Farmers get credit guarantee backing

Interest subvention scheme to include private sector commercial banks

Acknowledging that the large farming community had delivered despite difficult conditions, Finance Minister P Chidambaram said it was due to them that agriculture had continued to perform well. "The average annual growth rate of agriculture and allied sectors during the 11th Plan (2007-12) was 3.6 per cent against 2.5 per cent and 2.4 per cent in the 9th and 10th Plans, respectively. In 2012-13, total foodgrain production will be over 250 million tonnes. Farmers have responded to the price signals and produced more," he said.

As credit was one of the main drivers of production, he said the credit disbursal target for 2013-14 had been raised by 22 per cent to Rs 7 lakh crore. The increase is to be supplemented by extending the interest subvention on agricultural credit to scheduled private commercial banks, apart from the usual government lenders. The government gives an interest subvention of three per cent a year to all farmers who repay short-term crop loans on time; the rate is otherwise around seven per cent.

To ensure more farmers switch to commercial crops such as oilseeds and pulses, the minister also announced a Rs 500-crore National Mission on Crop Diversification. He allocated Rs 307 crore for a new National Livestock Mission, to augment feed and fodder production to boost production of protein-rich items such as milk and meat.

For small and marginal farmers, Chidambaram announced a credit guarantee fund for farmer producer organisations (FPOs), with an initial corpus of Rs 100 crore. FPOs are formed under the Companies Act at block and cluster levels. An FPO is different from a co-operative society, though these are also named co-operatives. There are almost 300 FPOs, with a combined membership of a little over 500,000 farmers.

The proposed fund is to be housed in the Small Farmers' Agri Business Corporation, which operates under the department of agriculture. A matching equity grant to registered FPOs, up to Rs 10 lakh each, was announced. This is to enable these bodies to leverage working capital from financial institutions. "I urge state governments to support such FPOs through necessary amendments to the APMC Act and in other ways," the minister said.

Other measures for small and marginal farmers include more money for the integrated watershed programme and a pilot project for nutri-farms. The latter are to help introduce varieties of crops such as iron-rich bajra, protein-rich maize and zinc-rich wheat. For related pilot projects, Rs 200 crore was provided.

For agriculture research and training, the minister announced the setting up of a National Institute of Biotic Stress Management, in Raipur, Chhattisgarh.