In a populist move, finance minister Pranab Mukherjee has announced a number of initiatives to make the life of the farming community easy.
Mukherjee, in his Budget 2011-12 has slashed the interest rate on loans for farmers who pay their dues in time to 4 per cent, 3 per cent less than the market rate.
the Budget in the Lok Sabha Mukherjee said, "the existing interest subvention scheme of providing short-term crop loans at 7 per cent interest rate will continue during the 2011-12 fiscal."
"In the last Budget, I had provided an additional 2 per cent interest subvention to those farmers who repay their crop loan on time. In order to provide further incentive to these farmers, I propose to enhance the additional subvention to 3 per cent in 2011-12. The effective rate of interest for such farmers would be 4 per cent," he said.
He also increased the credit target for the agriculture sector by Rs.1 lakh crore to Rs.4,75,000 crore, and directed banks to focus on farm credit lending to small and marginal farmers.
Faced with high food inflation and the country's dependence on import of pulses and edible oil, the finance minister also announced various schemes for promoting production of vegetables, pulses, oilseeds, fodder and nutrition-rich crops like millets and maize.