A Target of INR. 16.50 Lakh Crore for Ground Level Credit (GLC) has been Fixed for Farmers in 2021-22.

“To provide adequate credit to our farmers, I have enhanced the agricultural credit target to `16.5 lakh crore in FY22. We will focus on ensuring increased credit flows to animal husbandry, dairy, and fisheries.”- Finance Minister

Government has been making efforts to link all farmers to institutional credit to ensure timely, hassle free and affordable credit to farmers. As the institutional credit is more affordable in comparison to informal credit system, it has direct bearing on cost of production of farmers.

Ground level credit (GLC) to agriculture has shown an impressive growth in the last few years and has always remained higher than the overall targets. GLC has nearly doubled from Rs.7.30 lakh crore to Rs.13.92 lakh crore during the period 2013–14 to 2019–20. The share of term loan in the total GLC has increased from 24.95 per cent in 2013–14 to 40.5% in 2019-20. A continuous increase in the share of term loan would lead to the much-needed increase in capital formation in agriculture, and the consequent increase in agricultural productivity.

The target for ground level credit has increased from 7 lakh crore to 13.50 lakh crore from 2013-14 to 2019-20. During these years agriculture credit disbursement have surpassed the overall targets. The target for ground level credit for agriculture for the year 2020-21 was fixed at Rs.15.00 lakh crore and going by the trend, it is likely that the target would be surpassed. Despite COVID-19 pandemic during the current year, the progress till January 2021 has been encouraging with 76% of annual target achieved.

Indian agriculture is characterized by prevalence of small and marginal farmers which has increased from 491 lakh (1970-71) to 1,260 lakh (2015-16), registering a whopping growth of 156%. During 2010-11 to 2019-20 growth in GLC to small and marginal farmers was around 17.8%. Share of GLC to small and marginal farmers to total GLC has also increased from 35% to 52% during 2010-11 to 2019-20.

Keeping in view the performance under GLC flow during 2013-14 to 2020-21, a target of Rs. 16.50 lakh crore has been fixed for 2021-22.

Govt. is providing interest subvention to farmers through Interest Subvention Scheme(ISS), through which short term crop loans of upto Rs.3 lakh are provided to farmers at an effective interest rate of 4% per annum. Initially the crop loan is provided at 7% to farmers and additional 3% subvention is given on prompt repayment which brings down the effective rate of interest to 4%.

Govt. has launched KCC saturation drive w.e.f 10 Feb 2020 in the first phase upto April 2020 and further continued in the second phase from June 2020 onwards.  Under this drive, a total number of 1.87 crore new KCC have been issued with a sanctioned credit limit of Rs. 1.76 lakh crore to eligible farmers. Govt. has also extended facility of KCC to Animal Husbandry and Fisheries Farmers, along with benefit of interest subvention. This will go a long way in meeting their working capital needs.

All these facts and initiatives taken, the enhancement of Ground Level Credit target to Rs.16.5 lakh crore will further boost the efforts of concessional institutional credit to farmers and is bound to act as an enabler in doubling farmers’ income by reducing the cost of credit. With affordable bank credit these farmers may also make investments to further expand and modernise their farming operations. The impact of sustainable growth in Agriculture Credit is one of the major factors, which helped Agri sector emerge as a bright spot even during pandemic times.