Exclusive: Union Budget may increase agri-credit target up to Rs 25 lakh crore for 2024-25

Minister of Agriculture & Farmers Welfare Shivraj Singh Chouhan

The upcoming Union Budget on July 23 could announce an increase of up to 25 percent in the target for agricultural loans in 2024-25 at Rs 25 lakh crore, after assessing the potential to absorb credit block-wise, a government official said.

“The agricultural credit target is expected at Rs 25 lakh crore for the current year. It depends on the Potential Linked Credit Plan (PLCP) carried out by the National Bank for Agriculture and Rural Development (NABARD) at the block level, which is assessed depending upon the potential to absorb the credit,” the official told Moneycontrol on condition of anonymity.

PCLP is a comprehensive documentation of potentials for rural economic activities, both in physical and financial terms.

A block is a district sub-division for the purpose of rural and urban development departments.

In FY24, the government targeted agricultural credit at Rs 20 lakh crore, which was surpassed at Rs 24.84 lakh crore.

“After identifying the area’s agricultural activities, including the One District - One Crop initiative, the target for credit potential is decided. The exercise has been carried out by NABARD and shared with the Finance Ministry. It indicates a Rs 25 lakh crore likely target. The final decision will be taken by the Finance Ministry,” the official said.

The One District, One Crop initiative is part of a broader strategy to promote the One District One Product (ODOP) scheme, which aims to balance regional development by identifying and promoting unique products.

The chosen products often include agricultural commodities. The Lakadong turmeric from West Jaintia Hills in Meghalaya, various mango varieties from different states and lavender products from Doda district in Jammu and Kashmir are examples.

The agricultural credit flow has witnessed regional disparities, which NABARD and the banks are working to address.

In fiscal year 2023-24, over 50.5 percent of agricultural credit was disbursed to five southern states—Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, and Kerala.

The five northern states – Rajasthan, Punjab, Haryana, Jammu & Kashmir, and Himachal Pradesh –  received about 15 percent of the total agricultural credit.

The eastern region, comprising Bihar, Jharkhand, Odisha, and West Bengal, received only 8.5 percent of the total agricultural credit flow while the eight north-eastern states were allocated just 0.66 percent of the country's disbursement.