In a bonanza to farmers, the government today announced a subsidised five per cent interest rate on crop loans on timely repayment, while proposing a 15 per cent hike in credit made available for farm sector.
This would be as a result of Finance Minister proposing to hike to two per cent the interest subvention provided to farmers, giving them at an effective rate of five per cent per annum. Farmers get crop loan of up to Rs 3 lakh at 7 per cent.
In his budget speech for 2010-11, Finance Minister Pranab Mukherjee also allocated Rs 400 crore to raise farm production in the eastern parts of India, comprising Bihar, Chhattisgarh, Jharkhand, Eastern UP, West Bengal and Orissa.
"In the last budget, I provided an additional one per cent interest subvention as an incentive to those farmers who repay their short-term crop loan as per schedule. I propose to raise this subvention for timely repayment of crop loan from one per cent to two per cent for 2010-11," he said.
Noting that banks are consistently meeting the targets set for agriculture credit flow in past few years, Mukherjee said that for 2010-11, target has been raised to Rs 3,75,000 crore from Rs 3,25,000 crore in the current year.
In view of drought and severe floods in some parts of the country, he extended the period for repayment of loan amount by farmers under the Rs 71,000 crore debt waiver scheme by six months till June 30, 2010.
To give impetus to food processing, Mukherjee said five more mega food parks would be established to provide latest infrastructure facilities, in addition to the 10 already being set up.