Budget 2023: Agriculture credit target set at record Rs 20 lakh crore

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The government set the highest-ever agriculture credit target of Rs 20 lakh crore for FY24, an almost fivefold increase in as many years, and up from Rs 18.5 lakh crore target for the current financial year.

“The agriculture credit target will be increased to Rs 20 lakh crore with focus on animal husbandry, dairy and fisheries,” finance minister Nirmala Sitharaman said in her budget speech in parliament on February 1.

The hike in agriculture credit target is along expected lines. The government typically increases farm credit targets every year to support the agriculture sector, which remains one of the biggest employers in the economy.

According to the Economic Survey for 2022-23, the government has surpassed the agriculture credit target it has set each year. Ensuring hassle-free credit availability at a cheaper rate to farmers has been the top priority of the government, the Survey said.

The Kisan Credit Card (KCC) scheme provides farmers credit at any time, and the Modified Interest Subvention Scheme provides them with short-term agricultural loans of up to Rs 3 lakh at subsidised interest rates. KCCs have been issued to 38.9 million eligible farmers with a KCC limit of Rs 4,51,672 crore as on December 2022, according to the Survey.

However, while the government has increased the agriculture credit target every year, banks have faced challenges on account of relatively high stress in agriculture loans.

While India has witnessed record foodgrain production for successive years, climate change has begun to adversely affect agriculture. The Economic Survey released on January 31 noted that an early heat wave in 2022 adversely affected wheat production. The sown area for paddy cultivation declined (3.8 lakh hectares less in Kharif 2022-23 vs 2021-22) due to monsoon vagaries. While Rabi paddy sowing has grown, increasing climate action poses perhaps the biggest risk to farmers’ incomes.

In such a scenario, despite several government schemes to support farmers’ income, their lot does not seem to have improved significantly.

There was a general expectation that the Rs 6,000 income support the government offers to farmers under the PM-KISAN scheme annually would be enhanced. But no such bounty was announced in the budget speech.

Other initiatives for farmers:

1) The government will set up an Agriculture Accelerator Fund to encourage agri-startups by young entrepreneurs in rural areas. This fund will aim at bringing innovative and affordable solutions for challenges faced by farmers. It will also bring in modern technologies to transform agricultural practices, increase productivity and profitability.

2) India is already the largest producer and second-largest exporter of millets in the world. To make India a global hub for millets, the government plans to set up a Centre of Excellence at the Indian Institute of Millet Research, Hyderabad, to share best practices, research, and technologies at the international level.

3) A new sub-scheme, PM Matsya Sampada Yojana, will be launched with targeted investment of Rs 6,000 crore to further enable activities of fishermen, fish vendors, and micro & small enterprises, improve value chain efficiencies, and expand the market.
4) A decentralised storage capacity will be set up

5) Digital public infrastructure for agriculture will be built as an open source, open standard and inter-operable public good. This will enable inclusive, farmer-centric solutions through information services for crop planning and health, improved access to farm inputs, credit, and insurance, help for crop estimation, market intelligence, and support for growth of agri-tech industry and startups.