Rs 2L-crore concessional credit offer to 25 million farmers – business news

Finance minister Nirmala Sitharaman on Thursday announced measures to provide credit and relief to lockdown-hit farmers, including a Rs 2 trillion credit scheme that will cover 25 million farmers who do not have Kisan Credit Cards and Rs 30,000 crore in additional emergency working capital funding through National Bank For Agriculture and Rural Development (Nabard).

Toward this, the government will begin a special drive to provide concessional credit to beneficiaries of the income support scheme PM-Kisan through Kisan Credit Cards.

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“Nearly Rs 2 trillion concessional credit will be extended to boost the farming activity. The special drive will benefit 2.5 crore farmers who don’t have these Kisan Credit Cards. The rough estimate is that if there are 9 crore PM Kisan beneficiaries, of that 2.5 crore farmers don’t have Kisan Credit Card. Now we are reaching out to them and giving them the card,” Sitharaman said.

The move will enable such farmers to gain access to institutional credit at concessional interest rate, and will also cover fishermen and farmers engaged in animal husbandry. This will inject additional liquidity of Rs 2 trillion in the farm sector, an official statement said.


Post the outbreak of covid-19, the 2.5 million new Kisan Credit Cards were sanctioned with a loan limit of Rs 25,000 crore /chk/, the minister said.

The Rs 30,000 crore additional emergency working capital will be in addition to the Rs 90,000 crore budgetary allocation announced on 1 February for NABARD, the minister said.

“Rs 30,000 crore additional emergency working capital fund to be provided through NABARD to three crore small, marginal farmers,” Sitharaman said at a press conference in New Delhi on Thursday. The announcement was part of a nine point package for migrants, farmers and tribals.

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The farm sector is seen as stressed due to the lockdown given the disruption in the food supply chains. Farmers growing fruits and vegetables have had to dump their produce while those who have harvested their non-perishable crops like grains, pulses are unable to sell their produce due to restricted operations in wholesale markets.

According to Sitharaman, NABARD will extend additional refinance support of Rs 30,000 crore for crop loan requirement of rural cooperative banks and regional rural banks (RRBs). The scheme is front-loaded with on-tap facility to 33 state cooperative banks, 351 district cooperative banks and 43 RRBs available on tap based on their lending, she said.

The scheme is designed to meet post harvest rabi (winter) and current kharif (summer) requirements of 30 million small and marginal farmers in the months of May and June, the minister said.

Also Read: Small borrowers under MUDRA to get relief in ₹1,500-crore plan

However, there were mixed reactions to the finance minister’s proposals from experts.

“Only around 30% agricultural households avail of institutional loans,” said Shweta Saini, an expert on agriculture economy in the New Delhi-based ICRIER think tank.

“The rest of the 70% generally borrow money from local money lenders. Even those who have access to credit, the announcement today effectively says that this is help for the future, it does not address their problems of today–their current income loss or savings loss,” she said.

“The package of Rs 30,000 crore as additional working capital fund for farmers through NABARD will help small and marginal farmers. Credit constraints in terms of accessing loans from financial institutions could have severely impacted farm operations – given the ongoing harvesting cycle for RABI crops and onset of the Kharif cycle. The measures taken by the Government and a subsequent speedy disbursement through the RRBs, State Cooperative Banks and District Cooperative banks will help boost production and productivity in the agriculture sector.” Anand Ramanathan, Partner, Deloitte India said.

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