Besides a hike in the agriculture credit target, Budget 2023 looks to solve issues that both farmers and agritech startups face
One of the major challenges that the agriculture sector in India faces is that of lack of storage capacity. In order to fix this, the finance minister has announced plans to set up massive decentralised storage capacity Image: Shutterstock
Finance Minister Nirmala Sitharaman’s Budget 2023 speech had some major announcements for the agriculture sector—an accelerator fund for agri startups, higher agri credit allocation and digital public infrastructure for agriculture.
The Agriculture Accelerator Fund is expected to hugely benefit agritech startups and provide them with a much-needed boost, in turn transforming agricultural practices, increasing productivity and profitability. By encouraging young entrepreneurs in rural areas to set up startups, the fund aims to bring innovative and affordable solutions for challenges faced by farmers. “This will certainly encourage a greater number of startups to emerge and scale up their unique solutions, fast-tracking innovation in the sector,” says Rajesh Ranjan, CEO of Krishify, which is a social network and commerce platform for farmers.
The agriculture credit target has been increased by 11 percent to Rs 20 lakh crore for FY24 with a focus on animal husbandry, dairy and fisheries. The agricultural credit target for the current 2022-23 fiscal is Rs 18 lakh crore. Hemendra Mathur, venture partner, Bharat Innovation Fund believes that though this is a good step, “I would also like to see use of digital tools and cashflow-based financing while lending to farmers so that majority of farmers can get access to institutional credit.”
He adds that farmers’ access to institutional credit remains a constant challenge, despite a year-on-year increase in budgetary allocation under Priority Sector Lending (PSL) for agriculture. “Approximately 30 percent farmers have access to institutional credit and balance 70 percent remain dependent on informal credit (annual interest rate ranging from 24 to 60 percent in informal credit against 7 percent under PSL),” he adds.
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