen NABARD’s capital base by infusing Rs.3000 crore, in a phased manner, as government equity. This would raise its paid-up capital to Rs.5000 crore. To enable NABARD refinance the short term crop loan of the co-operative credit institutions and Regional Rural Banks (RRBs) at concessional rates, the Finance Minister proposed a contribution of Rs.10,000 crore to NABARD’s Short –term Rural Credit Fund for 2011-12 from the shortfall in priority sector lending by scheduled commercial banks.
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