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'We reap what we sow...'

After a spate of debt-related suicides, farmers really need something to look forward to this year. And this is what the Budget 2006-07 promises.

india Updated: Mar 01, 2006 02:04 IST

After a spate of debt-related suicides, farmers really need something to look forward to this year. And this is what the Budget 2006-07 promises.

The Budget brings some cheer to farmers in distress with a provision of Rs 1,700 crore to meet the two per cent interest liability of farmers with loans up to Rs 1 lakh. Finance minister P. Chidambaram on Tuesday said the government was aware of the difficulties farmers had been facing for the last two years. And despite fiscal constraints, he said, he was ready to walk that extra mile for them.

Farmers who took loans from scheduled, regional rural and cooperative banks for kharif and rabi crops in 2005-06 will have a two per cent interest liability amount credited to their accounts before March 31 this year. To meet this, total rural credit is being increased by about Rs 34,000 crore from Rs 1,41,500 crore in 2005-06 to Rs 1,75,000 crore in 2006-07. Furthermore, banks have been told to add 50 lakh additional farmers for loan disbursement in the coming year.

On the interest front, Chidambaram said the government would ensure that farmers received short-term credit at the rate of seven per cent with an upper limit of Rs 3 lakh. Nabard, which provides refinance for these loans, will suitably help the government. The government will ensure that rural credit is doubled in three years' time.

For tenant farmers who aren't adequately served, banks will open separate windows for self-help groups or joint liability groups.

The government has thought of the rain situation too. And instead of expressing helplessness, has decided to take it head on. Farmers will get irrigation help from thousands of water bodies that are being revived. The Budget provides for the repair, renovation and restoration of 20,000 traditional water bodies in 23 districts of 13 states. The government will seek funds from multilateral agencies for the purpose. The expenses, running into Rs 4,481 crore, will be shared with the states.

The existing scheme of accelerated irrigation projects will also get larger grants from the Centre. It was Rs 1,680 crore in 2005-06, and will be increased to Rs 2,350 crore in the coming financial year. The states, on their part, will spend nearly double this amount.

The Budget presents a good report card on the performance of self-help groups, which are flourishing and providing large amounts of credit to small farmers. In the last two years, it says, the number of such groups has reached 8,01,000 and they have distributed Rs 4,863 crore. Banks have been asked to credit-link another 3.85 lakh groups.

All in all, it looks like a good year ahead for the farmers.