Farmers to get collateral-free loans up to Rs 1.50 lakh

In an effort to bring about a change in the state of agriculture and farmers in India, the government is planning to provide collateral-free loan up to Rs 1.50 lakh to farmers through the Kisan Credit Card scheme.

At present, banks provide such loans up to a limit of Rs 50,000. A sub-committee of the National Development Council on agriculture and related issues headed by Agriculture minister Sharad Pawar has recommended this change.

The sub-committee has also recommended an increase in the validity period of such loans to five years from the present one-year period. It has also aksed the governemtn to amend laws for the purpose, if necessary.

The sub-committee has also held that in the case of occurence of natural calamities for three consecutive years, farmers should be given full credit relief in the form of waiver of the due amount.

It has proposed that a fund designated as National Agriculture Stabilisation Fund be created to aid such waivers. The fund could be created through annual contribution by the nationalised banks: NABARD, RBI, SBI out of their profits, contributions by state and central governments and levying a small annual cess on each farmers availing the scheme.

The sub-committee has also proposed that the stamp duty on agricultural advances should be reduced or brought down to zero. These issues will be taken up for endorsement by the National Development Council to be held on May 29.

The sub-committee has recommended that opening of a bank account and provision of Kisan Credit Card to all farmers in a time bound manner should be included as a main performance indicator for the banks.

It has also advocated the setting up Credit Information Bureau for rural areas. Such bureaus will issue smart cards with unique identification numbers to prospective and present borrowers to facilitate information sharing about borrowers. These bureaus will jointly owned and operated by the state governments and the banks.

The Planning Commission has set a target of 4 per cent agricultural growth during the 11th Plan period (2007-12). One percentage point of this additional growth is expected to come through direct result of the new Plan programmes, involving Plan expenditure on agriculture and irrigation like the Bharat Nirman programme.

The remainder of the target is expected to come from better resource utilisation and greater private investment. Prime Minister Manmohan Singh had on Wednesday announced that the government would come out with a major initiative for agriculture within the next 10 days.