Farm credit target raised to ₹10 lakh crore

To give the rural economy a leg-up, the Union Budget has set 11 per cent higher agricultural credit target at ₹10 lakh crore for banks in FY2018 as against ₹9 lakh crore in the previous year and also announced two new funds – one for micro-irrigation and another for dairy development – under the aegis of the National Bank for Agriculture and Rural Development (Nabard).

Emphasising that for a good crop, adequate credit should be available to farmers on time, Finance Minister Arun Jaitley said, “We will take special efforts to ensure adequate flow of credit to the under-serviced areas, the eastern states and Jammu & Kashmir.”

The farmers will also benefit from 60 days’ interest waiver announced by the Prime Minister on loans taken from cooperatives, Jaitley added.

The minister said a dedicated Micro Irrigation Fund would be set up in Nabard to achieve the goal of ‘per drop more crop’. The fund will have an initial corpus of ₹5,000 crore.

The Budget also doubled the corpus of Nabard’s Long Term Irrigation Fund to ₹40,000 crore. Harsh Kumar Bhanwala, Chairman, Nabard, said, “Through these two measures (on irrigation), we can increase the area under irrigation and improve the efficiency of irrigation. Improving irrigation efficiency is critical for Indian agriculture since we have 2.4 per cent of the world’s total geographical area, 18 per cent of the world’s population, but only 4 per cent of the world’s total fresh water resources.”

Underscoring that dairy is an important source of additional income for the farmers, Jaitley observed that availability of milk processing facility and other infrastructure will benefit the farmers through value addition.

A large number of milk processing units set up under the Operation Flood Programme (launched in 1970 to usher in white revolution, whereby the country became the largest milk producer in the world) have since become old and obsolete, he added.

Hence, a Dairy Processing and Infrastructure Development Fund would be set up in Nabard with a corpus of ₹8,000 crore over three years. Initially, the Fund will begin with a corpus of ₹2,000 crore. Bhanwala said, “The ₹8,000 crore allocation for dairy development in this Budget is a vindication that agricultural income can be made resilient only when we couple crop and animal husbandry.”