Despite the fact that the government is expanding its investment in agriculture, the promised results are still a long way off. One of the State’s attempts to support the agriculture industry is the establishment of soft credit provisions.
According to the report, 46,057 people took out soft loans of Rs 106.98 billion during the previous fiscal year (2020-21). This amount represents more than 135 percent of the agri-sector budget for the current fiscal year (2021-22).
The agricultural sector has a larger budget this fiscal year than the prior year. The agriculture sector has received a budget increase of Rs 45.9 billion, or around 20%, compared to the previous year’s budget of Rs 37.42 billion.
On the one hand, the size of the investable amount is growing, while the size of production is shrinking. The growing reliance on agri-products casts question on the agricultural concessional loan’s correct application. According to agriculture specialists, the import of rice of roughly one billion per month suggests that such a facility is being abused.
Farmers are taking out more concessional loans now that Nepal Rastra Bank has made it essential for all commercial banks to invest 11% of their total investable money in agriculture and livestock until July 15.
According to Uddhav Adhikari, an agricultural entrepreneur, the propensity of persons seeking low-interest loans for the agriculture and livestock sectors but not carrying out agriculture business is also noticed in society.
Borrowers who take out soft loans receive a 5% interest rebate. “Some astute individuals register the agriculture farm and obtain low-interest loans from financial organisations. They show that they have been doing agricultural work for a few months and then gradually leave,” said another farmer, Ram Krishna Dhakal.
NRB Governor Maha Prasad Adhikari introduced the current fiscal year’s monetary policy on Friday, with the goal of encouraging agricultural loans.
The central bank has established that a 15% budget of total credit should be invested in agriculture through monetary policy.
“Although the bodies concerned have emphasised the agriculture sector, it is not found that the government has been monitoring whether or not people obtaining the concessional loans have invested in the farm industry,” agriculture economist Krishna Poudel said.
According to the budget statement for the current fiscal year, agriculture modernization, commercialization, and mechanisation will lead to the country becoming entirely self-sufficient in agriculture within the next five years.