Govt raises farm credit target by 11% to Rs 20 lakh crore for FY24

The government on Wednesday announced 11 per cent hike in agriculture credit target to Rs 20 lakh crore for next fiscal year with focus on animal husbandry, dairy and fisheries.

The agricultural credit target is Rs 18 lakh crore for the current 2022-23 fiscal.

Among other big ticket announcements, Finance Minister Nirmala Sitharaman in her Budget speech said the government will launch 'Aatmanirbhar Clean Plant Programme' to boost availability of disease-free, quality planting material for high value horticultural crops at an outlay of Rs 2,200 crore.

A new sub-scheme of Pradhan Mantri Matsya Sampada Yojana will be launched with targeted investment of Rs 6,000 crore to further enable activities of fishermen, fish vendors, and micro and small enterprises, improve value chain efficiencies, and expand the market, she said.

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"The agriculture credit target will be increased to Rs 20 lakh crore with focus on animal husbandry, dairy and fisheries," the FM said.

The government has been increasing the credit target for the farm sector every year.

Normally, farm loans attract an interest rate of 9 per cent. However, the government has been providing interest subvention to make available short-term crop loan at an affordable rate and help boost farm output.

The government is providing a 2 per cent interest subsidy to ensure farmers get short-term farm loans of up to Rs 3 lakh at an effective rate of 7 per cent per annum.

To enhance coverage of small and marginal farmers in the formal credit system, the RBI has decided to raise the limit for collateral-free agriculture loans from Rs 1 lakh to Rs 1.6 lakh.

The interest subvention is given to public sector banks, private lenders, cooperative banks and regional rural banks on the use of their funds and to Nabard for refinancing RRBs and cooperative banks.