Nabard eyes Rs 50,000 crore Agri Fund mop-up

The National Bank for Agriculture and Rural Development (Nabard) said it will mobilise Rs 50,000 crore required for the Agriculture Infrastructure and Credit Fund from the banking system and through market borrowings.

The objective of the Fund, which was christened as the Lok Nayak Jaiprakash Narayan Fund by the Centre, is to enhance the efficiency, productivity and profitability of Indian agriculture.

This in turn will augment the incomes of rural households by strengthening infrastructure necessary for agriculture, encouraging agri-exports, diversification and value-addition.

The finance minister had announced the creation of this Fund in the vote on account on February 3, 2004, and it will be operational over the next three financial years.

The allocation of resources so mobilised will go to finance infrastructure through state governments (Rs 30,000 crore); investment in agriculture and commercial infrastructure through banking system (Rs 18,000 crore); and development measures and risk management mechanisms (Rs 2,000 crore).

Banks having a shortfall in their agricultural lending portfolio will contribute resources at terms similar to that of the Rural Infrastructure Development Fund.

Nabard said that the RIDF will come to an end with the commencement of the LNJPN Fund.

Resources required to finance rural infrastructure "" minor irrigation, watershed/ wasteland development, cold storage facilities in public sector, marketing infrastructure, etc "" will be raised over a three year period "" Rs 7,800 crore (2004-05); Rs 9,700 crore (2005-06); and Rs 12,500 crore (2006-07).

For infrastructure loans to state governments, Nabard said the rate of interest will be 6.50 per cent per annum.

The refinance required for investment in agriculture and commercial infrastructure through banking system and selective co-financing, which is pegged at Rs 18,000 crore, will also be raised in three tranches "" Rs 4,740 crore (2004-05); Rs 6,010 crore (2005-06); and Rs 7,250 crore (2006-07).

Under scheme the priority areas are : rainfed agriculture, micro irrigation, plantation and horticulture, animal husbandry, fisheries, organic farming, post harvest management etc.

For investment credit, the refinance rate to the banks would for the present continue to range from 5.50 per cent to 6.75 per cent.

The government wants banks to ensure that the agriculture investments under the scheme are financed at two per cent below the prevailing prime lending rates.

Under the development measures and risk management component the steps that are to be taken will, among others, include farm technology dissemination and integration of IT linkage, people's participation, expansion of farmers clubs, venture fund for technology support in agriculture etc.