Farmers can continue to reap a financial harvest that first came as a windfall loan waiver of Rs60,000 crore in 2008. Finance minister Pranab Mukherjee raised the target for loan disbursal to the farmers from Rs3,75,000 crore to Rs4,75,000 crore in 2011-12, nearly a 27% jump.
Mukherjee has raised the target consistently. In 2010-11, the loan target was raised by over 15% at Rs3.75 lakh crore, as against Rs3.25-lakh crore in 2009-10.
However, the finance minister has not lost sight of the need for fiscal discipline. Easy cash comes only for those farmers who do not default on payments.
Interest on farm credit for those paying on time was brought down to 5% from the standard rate of 7% in the last Budget, in addition to providing them with more time to repay loans. This year, those making timely payments will get farm loans at 4%.
“Banks have been asked to step up direct lending for agriculture and credit to small and marginal farmers,” Mukherjee said.
India’s aggressive farm credit policy — ranging from soft loans to higher support prices — has put soft cash into stressed farmhands, cushioning the impact of a crippling drought in 2009, the worst in three decades. The mammoth loan waiver, called the Agriculture Debt Waiver and Debt Relief Scheme, announced in 2008 has been the main driver of farmers’ incomes.
The finance minister said in his budget speech: “Banks have been consistently meeting the targets set for agriculture credit flow in the past few years.” Agriculture is still the way of life