Chidambaram promises 30 per cent increase on agricultural credit

New Delhi: Finance minister P Chidambaram yesterday announced a major relief package for small and marginal farmers and promised a 30 per cent increase in agricultural credit to Rs 1,04,500 crore in the current fiscal.

Addressing a press conference, Chidambaram spelt out a four-pronged strategy to restructure farmers'' debts that expected to add 5 million new farmers as borrowers under the special agricultural credit plan. The package was announced hurriedly in view of the new sowing season.

Chidambaram made it clear that the measures would not impose any added burden on the government. He said the debt relief would not involve any debt write-off in violation of the prudential norms of the Reserve Bank of India.

The plan was similar to the corporate debt restructuring (CDR) mechanism available for companies, ministry sources said. According to the minister, the package would agriculture lending a "commercially viable proposition".

It will help in "unclogging" the credit delivery channel for farmers, Chidambaram said, dismissing the view that the new measures would further increase the woes of the regional rural banks and cooperative banks.

The action plan, prepared by NABARD and the Indian Banks'' Association, indicates that farm credit is slated to surge to Rs 1,04,500 crore in 2004-05 from Rs 80,000 crore in the previous year.