The new government is likely to come under pressure to further increase agriculture credit target to maintain high farm growth, which is an essential pre-condition for a wider economic revival.
While finance minister P Chidambaram had set a target of Rs. 8,00,000 crore for 2014-15 in the Interim Budget, sources said there could be "some" further rise in the target in the full budget, which will be presented once the new government comes to power.
"There could be a possibility that the target is increased a little in the full budget as it is a critical political issue and whichever party comes to power would try and uphold this issue," an official source who refused to be identified said.
The UPA government has been increasing agriculture credit target every year.
While the credit target for 2013-14 was Rs. 7,00,000 crore, banks exceeded the same.
"The focus on agriculture and bank credit towards has been one of the pillars of the current government and a key reason for the UPA to get back to power in 2009… the agriculture credit lending pattern therefore is likely to continue," the source added.
The problem will arise in case there is inadequate rainfall this year, which in turn would lead to an increase in non-performing assets of public sector banks.
The government has targeted a growth rate of 4% for the farm sector under the 12th Plan.