Amidst mounting pressure from farmers’ groups, the government may allow people to avail loan from banks at 4 per cent interest rate to buy cows and for facilitating fish farming.

There is pressure from farmers’ groups in various parts of the country to raise crop prices and waive loans.

Agriculture credit, which is confined only to crops so far, may be extended to animal husbandry and fisheries, sources said.

The Dalwai-committee is considering this subject seriously, so as to suggest the blue print, which could be included in the next report on doubling farmers’ income, well placed sources said.

The banks have made it mandatory for all crop loans to be insured so that they can recover the dues in case of a drought or other natural calamity. Similarly, the government may also make insurance compulsory in case a farmer avails agricultural credit for buying cows or fish farming.

The government provides 2 per cent interest subsidy to small farmers availing loans up to Rs 3 lakh from
banks on the basic lending rate of 9 per cent.

It also provides additional subsidy of 3 per cent interest for those farmers who repay their loans within the year, making effective agricultural credit at 4 per cent interest. About 75 per cent of farmers avail the additional subsidy by paying in time, official estimates show.

The allocation of agricultural credit has been raised by more than 11 per cent to record Rs 10 lakh crore for 207-18 FY, which will help banks to cover more number of farmers as two-third of the amount is reserved only for crop loan.

Out of the total agriculture-credit of Rs 9 lakh crore in 2016-17, about Rs 6 lakh crore was earmarked for crop loan and the remaining Rs 3 lakh crore for term-loan to facilitate purchase of machinery.

While farmers get a maximum of Rs 3 lakh from agricultural credit at subsidised rates to be repaid within a year, they also avail term loan to buy machinery and set up small processing units.

Finance minister Arun Jaitley had said in his budget speech that the government would make special efforts to ensure adequate credit flow to underserved areas, the eastern states as well as Jammu and Kashmir.

In August, the government had released four volumes of the report of the Committee on Doubling Farmers’ Income headed by National Rainfed Area Authority CEO Ashok Dalwai. The remaining eight volumes will be released in a phased manner.

Sources said, the agriculture ministry has started implementing the suggestions of the report and would not wait to decide when the entire report is submitted.

In the next few months, there could be some announcements while a few may be incorporated in the budget, sources said.

If the government decides to expand the agriculture credit before the budget, the allocation may have to further increase beyond the normal 10 per cent, sources said, adding hat it could reach the Rs 12 lakh crore figure.

 prabhudatta.m@mydigitalfc.com