The government on Thursday announced additional liquidity worth Rs 30,000 crore for farmers through the National Bank for Agriculture and Rural Development (NABARD). Government-owned farm sector lender NABARD will immediately get the working capital for the farmers' post-harvest requirements towards the rabi season. The announcement came as Finance Minister Nirmala Sitharaman gave details of the second set of measures under the government's economic package to tackle the damage caused due to the coronavirus (COVID-19) pandemic and the weeks-long lockdown.
The Rs 30,000-crore liquidity will be over and above the Rs 90,000 crore provided by NABARD through the normal refinance route in the current financial year, the government said in a statement.
Government-owned farm sector lender NABARD, which usually raises funds from lenders and the market to refinance rural infrastructure projects, will immediately get the working capital for the farmers' needs towards the current kharif crop (May/June) and the post-harvest rabi season.
The Finance Minister said three crore small farmers will benefit from the additional working capital through NABARD.
Economists say the move will enable rural lenders to address the needs of the farming sector, which depends to a large extent on such credit.
Ms Sitharaman also said that in March, NABARD provided a sum of Rs 29,500 crore to cooperative banks and regional rural banks to support lending.
State-owned NABARD also extended support of Rs 4,200 crore for rural infrastructure through the Rural Infrastructure Development Fund (RIDF) during the month.
Economists and rating agencies expect the economy to contract by up to 5 per cent in the current financial year, a steep fall from earlier government estimates of 6 per cent growth.