Farmers to get loans at 4% and credit target raised

Finance Minister Pranab Mukherjee on Monday announced loans at an interest rate of four per cent for farmers who pay their dues on time and raised the credit target for the farming sector by Rs 1 lakh crore.

"The existing interest subvention scheme of providing short-term crop loans at seven per cent interest rate will continue during the 2011-12 fiscal," Pranab said while reading the Union Budget for 2011-2012 in Lok Sabha.

"In the last Budget, I had provided an additional two per cent interest subvention to those farmers who repay their crop loans on time. In order to provide further incentive to these farmers, I propose to enhance the additional subvention to three per cent in 2011-12. The effective rate of interest for such farmers would be four per cent," he said.

Pranab said the credit target for the agriculture sector was being increased from Rs 375,000 crore to Rs 475,000 crore. Banks, he said, have been asked to focus on farm credit lending to small and marginal farmers.

Faced with high food inflation and the country's dependence on import of pulses and edible oil, the finance minister announced various schemes for promoting the production of vegetables, pulses, oilseeds, fodder and nutrition-rich crops such as millets and maize.

Pranab said agriculture growth for the current financial year was pegged at 5.4 per cent.