The government has disbursed agricultural credit of Rs 89,687 crore in the quarter ended June — 24 per cent of the target of Rs 3, 75,000 crore for the financial year. Credit disbursement in 2009-10 was to the tune of Rs 3, 66,919 crore, much above Rs 3, 25,000-crore target set by the government.
The flow of agricultural credit since 2003-04 has consistently exceeded the target set by the government for the financial year. Its flow has gone up from Rs 86,981 crore in 2003-04 to Rs 3, 66,919 crore in 2009-10.
As agricultural credit plays an important role in improving agricultural production and productivity and mitigating the distress of farmers, the government has taken several measures to improve the flow of agricultural credit and bring down interest rates on farm loans.
Since the 2006-07 kharif season, farmers have received crop loans on a maximum principal amount of Rs 3 lakh at 7 per cent interest rate. In 2009-10, an additional 1 per cent interest subvention was provided to those farmers who repaid their short-term crop loans within the time given to them by banks. In the current financial year the subvention rate for timely repayment of crop loans has been raised to 2 per cent, bringing down the effective rate of interest for such farmers to 5 per cent a year.
The limit of collateral-free farm loan has also been increased from Rs 50,000 to Rs 1,00,000.
The government also said it had issued Kisan Credit Card (KCC) to 94.8 million eligible and willing farmers during the first quarter of this financial year. Launched by Nabard in consultation with other banks in 1998, KCC helps farmers easily access credit and purchase raw materials during the farming season.
