Money
Govt set to launch subsidised agri loans
The government is likely to introduce subsidised interest rates on bank loans for contract and lease farming from the coming fiscal yearPresenting its policies and programmes to Parliament recently, the government said it would accord priority to contract farming, farm mechanization and cooperative-based farming to enhance production and productivity.
Under contract farming, a buyer pledges to purchase a farmer’s harvest and the farmer pledges to produce farm products of the desired quality and in the specified quantity at a stipulated time. The contract also gives farmers access to agricultural inputs, raw materials and bank credit. The arrangement is designed to create a win-win situation for both the parties.
“There has been talk about giving interest subsidies for the loans farmers take for contract farming and lease farming through the budget for the next fiscal year,” said Pushpa Lal Shakya, joint secretary at the National Planning Commission.
“The approach paper of the 13th Plan has also talked about prioritizing contract farming and providing subsidies is part of its implementation.” The planning body is currently finalizing the 13th Plan. However, he said that the extent of the subsidy had not been finalised.
The approach paper has stated that marginalized farmers and food-insecure households will be encouraged to take up contract farming by aligning them in groups and cooperatives.
The government has prepared a draft of the Agricultural Business Promotion Act which envisages contract farming provisions in a bid to ensure market access to farmers and attract private players in commercial agriculture.
The ministry has also finalized a draft of the Contract Farming Guideline. Currently, agreements made between buyers and producers of farm produce are not legally valid.
Meanwhile, the proposed facilities for lease farming are expected to attract more youths to take up agriculture and discourage them from going abroad for jobs.