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BUDGET 2024: In the upcoming interim budget, the government is expected to unveil a significant boost in the agricultural credit target for the next fiscal year, ranging between Rs 22-25 lakh crore. The current target for the ongoing fiscal year stands at Rs 20 lakh crore.

As of now, the government provides a two percent interest subvention on short-term agricultural loans up to Rs 3 lakh for all financial institutions. This translates to farmers securing farm loans of up to Rs 3 lakh at a concessional rate of 7 percent per annum. Additionally, farmers who repay on time receive an extra interest subvention of 3 percent per annum. While farmers can also opt for long-term loans, the interest rates align with market rates.

For the fiscal year 2024-25, there is a potential substantial increase in the agri-credit target, reaching Rs 22-25 lakh crore, according to insider sources. The government is placing a stronger emphasis on agri-credit and has initiated various campaigns to identify eligible farmers who have been left out and integrate them into the credit network.

To streamline efforts, the agriculture ministry has established a dedicated division focused on ‘credit,’ sources revealed. Furthermore, data indicates that credit disbursal for various agricultural and allied activities has consistently surpassed targets over the past decade.

As of December 2023, approximately 82 percent of the agri-credit target for the current fiscal year has already been achieved. Both private and public banks have disbursed around Rs 16.37 lakh crore in credit during this period. Insiders suggest that agri-credit disbursal is likely to exceed the target for this fiscal year as well.

In the previous fiscal year (2022-23), the total farm credit disbursal amounted to Rs 21.55 lakh crore, surpassing the set target of Rs 18.50 lakh crore. The Kisan Credit Card (KCC) network has played a crucial role, with 7.34 crore farmers availing credit. As of March 31, 2023, the outstanding amount reached Rs 8.85 lakh crore.

Despite these achievements, a 2019 NSS Report highlights that 50.2 percent of agricultural households in the country are indebted, and 69.6 percent of the outstanding loans were obtained from institutional sources. Recognizing this gap, the government aims to include those lacking access to institutional credit within the formal credit network.