NEW DELHI, Aug 12: Acknowledging that some banks are reluctant to provide farm loans, Agriculture Minister Radha Mohan Singh today said efforts would be made to nudge lenders to provide credit to farmers.
Responding to a query in the Lok Sabha on whether public sector banks are reluctant in extending loans to farmers, Singh replied in the affirmative.
It is a fact that some banks are reluctant to give loans to farmers, he said and added that pressure would be put on banks to give loans to them.
“…Agriculture sector has been identified by government as priority lending sector, which constitutes at least 18 per cent of the total loan portfolio of the banks.
“Crop loans are provided to farmers at a concessional rate of 7 per cent per annum with 3 per cent interest subvention for timely repayment,” Singh said during Question Hour.
Post-harvest loans are also given to farmers on the basis of negotiable warehouse receipts for six months to prevent distress sale.
“Thus, crop loans are available to farmers at more favourable terms than loans available to industries sector. However, loans for post-harvest management activities like marketing and processing are available on rates decided by the banks concerned,” the Minister said.
He also noted that suggestions have been received to accord status of industry to agriculture.
Noting that government has taken several measures for sustainable development of agriculture sector, Singh said schemes are implemented in a decentralised manner providing flexibility to states.
“The focus of government is primarily on expansion of farm income, creation of non-farm income opportunities, improvement in productivity of rainfed agriculture, increasing coverage of farming areas under protective irrigation and forging appropriate backward and forward linkages,” he said.
To another query, Singh emphasised that government is
making efforts to bring down the cost of production in agriculture.
He said profitability of crops depends upon their cost of production, productivity and prices.
The cost of inputs is covered in the cost of production, which is estimated by the government through cost of cultivation survey.
Noting that effect of rise in cost of cultivation of major crops is balanced through Minimum Support Price mechanism, he said MSPs have “increased significantly in recent years”.
Productivity depends on various location specific factors such as type of soil and method of cultivation.
“Prices depend on market forces of demand and supply. As these factors vary from place to place and time to time, no generalised conclusion can be drawn regarding profitability of crops across time and space,” the Minister said.
To encourage growth of food processing industries, the government has taken various fiscal incentive measures such as tax deduction and waiver/reduction of excise duty.
Besides, several schemes are being implemented for providing assistance for establishment and modernisation of food processing units, among others.
“Soil testing laboratories and agri processing units including cold storages and cold chain have been included in the harmonious list of infrastructure to promote their development,” Singh said. (PTI)
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