With easy credit and more time to repay agricultural loans, farmers can continue to reap the financial harvest that was first ushered in by finance minister Pranab Mukherjee's predecessor, P Chidambaram, in the 2005 Budget.
Mukherjee on Friday announced raising the target for loan
disbursal to farmers from 2012-13 to Rs. 5.75 lakh crore, up Rs. 1 lakh crore over last year's target.
He has, in fact, been raising the target consistently. In 2010-11, the loan target was raised by more than 15% at Rs. 3.75 lakh core, against Rs. 3.25-lakh crore in 2009-10.
However, the finance minister has not lost sight of the need for fiscal discipline. Easy cash comes only for farmers who do not default on payments.
Interest on agricultural credit, brought down to 7% from the standard rate of 9%, continues. Those making timely payments will get farm loans at 4%.
"Farmers need timely access to affordable credit," Mukherjee said.
India's aggressive farm credit policy - ranging from soft loans to higher support prices - has put soft cash into stressed farmhands and helped cushion the impact of a crippling drought in 2009, the worst in three decades.
Political payoffs and the ability of banks to meet agricultural loan targets have encouraged the finance minister to set an even higher target for 2012-13.
A mammoth loan waiver announced in 2008, called the Agriculture Debt Waiver and Debt Relief Scheme, instantly pulled thousands of farmers out of debt.
In his budget speech, presented on Friday, the finance minister said: "Banks have been consistently meeting the targets set for agriculture credit flow in the past few years."
The agricultural credit flow had registered a historic jump in 2010-11. Credit institutions disbursed Rs. 4,26,531 crore during the course of the year, against the target of Rs. 3,75,000 crore.