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Cheap agriculture loans to cushion impact of weather shocks, droughts

Last modified March 07, 2016 10:44

Hindustan Times. New Delhi, 02 March 2016

Farmers can continue to get cheap farm loans with finance minister Arun Jaitley raising the target for loan disbursal to them to Rs 9 lakh crore (9x1012). Special focus has been given to ensure adequate and timely flow of credit to farmers, Jaitley said, adding “Against the target of Rs 8.5 lakh crore (8.5x1012) in 2015-16, the target of agricultural credit in 2016-17 will be an all-time high of Rs 9 lakh crore (9 x 1012).”

An aggressive farm credit policy is aimed at putting cash into stressed farmhands and cushioning the impact of weather shocks and crippling droughts. In fact, the target for farm loan disbursal has been raised consistently. For example, in 2010-11, the loan target was raised by more than 15% at Rs 3.75 lakh crore (3.75 x 1012), as against Rs 3.25 lakh crore (3.25 x 1012) in 2009-10. To reduce the burden of loan repayment on farmers, the finance minister said a provision of Rs 15,000 crore (15 x 1010) has been made in the budgetary estimate of 2016-17 towards interest subvention. Jaitley said the government has provided a path-breaking crop insurance scheme — Prime Minister Fasal Bima Yojana — for which Rs 5,500 crore (5.5 x 1010) has been allocated for effective implementation in 2016-17.


The new farm insurance scheme does away with clumsy procedures of existing plans that are so complex that they have only served to chase farmers away. Only about 5% farmers take insurance in areas where it is available, a low penetration that shrivels farm incomes during droughts, hailstorms and unseasonal rains. The new scheme fixes farmers’ share of premium at 1.5% for winter-sown crops and 2% for summer-sown crops. For cash crops and horticulture crops, it is 5%. The rest will be borne by the government. This is cheaper than current rates.


Source: Agriculture Today, AgriNews, <>

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