Keeping Prime Minister Narendra Modi’s vision to double farmers’ income by 2022 in mind, the government may raise farm credit target to about Rs 19 lakh crore in the upcoming Budget 2021-22, reports stated on Tuesday.

This year, for the first time in the history of independent India, Finance Minister Nirmala Sitaraman is scheduled to present a paperless Budget 2021-2022 to the members of the parliament on February 1.

A PTI report that cited official sources said that the government has set a farm credit target of Rs 15 lakh crore.

It is worth mentioning that the government has been increasing farm credit on an annual basis. For instance, credit worth Rs 11.68 lakh crore was given to farmers in 2017-18, much higher than the Rs 10 lakh crore target set for that year, sources in the report said.

Similarly, crop loans worth Rs 10.66 lakh crore were disbursed in 2016-17 fiscal, higher than the credit target of Rs 9 lakh crore.

Therefore, this year too, it is expected to be increased to around Rs 19 lakh crore, report stated.

“Non-banking finance companies (NBFCs) and co-operatives are active in the agriculture credit space. The Nabard refinance scheme will be further expanded. Agriculture credit target for the year 2020-21 has been set up at Rs 15 lakh crore,” Finance Minister Nirmala Sitharaman had said while announcing the Budget 2020-21.

Credit is a critical input in achieving higher farm output. Institutional credit will also help delink farmers from non-institutional sources where they are compelled to borrow at usurious rates of interest, the sources said.

Normally, farm loans attract an interest rate of 9 per cent. However, the government has been providing interest subvention to make available short-term farm credit at an affordable rate and help boost farm output.

The government is providing a 2 per cent interest subsidy to ensure that farmers get short-term farm loans of up to Rs 3 lakh at an effective rate of 7 per cent per annum.

An additional incentive of 3 per cent is being given to farmers for prompt repayment of loans within due date, making the effective interest rate 4 per cent.

The interest subvention is given to public sector banks (PSBs), private lenders, cooperative banks and regional rural banks (RRBs) on use of own funds and to Nabard for refinancing RRBs and cooperative banks.