The farm credit target is likely to be raised by a whopping Rs 1 lakh crore to Rs 10 lakh crore in Budget 2017-18 in order to increase credit flow in the agriculture sector. According to sources, the government may increase the agriculture credit target to Rs 10 lakh crore for 2017-18 fiscal from the existing Rs 9 lakh crore.
During April-September period of 2016-17 fiscal, about Rs 7.56 lakh crore credit has been disbursed to farmers and the total target is likely to be surpassed. That apart, the government may also allocate Rs 10,000 crore for Pradhan Mantri Fasal Bhima Yojana (PMFBY) in the Union Budget to be presented by Finance Minister Arun Jaitley on February 1.
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For this fiscal, the government had allocated Rs 5,500 crore for this scheme, but later it was increased to over Rs 13,000 crore in the revised budget estimate. The PMFBY, which was launched in April 2016 by Prime Minister Narendra Modi, aims to increase the crop insurance coverage in the country by charging very low premium from farmers and promising full payment of claims.
The government provides short-term crop loans up to Rs 3 lakh at subsidised interest rate of 7 per cent per annum. An additional incentive of 3 per cent is provided to farmers for prompt repayment of loans within due date, making an effective interest rate for them at 4 per cent. Recently, the government waived Rs 660.50 crore interest on short-term crop loans for November-December 2016 to provide relief to farmers who reeled under cash crunch on account of demonetisation.