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In a bonanza for farmers, the government on Saturday raised agriculture credit target by Rs 50,000 crore (Rs 500 billion) to Rs 8.5 lakh crore (Rs 8.5 trillion) for 2015-16 fiscal and also announced financial support to enhance irrigation and soil health to achieve higher agriculture productivity.
"Farm credit underpins the efforts our hardworking farmers and I have therefore set up an ambitious target of Rs 8.5 lakh crore of credit during the year 2015-16.
“I am sure banks will surpass (this target)," Finance Minister Arun Jaitley said while presenting the Budget for 2015-16 fiscal.
Farmers have been availing crop loans upto Rs 300,000 at 7 per cent interest rate.
However, the effective rate of interest for farmers who repay on time is 4 per cent.
As against the target of Rs 8 lakh crore (Rs 8 trillion) for this fiscal, banks have disbursed over Rs 3.7 lakh crore (Rs 3.7 trillion) till September.
To support agriculture sector with the help of effective and hassle-free agricultural credit with special focus on small and marginal farmers, the Minister said: "I propose to allocate Rs 25,000 crore (Rs 250 billion) in 2015-16 to the corpus of Rural Infrastructure Development Fund set up by National Agricultural Bank for Rural Development."
He also announced an allocation of Rs 15,000 crore (Rs 150 billion) for long term rural credit fund, Rs 45,000 crore (Rs 450 billion) for short term cooperative rural credit refinance fund and Rs 15,000 crore (Rs 15 billion) for short term RRB (regional rural banks) refinance fund.
Budget 2015: Complete Coverage
To boost irrigation and soil health, Jaitley said, "Our commitment to farmers runs deep. We have already taken major steps to address two major factors critical to the agriculture production -- soil and water.
"I propose to support the Agriculture Ministry's organic farm scheme 'Parampara Krishi Vikas Yojana' and 'Pradhan Mantri Gram Sichai Yojana (PMGSY'. . . I am allocating Rs 5,300 crore (Rs 53 billion) to support micro irrigation watershed programmes and PMGSY," he said and urged states to chip in substantially in this vital sector.
PMGSY is aimed at irrigating the field of every farmer and improving the water usage efficiency to provide per drop more crop, while ambitious soil health card has been launched to improve soil fertility on sustainable basis, he added.
Stressing the need to improve farmers' income, Jaitley said, "While farmers are no longer in the clutches of local traders, his produce still does not command the best notional prices.
“To increase income of farmers, it is felt that we create a national common market which will have incidental benefit of moderating prices."
"I intend this year to work with states in Niti for creation of unified national agricultural market," he said.
Noting that increase in productivity and realisation of reasonable price of agri-production is essential for the welfare of rural people, the minister said, "We should commit to increase irrigation area, improve efficiency of distinct irrigation scheme, promoting agro-based industries, value addition, increasing farm income and reasonable prices for farmers produce."
Image: India has witnessed sluggish growth in agriculture. A farmer with his oxen on a paddy field at Kakkoor village in Kerala. Photograph: Sivaram V/Reuters