Agriculture sector has assumed extraordinary significance owing to certain factors. Today, food security has emerged as a major challenge due to the accelerating pace of climate change, uncontrolled population growth, conflicts around the world, and the destruction caused by the Covid-19 pandemic. There is no alternative for the governments but to channelize their efforts more towards the development of a more sustainable and resilient agri-food industry.
A World Bank report quoting estimates suggests that the global food demand will increase by 70% by 2050 and at least $80 billion annual investments throughout the value chains will be required in response.
Most of which needs to come from the private sector due to the limited public resources, large scale in mechanization, climate smart technologies, processing, and agri-food logistics.
Smaller investments are also needed for farmers and agriculture micro, small and medium enterprises to increase their productivity while reducing environmental impact and taking into account climate risks. The report has also shown concern that agriculture loans and investments portfolios currently are disproportionately low compared to the agriculture sector’s share of GDP.
Basically agriculture finance is a strong source of empowerment to poor farmers and it encourages them to realize their farming potential not only to bring them wealth, but also facilitates the development of food value chains.
These established food value chains, as per the World Bank estimates, can go a long way to feed 9 billion people by 2050. Precisely, it’s the finance which is the backbone of farming communities to enhance their productivity.
But the availability of the finance in a hassle free manner has always remained loaded with question marks. The basic need of farmers is its reliable timely access to loans at a reasonable rate of interest.
One of the critical areas in the agriculture sector is the finance which farmers among other things need for purchase of agricultural machinery. The purchasing power of the farmers, as evaluated by various studies, is low.
If we look at the government assistance to the farmers, we find the government provides subsidy and credit at reduced rates to the farmers who are economically and socially disadvantaged to adopt modern technologies.
Its demand has increased considerably as there is no other alternative for farmers but to modernize their farming practices through the use of state-of-the-art machinery.
In this age of advanced technology, modern agriculture demands use of efficient machinery in farming practices if the productivity is to be enhanced to improve incomes as well as mitigate the risk of facing food shortage in coming years. The mechanization of farming practices on the modern lines will enable the farmers to go for multiple crop cultivation and commercialize their activities in the sector.
Meanwhile, banks and financial institutions have customized loan schemes to lend financial support to the farmers for modernizing their farming practices through the state-of-the-art machineries and implements. They have tailored the schemes.
J&K Bank, a major player in the geography of Jammu and Kashmir, has revisited its scheme – Kisan Dost – and has made it more attractive for the farmers.
The bank has enhanced the loan limit to Rs.25 lakhs and for loans up to Rs.10Lakhs the farmer is not required to give tangible security. Besides, those having ancestral/ leased/ tenanted land holding can also seek financial assistance under the scheme.
What kind of equipment is financed under the ‘Kisan Dost’ Scheme?
Farmers can get up to 90 per cent finance facility for purchase of wide range of agricultural/horticultural implements/machinery such as Power Tillers, Reapers, Weeders, Harvesters, Rice Transplanters, Pump Sets, Sprayers, Threshers, Tractors, Load Carriers, Wheel Carts, etc. Even three wheeler Load Carriers, One Ton Load Carriers etc. are financed under the scheme. To be precise, the scheme is a source of dependable finance for all types of implements/equipment, machinery utilized by the farmers for farm mechanization purpose and/or transportation of agricultural/ horticultural produce.
Is the scheme open to those engaged in medicinal and aromatic plant cultivation?
Yes. Farmers – be an individual or group of Individuals – engaged in cultivating crops such as vegetables, floriculture, horticulture, cereals, pulses, fruit, medicinal and aromatic plants etc. are eligible to get finance facility under the scheme. It’s worth mentioning that the farmers having ancestral/ leased or tenanted land also fall under the ambit of the scheme.
Is there any maximum permissible finance for different categories of farmers?
Yes. Those who seek finance facilities for tractors, harvesters, reapers and four wheeler load carriers should have minimum 04 Kanals of irrigated land or minimum 08 Kanals of un-irrigated land. Such a category of farmers can get loans up to Rs. 25 lakhs.
For purchase of Power Tillers, Weeders, Rice transplanters, Pump Sets, Sprayers, Threshers, three wheeler load carriers etc., the farmer can get finance facility to the tune of Rs.10 Lakhs. However, the farmer should have a land holding of minimum 04 Kanals.
For pump sets, sprayers, grass cutter, baskets & receptacles, ladder, trays, handcarts etc. the maximum finance facility is Rs.3 lakhs and the farmers minimum apple cultivated land holding should be 02 Kanals.
Is there any subsidy component in the scheme?
The scheme carries its own treatment of subsidies. Farmers intending to avail benefits under PM-KUSUM scheme for installation of Solar water pumps or any similar agriculture implements on subsidized rates are also eligible for financing under this scheme. For this, it is mandatory that the cost of equipment, subsidy component and the farmers share is clearly mentioned in the sponsorship cum recommendation letter issued by JAKEDA which is the nodal agency for implementation of this scheme in J&K. Sponsorship by the nodal agency shall be treated as proof of agriculture end use. However, disbursement will be made directly to JAKEDA. Notably, interest rate concession of 0.50% on applicable rate of interest shall be extended to beneficiaries identified/ sponsored by JAKEDA.
Similarly, farmers sponsored by Agriculture/ Horticulture Department or any other Govt Department for purchase of any agricultural implement are also financeable under this scheme. In case the sponsoring agency provides any upfront subsidy, the same shall be appropriated towards margin requirement and in case of back end/ interest subsidy, same shall be appropriated towards repayment.
What is the nature of collateral security required in this scheme?
For loans above Rs 1.60 lakhs and upto Rs 10.00 lakhs, the borrower is required to submit third party guarantee (TPG) of two persons. It’s waived off in certain categories like government employees etc.If the loan amount is above Rs 10.00 lakhs, the bank will ask for mortgage of immovable property/ Agri land having realizable sale value at least equal to 1.25 times of the loan sanctioned.
What are the documents required in support of land holding?
The borrower has to submit an affidavit to confirm land holding, be it owned, ancestral, leased or tenanted.
Disclaimer: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.