57
subject came to be examined by various committees rather repetitively (the
two V.S. Vyas Committee reports referred to earlier in particular). After the
banks began to implement
special agricultural credit plans
in 1995-96, some
improvements in agricultural credit began to take place but in
real
terms it
showed noticeable improvement only after 2000-01 (earlier Table 4.1).
However, what gave added impetus to farm credit in recent years has
been the direction issued by the Government of India in June 2004 to the
banking system as a whole to double credit flow in three years as a ‘special
package’, that is, to increase the credit-flow at a rate of 30% per annum between
2004-05 and 2007-08.
7
Though initially, the goal of doubling was set for these
three years, the system of setting target by the Union Finance Minister roughly
at an annual increase of 25% per annum has continued now for a decade.
The Budget Speech of the Finance Minister for 2012-13 has set the target at
`
575,000 crore – an increase of
`
1,00,000 crore or by 21% over the target for
2011-12; yet another budget for 2013-14 has set the target at
`
700,000 crore,
an increase of
`
125,000 or by 21.7%. The Finance Minister has indicated
that the 2012-13 target will be exceeded (The Union Budget Speech for 2013-
14, p.7). In the initial three years, the annual targets set had been more than
fulfilled and, in doing so, the performance of scheduled commercial banks
and RRBs had been the most impressive (Table 4.3). Thereafter, there has
been some slowdowns; even so the persistent increase of over 23% per annum
during the four-year period 2007-08 to 2010-11 has been truly impressive; the
recent data do suggest that there has been some slackening.
7
The Union Finance Minister’s budget speech for 2006-07 said thus: “Farm credit increased
to
`
125,309 crore in 2004-05 (well above the target) and is again expected to cross the target
of
`
141,500 crore set for the current year. I propose to ask the banks to increase the level of
credit to
`
175,000 crore in 2006-07 and also add another 50 lakh farmers to their portfolio. We
shall not only achieve but exceed the target of doubling farm credit in three years. Since tenant
farmers are not adequately served, I have asked the banks to open a separate window for self-
help groups or joint liability groups of tenant farmers and ensure that a certain proportion of the
total credit is extended to them. I intend to monitor closely progress in this behalf” (p.9).
Subsequently, an official press release from NABARD states as under:
“In line with the announcement of the Farm Credit Package made by the Central Government in
June 2004 to double the flow of credit to agriculture over a period of three years effective from
2004-05, the Union Budget for 2006-07 had set a target of
`
1,75,000 crore of credit flow to the
agriculture sector for the year. Against this target, the disbursement by all banks during 2006-
07 (provisional figure) was
`
2,03,296 crore, a modest growth of 13%. For the year 2007-08, the
Hon’ble Finance Minister has announced that Commercial Banks, RRBs and Cooperative Banks
together would disburse credit for agriculture sector to the extent of
`
2,25,000 crore, besides
coverage of 50 lakh new farmers by the Commercial Banks and RRBs during the year” (Press
Release dated June 7, 2007). Thus, within two years, about 10 million farmers are supposed
to have been covered under the programme. As indicated in subsequent paragraphs, this policy
has been continued uninterruptedly even in the latest budget of 2013-14.
