Budget 2023-24: Agri credit goal rises 11% to 20 lakh crore for FY24
On February 1, the government announced an 11% increase in the farm credit target to ₹20 lakh crore for the coming fiscal year, with a concentration on animal husbandry, dairy, and fisheries.
The agricultural credit target for the current fiscal year 2022–23 is ₹18 lakh crore.
Among other major announcements in her Budget speech, Finance Minister Nirmala Sitharaman stated that the government will launch the ‘Aatmanirbhar Clean Plant Programme’ to increase the availability of disease-free, high-quality planting material for high-value horticultural crops at a cost of ₹2,200 crore.
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A new sub-scheme of the Pradhan Mantri Matsya Sampada Yojana, with a planned investment of ₹6,000 crore, will be launched to further empower the operations of fishermen, fish merchants, and micro and small companies, increase value chain efficiency, and grow the market, she added.
‘The farm credit objective would be raised to ₹20 lakh crore, with a focus on animal husbandry, dairy, and fisheries,’ said the Finance Minister.
Every year, the government raises the lending target for the agricultural sector.
Farm loans typically carry a 9% interest rate. But the government has been subsidizing interest rates to make short-term crop loans more affordable, which has led to more crops being grown on farms.
The government is granting a 2% interest subsidy to farmers in order for them to obtain short-term farm loans of up to 3₹ lakh at an effective rate of 7% per annum.
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The RBI has decided to increase the collateral-free agriculture loan limit from ₹1 lakh to ₹1.6 lakh in order to increase the coverage of small and marginal farmers in the formal credit system.
On the use of their money, public sector banks, private lenders, cooperative banks, and regional rural banks receive interest subsidies, as does Nabard for refinancing Regional Rural Banks (RRBs) and cooperative banks.