Incentives for Agriculture Sector in Union Budget 2014-15

The Union Budget 2014-15 presented in Parliament put a high emphasis on Agriculture Sector and announced several new schemes for its development. Proposals Include New Agri Universities, Soil Health Card to Every Farmer, Kisan TV Channel and Raising of Farm Credit Target to Rs. 8 Lakh crore

The union budget presented by Shri Arun Jaitley, Minister of Finance, yesterday has a number of proposals relating to agriculture. The major proposals are as follows:


Government will establish two institutions of excellence in Assam and Jharkhand with an initial sum of `100 crore in the current financial year. In addition, an amount of Rs.100 crores is being set aside for setting up an “Agri-Tech Infrastructure Fund”.

It is also proposed to establish Agriculture Universities in Andhra Pradesh and Rajasthan and Horticulture Universities in Telangana and Haryana. An initial sum of Rs.200 crores has been allocated for this purpose.


Deteriorating soil health has been a cause of concern and leads to sub optimal utilization of farming resources. Government will initiate a scheme to provide to every farmer a soil health card in a Mission mode. A sum of Rs.100 crore has been kept for this purpose and an additional Rs.56 crores to set up 100 Mobile Soil Testing Laboratories across the country.


As a very large number of landless farmers are unable to provide land title as guarantee, institutional finance is denied to them and they become vulnerable to money lenders’ usurious lending. The Finance Minister has proposed to provide finance to 5 lakh joint farming groups of “Bhoomi Heen Kisan” through NABARD in the current financial year.

Price volatility in the agriculture produce creates uncertainties and hardship for the farmers. To mitigate this a sum of Rs.500 crore has been provided for establishing a Price Stabilization Fund.

The farmers and consumers’ interest will be further served by increasing competition and integrating markets across the country. To accelerate setting up of a National Market, the Central Government will work closely with the State Governments to re-orient their respective APMC Acts., to provide for establishment of private market yards/ private markets. The state governments will also be encouraged to develop Farmers’ Markets in town areas to enable the farmers to sell their produce directly.

The issue of profitability of small holding based agriculture has assumed importance in view of increasing proportion of small and marginal farmers in the country. I propose to supplement NABARD’s Producers’ organization development fund for Producer’s development and upliftment called PRODUCE with a sum of Rs.200 crore which will be utilized for building 2,000 producers organizations across the country over the next two years.


The Finance Minister said, we are committed to sustaining a growth of 4% in Agriculture and for this we will bring technology driven second green revolution with focus on higher productivity and include “Protein revolution” as an area of major focus.

Climate change is a reality which all of us have to face together. Agriculture as an activity is most prone to the vagaries of climate change. To meet this challenge, a “National Adaptation Fund” for climate change will be established. As an initial sum an amount of Rs. 100 crore will be transferred to the Fund.

North Eastern Region of India has tremendous potential for development of organic farming. With a growing global demand for organic food, people living in the NE states can reap rich harvest from development of commercial organic farming. To facilitate this, the budget provides a sum of Rs.100 crore for this purpose in the current financial year.


Banks are providing strong credit support to the agriculture sector. A target of Rs.8 lakh crore has been set for agriculture credit during 2014-15.

Under the Interest Subvention Scheme for short term crop loans, the banks are extending loans to farmers at a concessional rate of 7%. The farmers get a further incentive of 3% for timely repayment. This scheme will continue in 2014-15.

The share of long term investment credit in agriculture is going down as compared to short term crop loan. This is severely hampering the asset creation in agriculture and allied activities. In order to give a boost to long term investment credit in agriculture, the budget provides for setting up “Long Term Rural Credit Fund” in NABARD for the purpose of providing refinance support to Cooperative Banks and Regional Rural Banks with an initial corpus of Rs.5,000 crore.

The Short Term Cooperative Rural Credit (STCRC) – Refinance Fund was announced in Union Budget 2008-09 with initial corpus of Rs.5,000 crore. In order to ensure increased and uninterrupted credit flow to farmers and to avoid high cost market borrowings by NABARD, an amount of `50,000 crore has been provided for STCRC Fund during 2014-15.