The Finance Minister Shri Arun Jaitley while presenting his maiden Budget in Lok Sabha here today said that bank are providing strong credit support to the agriculture sector. A target of ₹ 8 lakh crore has been set for agriculture credit during 2014-15 which he is confident that the banks will surpass in the current financial year.

Under the Interest Subvention Scheme for short them crop loans, the banks are extending loans to farmers at a concessional rate of 7%. The farmers get a further incentive of 3% for timely repayment. He hope to continue the Scheme in 2014-15, the Finance Minister added.

The Finance Minister said that NABARD operated the Rural Infrastructure Development Fund (RIDF) out of the priority sector lending shortfall of the banks, which helps in creation of infrastructure in agriculture and rural sectors across the country. The Finance Minister proposed to raise the corpus of RIDF by an additional ₹ 5,000 crores from the target given in the Interim Budget to ₹ 25,000 crores in the current financial year.

The Finance Minister said that increasing warehousing capacity for increasing the shelf life of agriculture produces and thereby the earning capacity of the farmers is of utmost importance. Keeping in the view the urgent need for availability of scientific warehousing infrastructure in the country, the Finance Minister proposed an allocation of ₹ 5,000 crore for the fund for the year 2014-15 the Finance Minister added.

The share of long term investment credit in agriculture is going down as compared to short term crop loan. This is severely hampering the asset creation in agriculture and allied activities. In order to give a boost to long term investment credit in agriculture, the Finance Minister proposed to set up “Long Term Rural Credit Fund” in NABARD for the purpose of providing refinance support to Cooperative Banks and Regional Rural Banks with an initial corpus of ₹ 5,000 crore.

The Short Term Cooperative Rural Credit (STCRC), Refinance Fund was announced in Union Budget 2008-09 with initial corpus of ₹ 5,000 crore. In order to ensure increased and uninterrupted credit flow to farmers and to avoid high cost market borrowings by NABARD, the Finance Minister proposed to allocate an amount of ₹ 50,000 crore for STCRC Fund during 2014-15.

The issue of profitability of small holding based agriculture has assumed importance in view of increasing proportion of small and marginal farmers in the country. The Finance Minister proposed to supplement NABARD’s Producers’ Organization Development Fund for Producer’s development and upliftment called ‘PRODUCE’ with a sum of ₹ 200 crore which will be utilized for building 2,000 producers organizations across the country over the next two years.

Agriculture credit target raised to boost rural lending, expand refinance funds and warehousing support for farmers. A package increases agriculture lending targets and preserves concessional short-term finance under the Interest Subvention Scheme, while expanding NABARD-administered refinance and development funds. It proposes enlarging the Rural Infrastructure Development Fund, creating a Long Term Rural Credit Fund to support term-lending through Cooperative and Regional Rural Banks, augmenting short-term cooperative refinance to ensure uninterrupted credit flow, establishing a warehousing fund, and supplementing the Producers' Organization Development Fund to build producer organizations.