FM rewards farmers with more credit

Encouraged by the performance of India’s agriculture sector in 2013-14, Finance Minister P Chidambaram said the government will continue with the interest subvention scheme on farm loans and also raised the agriculture credit disbursal target by Rs 100,000 crore to Rs 800,000 crore in 2014-15. Expected agricultural growth of almost 4.6 per cent in 2013-14 against 1.4 per cent in 2012-13 will play a big role in helping the government reach the GDP target of 4.9 per cent in 2013-14, he said.  

Presenting the interim Budget of 2014-15, Chidambaram recalled the yeoman’s service rendered by the country’s farmers in delivering record production during most of UPA’s 10-year rule. He said 10 years ago, India produced 213 million tonnes of foodgrain; in 2013-14 it is projected to touch an all-time high of 263 million tonnes.  

On interest subvention, the finance minister said the government intends to continue with the scheme first introduced in 2006-07. Under the scheme, the government provides a subvention of 2 per cent and an incentive of 3 per cent for prompt payment, thus reducing the effective rate of interest on farm loans to 4 per cent. “So far, Rs 23,924 crore has been released under the scheme. I propose to continue the scheme in 2014-15,” Chidambaram said.

He said the country is proud of the performance of the agriculture sector. Foodgrain production in 2012-13 was 255.36 million tonnes and the estimate for the current year is 263 million tonnes. Production estimates of sugarcane, cotton, pulses and oil seeds all point to new highs.

Chidambaram also recalled how a bumper harvest has prompted a surge in India’s agriculture exports. Agriculture exports in 2012-13 stood at $41 billion, while imports were pegged at $20 billion. For 2013-14, Chidambaram estimated exports to cross Rs 45 billion, almost 9.5 per cent more than last year.

Some experts do not share the optimism of the finance minister. “Our calculation shows that the surplus (difference between agriculture export and import) is likely to widen in 2013-14 in comparison to the previous year. Exports in 2013-14 would be lower than the finance minister’s estimate of $45 billion, while imports will also be lower at around $18 billion,” eminent agricultural economist and chairman of Commission for Agricultural Costs and Prices Ashok Gulati told Business Standard.