Sinha raises credit flow to the agri sector to Rs 750 bn

Union Finance Minister Yashwant Sinha, in the Union Budget for 2002-03 presented to Parliament today, said here should be adequate flow of credit to the agriculture sector.

The total credit flow to the agriculture sector through institutional channels is expected to reach the targeted level of Rs 640 billion this year. It is expected to increase to Rs 750 billion in 2002-2003. Sinha proposed the following steps to further improve the delivery of agricultural credit:

The funds for RIDF VIII will be enhanced from Rs 50 billion to Rs 55 billion next year, while the rate of interest will be reduced from 10.5 per cent to 8.5 per cent. Henceforth it will be fixed at the prevailing bank rate plus 2 per cent. Assistance to the States from RIDF will be linked to reforms in the agriculture and rural sectors.

Kisan Credit Cards introduced in 1998-99, have been a resounding success and have helped our farmers considerably in their access to agricultural credit. An additional 63 lakh KCCs have been issued upto December 31, 2001 taking the total to 21 billion. The personal insurance package linked to KCCs has also been operationalised.

Similarly, the scheme of micro credit through Self Help Groups is progressing well. The target of one lakh additional self-help groups during the current year is expected to be achieved taking the total so far to more than 350,000 covering more than 7 million families, making it the largest micro credit programme in the world. I am raising the target to 125,000 for 2002-03.

A one-time settlement scheme for small loan accounts with outstanding principal balance upto Rs 25,000 as on March 31, 1998 is already in operation. A special OTS scheme for small and marginal farmers will be announced by RBI to cover loans upto Rs 50,000.

The National Agriculture Insurance Scheme is already in operation. To subserve the needs of farmers better and to move towards a sustainable actuarial regime Sinha proposed to set up a new Corporation for agriculture insurance to be promoted by the existing public sector general insurance companies.

Sinha proposed to increase the allocation for the Accelerated Irrigation Benefit Programme (AIBP) from Rs 20 billion this year to Rs 28 billion in 2002-03. This will assist the states to accelerate the completion of unfinished medium and major irrigation projects, and also to undertake reforms by revising user charges and setting up of water users associations.

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