With the agrarian crisis threatening to spread to other parts of India after getting ignited in Madhya Pradesh, the Centre on Wednesday approved the disbursal of short-term crop loans to farmers for the current season. Under it, farmers will get loans upto Rs 3 lakhs at seven per cent interest for six months, as in previous seasons ever since the scheme started in 2006-07.
Those who repay on time will get a three per cent rebate; that is, they will be charged only four per cent interest. To provide relief to farmers hit by natural calamities, the government has decided to give two per cent interest subsidy for the first year on the restructured amount.
This is being seen as a bid to counter the unrest, though it will bring only partial relief as farmers are demanding loan waivers and an adequate minimum support price (MSP) for their produce.
The Union Cabinet, which met on Wednesday morning, approved extending the scheme for the current season with funds worth Rs 20,339 crores for interest subvention.
Finance minister Arun Jaitley had announced in his Budget speech on February 1 that adequate credit would be available to farmers and a target of Rs 10 lakh crores has been fixed for agricultural credit in 2017-18.
However, according to sources, the decision to give the loan should have been implemented in April when the season had just begun. Now, with the monsoon having set in and sowing under way, by the time the funds reach farmers, the sowing would get more or less completed.
The interest subvention scheme, which has been running since 2006-07, will continue for the current fiscal and be implemented by the National Bank for Agriculture and Rural Development (Nabard) and the Reserve Bank.
Normally, farm loans attract an interest rate of nine per cent. But the government has offered interest subvention to make available short-term farm credit at an affordable rate and help boost farm output.
The interest subvention will be given to public sector banks (PSBs), private lenders, cooperative banks and regional rural banks (RRBs) on the use of own funds and to Nabard for refinance for RRBs and cooperative banks.