Finance Minister, Shri Pranab Mukherjee has proposed to raise the target of credit flow to the farmers from Rs. 3,75,000 crore this year to Rs.4,75,000 crore in 2011-12. Banks have been asked to step up direct lending for agriculture and credit to small and marginal farmers.
Presenting the Union Budget for 2011-12 in the Lok Sabha today, Shri Mukherjee said, the existing interest subvention scheme of providing short term crop loans to farmers at 7% interest will be continued during 2011-12. He further proposed to enhance the additional subvention to 3% in 2011-12. Thus, the effective rate of interest for such farmers will be 4% per annum.
In view of the enhanced target for flow of agriculture credit, Shri Mukherjee proposed to strengthen NABARD’s capital base by infusing Rs.3000 crore, in a phased manner, as government equity. This would raise its paid-up capital to Rs.5000 crore. To enable NABARD refinance the short term crop loan of the co-operative credit institutions and Regional Rural Banks (RRBs) at concessional rates, the Finance Minister proposed a contribution of Rs.10,000 crore to NABARD’s Short –term Rural Credit Fund for 2011-12 from the shortfall in priority sector lending by scheduled commercial banks.
