The government is set to increase the corpus of the Rural Infrastructure Development Fund (RIDF) by Rs 2,000 crore to Rs 14,000 crore in the forthcoming Budget. The corpus of the fund was increased from Rs 10,000 crore to Rs 12,000 crore in the last Budget.
In 2006-07, Nabard was sanctioned Rs 8,440 crore from the fund. According to government figures there has been a growing demand for these funds.
Finance minister P Chidambaram is also set to increase the target for agriculture credit in Budget 2008-09. The target for 2007-08 was Rs 2,25,000 crore. However, in 2008-09, the target is likely to be raised to Rs 2,50,000 crore. The government, it is learnt, would continue with the 2.5% interest subvention for farmers and the public sector banks would be directed to add at least 60 lakh new farmers in the banking net.
?The challenge for the banks is to add more farmers in the banking net. Most farmers still continue to take credit from the unorganized sector and therefore the relief packages do not help the needy ones,? a government official said.
There is pressure on the finance minister from his colleagues in the Congress to provide major concessions to rural India, especially the farm sector. Large number of farmers committed suicide last year after failing to repay debt. The issue has come to haunt the ruling party and political analysts said that there is little time for it to undo the damages with the country slated to go to polls next year.
The overall deceleration of agriculture growth to below 3% has also become a cause for concern for the UPA. The economic advisory council, it reports recently, has projected a growth of 3.5-3.6% in the farm sector.
The Radhakrishna committee report tabled earlier had recommended that a package of Rs 1 lakh-crore be directed to the farm sector. The committee laid stress on the right implementation and monitoring of any relief programme.