Target for Agriculture Credit Fixed at Rs 10 Lakh Crore
The Union Budget for FY 2017-2018 was shrouded with speculations and guesses. However, all those speculations and assumptions came to a halt when Finance Minister Mr. Arun Jaitley announced the budget in parliament today. As expected, the agrarian sector of the economy received a massive thrust from the government. Of several announcements made for the agricultural sector, the most important one being that of increase in Agriculture Credit.
A whopping INR 1 lakh crore increase has been declared towards agriculture credit for FY 2017-2018. The current target is INR 10 lakh crores, which will be extended to farmers in an attempt to boost the agricultural income of the nation. Government wants to double the agricultural income in coming 5 years.
Expected Growth Rate for FY 2017-2018
According to Arun Jaitley, this is the highest ever allocation towards agricultural credit and coupled with better monsoons, it is expected that agriculture in India will experience a growth of 4.1% in the fiscal year 2017-2018.
In case you are not aware, the Union Government provides crop loans of up to INR 3 lakhs for short term at a subsidized rate of 7% interest each year. However, those farmers who are good with their payments and pay off the loans early, actually enjoy an additional subsidy of 3%. Thus, for those farmers, the effective interest rate is actually reduced to a mere 4% per year.
Increased Allocation for Pradhan Mantri Fasal Bima Yojana
While speaking of agriculture credit, Jaitley even spoke about Pradhan Mantri Fasal Bima Yojana. That is a nothing other than a crop insurance program, which was launched only last year with a budget allocation of INR 5,500 crores. In this budget, the allocation towards the Fasal Bima Yojana has been increased to INR 13,240 crores, which is more than double the initial allotment. However, for the next fiscal year, budget allocation for the Pradhan Mantri Fasal Bima Yojana will be reduced to INR 9,000 crores.
The scheme, when launched, was designed to give cropped area coverage of 30%. The coverage target has been extended for Fiscal Year 2017-2018 and now it will target a coverage of 40%. For fiscal year 2018-2019, the coverage will be extended to 50% of total cropped area.
Micro-Irrigation Setup and Diary Setup
In addition to that, micro-irrigation will also gain impetus as a separate budget pool of INR 5,000 crores has been set up with NABARD. Turning attention to dairy segment, Jaitley stated that dairy is another source of additional income for farmers and hence, budget allocations have been put in place for development of dairy processing infrastructure. The fund allocated for dairy processing is INR 8,000 crores. This pool will be created over a period of 3 years. However, the pool will start with only INR 2,000 crores.
Additionally, contract farming model law will be created and this law will then be circulated at all states of the nation.