It also prposes to strengthen NABARD's capital base by providing Rs 10,000 crore short term credit fund and offer an additional two per cent interest subvention to those farmers who repay their crop loans on time.
Also in a bonanza for the farming community, the government announced loans at an interest rate of four per cent -- three per cent less than market rate -- for farmers who pay their dues in time and raised the credit target for the farm sector by Rs 1 lakh crore.
The existing interest subvention scheme of providing short-term crop loans at seven per cent interest rate will continue during the 2011-12 fiscal, said Mukherjee.
"In the last Budget, I had provided an additional two per cent interest subvention to those farmers who repay their crop loan on time. In order to provide further incentive to these farmers, I propose to enhance the additional subvention to three per cent in 2011-12. The effective rate of interest for such farmers would be four per cent," he said. He also said the credit target for the agriculture sector has been increased by Rs one lakh crore to Rs 4,75,000 crore. Banks have been asked to focus on farm credit lending to small and marginal farmers, he added. Similarly the Budget has proposed that low-cost housing loans of Rs 15 lakh will be eligible for one% interest subsidy. Mukherjee said he is liberalising the existing scheme of one% interest subvention on housing loans up to Rs 15 lakh.