The government today decided to extend additional refinance support of Rs 30,000 crore to Nabard, which it will use to push liquidity through Regional Rural Banks (RRBs) and cooperative institutions. It also expanded an ongoing drive to enlist 25 million new farmers for concessional credit as part of its Covid-19 relief package. Many, however, say that these measures do nothing to address the fundamental problem of low prices and falling demand.

The step to bring 25 million new farmers under the existing concessional loan scheme does not have a time period, while in the case of additional finance to Nabard, critics wondered how banks, which lend this money at 4.8 per cent interest, will recover it from farmers when the latter’s operations have run into losses due to the lockdown.

The refinance for Nabard, according to Finance Minister Nirmala Sitharaman, will be over and above the existing Rs 90,000 crore refinance facility that Nabard was to extend this year to RRBs and cooperative institutions for farmers' crop loan requirements.

“To me, a better and more viable way would have been to waive off the existing interest on short-term crop loans and term loans for agriculture, along with giving states more funding for Central schemes as they are starving for funds, while at the same time ensuring minimum 10 days work under MGNREGA per month for rural poor,” Ajay Vir Jhakhar, chairman Bharat Krishak Samaj told Business Standard.

The enrollment of 25 million farmers under the Kisan Credit Card scheme so that they can avail concessional loans of around Rs 2 trillion is part of the ongoing drive that the Centre has undertaken to bring the maximum number of farmers under the institutional credit fold.

Under the same, it has sanctioned 2.5 million new Kisan Credit Cards during the lockdown period and sanctioned loans amounting to Rs 25,000 crore.

The concessional loan programme, under which interest subvention is given on timely repayment of the crop loan, has been extended till May 31 for calculation of timely repayment tenure.

“Today’s announcement of Finance Ministers shattered the hopes of financial assistance of small and marginal farmers from financial package. For current the only announcement is extension of two months’ moratorium on crop loan. The other announcement on increased credit flow and KCC numbers may be of future advantage, if any,” said Sudhir Panwar, former member of Uttar Pradesh Planning Commission.

In the case of MGNREGA, which is providing a much needed support to lakhs of migrant labourers returning back to their villages, the government claimed that so far 146.2 million man days of work have been provided under the scheme, which is 40-50 per cent more than the same period last year, but experts said that in reality the work generated in April 2020 was less by over 40 per cent than last year, while in May (till 13th) it is almost 10 per cent lower as compared to same period last year.