Prime Minister Narendra Modi on Wednesday announced enhanced input subsidy relief for farmers in distress.

During his address at the launch of the Pradhan Mantri Pradhan Mantri Micro Units Development and Refinance Agency Ltd (MUDRA) Yojana here, Mr. Modi said farmers will now be eligible for input subsidy if 33 per cent of their crop has been damaged, as opposed to 50 percent or more, which was the norm till now. Further, the input subsidy given to distressed farmers will be enhanced by 50 per cent of the existing amounts,

The Prime Minister expressed concern over the problems faced by farmers due to abnormal weather over the past year. “Helping the farmer in this time of distress is our responsibility, and therefore, the Government had sent teams of Central Ministers to affected areas, to assess the extent of damage,” Mr. Modi said, according to an official release. He also have the assurance that the Centre and State Governments, the banks and insurance companies would all do their utmost to provide relief to the farmers.

Mr. Modi said that banks had been asked to restructure loans of farmers hit by unseasonal rains and insurance companies had been advised to pro-actively settle claims.

He also launched the MUDRA bank with a corpus of Rs. 20,000 crores and credit guarantee of Rs. 3000 crore.

The Bank will be responsible for refinancing micro-finance institutions in the business of lending to small entities.

While big industrial houses provide jobs to only 1.25 crore people, small entrepreneurs have given employment to nearly 12 crore people, Mr. Modi said. India Post network will be used for increasing access to formal financial system.

Union Finance Minister Arun Jaitley said the MUDRA Bank is a step in the right direction of ‘funding the unfunded’. He had proposed the Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of Rs.20,000 crore, and credit guarantee corpus of Rs.3,000 crore in his Budget speech in February.

MUDRA will be set up through a statutory enactment. It will be responsible for developing and refinancing through the Yojana all Micro-finance Institutions (MFIs) which are in the business of lending to micro and small business entities engaged in manufacturing, trading and service activities.

It will also partner with state and regional level coordinators to provide finance to last mile financiers of small and micro business enterprises. Its proposed role includes laying down policy guidelines for micro enterprise financing business; registration, accreditation and rating of MFI entities.

The agency will also follow responsible financing practices to ward off over indebtedness and ensure proper client protection principles and methods of recovery, according to an official release.

These measures are targeted towards mainstreaming young, educated or skilled workers and entrepreneurs including women entrepreneurs, the release said.

“A vast part of the non-corporate sector operates as unregistered enterprises and formal or institutional architecture has not been able to reach out to meet its financial requirements…Providing access to institutional finance to such micro, small business units, enterprises will not only help in improving the quality of life of these entrepreneurs but also turn them into strong instruments of GDP growth and employment generation,” the release said.