Budget 2022-23: Govt likely to boost farm loan target to ₹18 lakh crore
According to sources, the government plans to increase the farm loan target to roughly ₹ 18 lakh crore in the Budget 2022-23, which will be announced on February 1. For the current fiscal year, the government has set a credit objective of 16.5 lakh crore.
The government has set a credit goal of ₹ 16.5 lakh crore for the current fiscal year. The government has been boosting the credit goal for the agricultural sectors every year, and the aim for 2022-23 is expected to be hiked to ₹ 18-18.5 lakh crore, according to sources.
According to the sources, the figure will be frozen until the Budget figure is finalized in the last week of the month. The government establishes annual farm credit targets, which include crop loan targets for the banking sector.
Agricultural loan flow has continually increased throughout the years, exceeding the objective set for each fiscal year. For example, in 2017-18, farmers received loans worth ₹ 11.68 lakh crore, substantially above the ₹ 10 lakh crore objective set for that year.
Similarly, crop loans totaling ₹ 10.66 lakh crore were disbursed in 2016-17, exceeding the credit goal of ₹ 9 lakh crore.
Credit is a vital element in increasing agricultural output. As per the sources, institutional finance could also help growers be free from non-institutional credits where they are forced to borrow at usurious rates of interest.
Farm loans are often subject to a 9% interest rate. However, the government has been providing interest subvention to make short-term crop loans available at an affordable rate, thereby helping to enhance farm output.
The government is offering a 2% interest subsidy to ensure that Farmers receive short-term Agri loans of up to ₹ 3 lakh at an effective rate of 7% per annum.
Farmers will receive a 3% bonus for timely repayment of loans by the due date, bringing the effective interest rate to 4%.
To bring small and marginal farmers into the formal credit system, the Reserve Bank of India (RBI) has decided to increase the collateral-free Agriculture loan limit from ₹ 1 lakh to ₹ 1.6 lakh.
On the use of their own money, public sector banks (PSBs), private lenders, cooperative banks, and regional rural banks (RRBs) receive interest subsidies, as does NABARD for refinancing RRBs and cooperative banks.